Some entrepreneurs and prospective founders see registration as an unnecessary ceremony that they would rather skip if they had a way. Some even carry on with their businesses without registration for some time. Others register without being aware of what value such registration brings to their business. This article – 7 Reasons You Should Register Your Business Now – will attempt to highlight some of the benefits that registration of a business will afford founders/promoters.
7. Legitimacy – The law requires every business to be registered within 28 days of commencement of operations. Failure to do so is an offence and appropriate sanctions will be applied to offenders as ignorance of the law does not excuse anyone. You may think that the long arm of the law is far from you until the day you get a visit from the regulatory authorities. It’s always safer to be on the right side of the law.
There are some exceptions provided by the law when a business may not need to be registered. Therefore any business that falls under the exceptions will not be in breach of the law. A business is exempted from registration if the business –
- In the case of a firm/partnership, bears only the true forenames and surnames of all the partners; e.g. Chinedu Ibe, Herbert Odu, & Philip Ene
- In the case of an individual, bears the true forenames and surname of that individual for example, Juliet Ineba Barango; and
- In the case of a corporation, the name consists of the corporate name with an addition e.g. Red Grapes Ltd & Sons.
Apart from the fact that it is illegal to operate a business without registration, (where the above exceptions do not apply) there are other benefits of registration of a business.
6. Reputation/recognition/distinction – It is easier for people to deal with registered entities for the purpose of business than individuals. Usually people who are interested in dealing with a particular corporate entity have the opportunity to conduct due diligence from the regulatory authorities as to the nature of the entity they want to deal with. Creditors, customers, suppliers and financiers are some of the categories of people for whom registration of a business would provide some form of security. Furthermore, when a business is registered, the registration protects the name of such business so that no other business is allowed to use the same name as far as the jurisdiction of registration is concerned.
5. Succession and structure – A registered business is more likely to outlive the founder especially if it is registered as a company. Registration of a business also helps to lay a foundation for a proper structure in terms of management, accounting, etc.
4. Bank account – A business must be registered before a corporate bank account can be opened for that business. The advantage of having a corporate bank account is separation of business funds from personal funds which is fundamental for any business owner that seeks to make progress with the business venture.
3. Financing – Businesses will need financing at different stages of their growth in form of grants, loans, investments etc. Financiers will always prefer more established and duly registered entities especially for small or start-up businesses. They would want to see some form of structure in place of which registration is crucial foundation.
2. Contract bids – Registration is usually an important eligibility criterion for contract bids in most public and private institutions. There are several other criteria such as up-to-date annual and tax returns but these cannot even be achieved without first having the business registered.
1. Value Added Services – As Micro, small and medium enterprises gain more recognition due to their contribution to economies of countries, there are many organisations that now offer services to this category of corporate entities which may not be readily available to individuals. For e.g financial institutions like Diamond Bank and Heritage Bank have initiated SME clinics aimed at providing support and adding value to corporate entities that are at their foundational stages.
Despite these benefits, it is imperative to note that there are also responsibilities attached to registration and this includes tax liabilities, as well as other post-registration requirements such as filing of annual returns, appointment of company secretary (for companies) and updating the business records at the Corporate Affairs Commission.
Okay, I’m sure you agree now that it’s worth it after all to register your business or do you still think otherwise? Let’s discuss in the comments section.
*Please note that adequate professional guidance should be sought as this article does not constitute legal advice and is solely for enlightenment purposes.