The beauty of every business is when it is legal or operated legally. Generally, in the context of business, being legal simply means that when a business is checked, it is found to be registered, verified and certified by the constituted authorities in the country. Most consumers have this special kind of trust for legal business. Hence, as a Nigerian entrepreneur or an entrepreneur operating in Nigeria, you should not take all the legal requirements when starting business In Nigeria. Do not take these legal conditions that surround the smooth operation of your business with levity; they are very important to your business success.
Legal Requirements When Starting Business In Nigeria
In Nigeria, most businesses are not legally recognized and this is consequential in the long, medium and short term. Some of these include locking up (closing) of an operating business, sanctions, and other forms of legal actions against non-compliant businesses. To be on the safer side and not face the wrath of the law, it is good to meet the legal requirements when starting a business in Nigeria. It is required of you as an entrepreneur in Nigeria to meet all legal requirements.
In this article, the important legal requirements when starting business in Nigeria are discussed.
10 Important Legal Requirements When Starting Business In Nigeria You Must Meet.
1) Business Registration
Recently, business registration in Nigeria has been made easy. It is not a must but is very important. Business registration is done by a governmental body in Nigeria known as Cooperate Affairs Commission (CAC). This body helps to register the businesses in the country. Their portfolio includes registering of business name, company/corporation/charity and other organizations. They also issue certificate of business or company registration. CAC registers small-scale, medium-scale and large-scale businesses. They help to know if a business name has or has not been registered by someone else to avoid confusion. Upon validation, the body issues a business certificate which indicates that a business is legally registered. A duly registered business in Nigeria is open to a lot of benefits like grants, loans, interns from NYSC and many other benefits.
2) Nigeria Investment Promotion Commission (NIPC) Registration
The Nigeria Investment Promotion Commission (NIPC) basically promotes foreign investment in Nigeria. This body registers businesses that want to involve in foreign participation like importation/exportation in the country. Obtaining a certificate from this statutory body puts out (showcases) your company for foreign participation/investment among foreign investors.
Related: The Legal Documents Your Business or Startup Should Have In Nigeria
3) Insurance
In Nigeria, a larger percentage of entrepreneurs do not insure their business. This is bad and legally not right because as an entrepreneur, insuring your business protects your business against any unforeseen/unplanned circumstances e.g. theft, burglary, fire incident etc. In Nigeria, business insurance is not compulsory but it is a safe thing to do against unforeseen contingencies.
4) Registration with Federal Inland Revenue Service (FIRS)
Federal Inland Revenue Service is a statutory body that oversees taxation in Nigeria. They issue any document related to taxation. A legal business must meet her tax requirement which include tax clearance, Tax Identification Number (TIN), etc. As a business, you are required to pay tax to the government. So, registration Federal Inland Revenue Service (FIRS) is mandatory. Registration with federal Inland Revenue Service will make sure all taxes paid by your company get to the appropriate quarters and you stay of the wrong side of the law.
5) Registration with Trade Commission(s) and Association(s)
Intending business should be fully registered under the appropriate trade commission/association or bodies. For example, a pharmaceutical outlet should be registered and get a license from pharmacist national bodies; a photography business must be duly registered under the association of photographers likewise a diagnostic center must register with the association of medical laboratory scientist in Nigeria and so on. It is important to register with the appropriate regulatory bodies. It is an important legal requirement when starting a business in Nigeria.
6) Physical Offices Tax Registration
If your business is offline i.e. you own a physical office or shop where you run your business, you must register with the tax office at both state and local government level where you are required to pay tax to; taxes are collected annually. The governmental body in charge of this registration is known as Internal Revenue Service (IRS).
7) Business Permit
If you are a foreigner and you want to start a business in the Nigeria, it is legally advisable to get a business permit. A business permit is often issued by the ministry in charge of internal affairs. This help you as a foreigner to run your business legally in Nigeria because it is against the law to run a business as a foreigner without a business permit from the regulatory bodies.
8) Exportation and Importation of Goods Permit
This permit is mandatory for a business that deals with importation and exportation of goods in the country. For example, if your company imports any consumables either food or drug, an importation permit must be collected from an agency of government known as the National Agency for Food and Drug Administration and Control (NAFDAC). This aids easy movement of your goods into and around the country, likewise exportation of goods; a permit must be issued out to the relevant bodies in charge of the product. Another regulatory body in the country is the Nigeria Communication Commission (NCC). This body oversees the registration and regulation of telecommunication services in the country.
9) Labour Law Registration
If you are going to be an employer of labour, you must be duly registered in accordance with the Labour Act. This helps to monitor funds that will be contributed for any unforeseen or unplanned circumstances that might occur while your labourer/staff is in service. The eventuality could be injury, illness, disability or even death! Contribution of about 1% of the total money earned by the employees is saved up for unforeseen issues and can also serve as pension after retirement.
10) A Financial Account Opening
One of the legal requirement when starting a business in Nigeria is opening a corporate account with any financial institution e.g. bank. This must be opened in (your name or) the business name where certain documents will be requested by the bank before opening an account with them. Some of the basic documents for opening a corporate account in Nigeria include Bank verification number (BVN), Tax identification number, mode of identification, business registration certificate, etc. depending on the bank. This enables you to have the ability to obtain loan from a bank, get government loan and enjoy other empowerment programs.
Related: 4 Things About Your Business Certificate Of Incorporation You Should Know
Conclusion
As much as possible, it is important to meet the list of legal requirements when starting business in Nigeria herein listed and explained depending on the kind of business you want to undertake in Nigeria. To legally run a business in Nigeria, try to comply with the appropriate legal requirements. Some of them are not mandatory but they are important to have and may be acquired to run your business smoothly. Avoid the fear of being brought to book by legal authorities by complying accordingly. Also, a good business should have a lawyer to assist in explaining and implementing the legal aspects of the business. So, if you can, get a legal practitioner for your business to be on the safer side of running a business in Nigeria legally and successfully.
