ENSURING COMPLIANCE: A STEP-BY-STEP GUIDE ON HOW TO CHECK IF YOUR COMPANY IS ACTIVE OR INACTIVE ON CAC NIGERIA AND WHAT TO DO NEXT

Corporate Affairs Commission

The Corporate Affairs Commission (CAC) is the regulatory body responsible for the registration and regulation of companies in Nigeria. It is essential to know if your company is active or inactive on CAC Nigeria as it determines the legal status of your business. In this article, we will guide you on how to check if your company is active or inactive on CAC Nigeria and what to do next.

STEP 1: Visit the CAC Nigeria Website

The first step to check the status of your company is to visit the CAC Nigeria website, www.cac.gov.ng. The website is user-friendly and easy to navigate. On the homepage, you will see a tab that says “Public Search”. Click on it to proceed.

STEP 2: Enter Company Name

Once you have clicked on “Public Search”, you will be redirected to a new page. On this page, you will see a search bar where you can enter the name of your company. It is important to note that you must enter the exact name of your company as it is registered with CAC Nigeria.

STEP 3: Review Search Results

After entering your company name, click on the “Search” button. The website will display a list of companies that match the name you entered. Review the search results to locate your company.

STEP 4: Check Company Status

When you have located your company, check the status column to see if it is active or inactive. If your company is active, it means that it is currently in good standing with CAC Nigeria, and all necessary filings and fees have been paid. On the other hand, if your company is inactive, it means that it is no longer in good standing with CAC Nigeria. This may be due to the non-payment of annual fees or non-compliance with regulatory requirements.

What to Do Next If your company is active, congratulations! You are compliant with all CAC Nigeria regulations, and your business is in good standing. However, if your company is inactive, there are a few steps you should take to remedy the situation.

STEP 1: Determine the Reason for Inactivity

The first step is to determine the reason for your company’s inactivity. This may be due to non-payment of annual fees, non-filing of annual returns, or non-compliance with regulatory requirements.

STEP 2: Address the Issue

Once you have determined the reason for your company’s inactivity, take steps to address the issue. For example, if your company is inactive due to non-payment of annual fees, make the necessary payments to bring your account up to date. If your company is inactive due to non-filing of annual returns, submit the necessary documentation to CAC Nigeria.

STEP 3: Seek Professional Assistance

If you are unsure about how to address the issue, seek professional assistance from a lawyer or accountant. They can guide you through the process and ensure that you are in compliance with all CAC Nigeria regulations.

Conclusion

In conclusion, it is essential to check if your company is active or inactive on CAC Nigeria to ensure that your business is in good standing with the regulatory body. By following the steps outlined in this article, you can easily check your company’s status and take the necessary steps to address any issues. Remember, compliance with CAC Nigeria regulations is essential for the success and longevity of your business.

Regville Associates offers end-to-end legal, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

CHOOSING BETWEEN A DELAWARE C-CORP OR LLC: PROS, CONS, AND FINDING THE PERFECT MATCH

Image Source – ebizfiling.com

When starting a new business, one of the most important decisions that an entrepreneur will have to make is what type of legal entity to form. In the United States, two of the most popular options are the Delaware C-Corporation and the Delaware Limited Liability Company (LLC). Both of these legal structures have their own unique advantages and disadvantages, and the choice of entity will depend on the specific needs and goals of the business.

The Delaware C-Corporation is one of the most popular types of legal entities for startups, particularly in the technology industry. According to data from the National Venture Capital Association, 43% of venture-backed companies in the United States are structured as C-Corporations. One of the key advantages of a C-Corporation is that it offers limited liability protection for the company’s shareholders, which means that they are not personally liable for the company’s debts and obligations. Additionally, C-Corporations are taxed as separate entities, which allows for greater flexibility in terms of raising capital and issuing stock.

Another advantage of the C-Corporation is that it is well-suited for companies that plan to go public or be acquired by a larger company. This is because the stock structure of a C-Corporation is more flexible than that of an LLC, and it is easier to transfer ownership of a C-Corporation through the sale of stock.

However, there are also some disadvantages to forming a Delaware C-Corporation. One of the biggest drawbacks is the potential for double taxation. C-Corporations are subject to corporate income tax on their profits, and then shareholders are subject to individual income tax on any dividends that they receive. Additionally, C-Corporations have more extensive recordkeeping and reporting requirements than other types of legal entities.

On the other hand, the Delaware LLC is another popular option for entrepreneurs, particularly for those who are looking for a more flexible legal structure. According to data from the Small Business Administration, LLCs accounted for 57% of all new business formations in the United States in 2019. One of the key advantages of an LLC is that it offers pass-through taxation, which means that the business’s profits are only taxed once, at the individual level.

Another advantage of an LLC is that it offers more flexibility in terms of management and ownership structure. In an LLC, the owners are referred to as members, and they can choose to manage the business themselves or hire professional managers to do so. Additionally, LLCs do not have as many recordkeeping and reporting requirements as C-Corporations.

However, there are also some disadvantages to forming a Delaware LLC. One of the biggest drawbacks is that LLCs do not offer the same level of limited liability protection as C-Corporations. While the LLC does protect the personal assets of the members from business debts and obligations, they can still be held personally liable for their own actions or negligence.

In order to determine the best legal structure for a new business, entrepreneurs should carefully consider their specific goals and needs. For example, a tech startup that plans to raise venture capital and eventually go public may be better suited for a Delaware C-Corporation, while a small business that values flexibility and pass-through taxation may be better off forming an LLC.

In addition to considering the advantages and disadvantages of each legal structure, entrepreneurs should also take into account the costs of forming and maintaining the entity, as well as any legal and regulatory requirements that may apply.

Overall, the choice between a Delaware C-Corporation and an LLC will depend on the specific needs and goals of the business. While each structure has its own advantages and disadvantages, the right choice can provide the foundation for long-term success and growth.

Regville Associates offers end-to-end legal, tax and secretarial service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

IS YOUR NIGERIAN COMPANY READY FOR A HOLDING COMPANY STRUCTURE? TIPS TO CONSIDER FOR EXPANSION, RISK MANAGEMENT, AND TAX PLANNING

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A holding company is a type of business structure that owns other companies’ outstanding stock. It is a popular structure for many Nigerian businesses looking to expand their operations and consolidate their holdings. However, determining whether your company is ripe for a holding company structure can be a daunting task. In this article, we will explore some tips to help you determine whether your company is ripe for a holding company in Nigeria, backed by statistics, examples, and laws.

1. DIVERSIFICATION OF BUSINESS OPERATIONS: If your company has multiple business operations, it may be time to consider a holding company structure. A holding company can hold multiple subsidiaries, each with their unique operations, while the holding company oversees the management and governance of these subsidiaries. According to the Nigerian Bureau of Statistics, the top five sectors that contributed to the country’s Gross Domestic Product (GDP) in the second quarter of 2021 were Agriculture, Trade, Information and Communication, Manufacturing, and Oil and Gas. Companies that operate in multiple sectors and want to streamline their management can benefit from a holding company structure.

2. EXPANSION PLANS: If your company is planning to expand its operations to other locations or countries, a holding company structure can be beneficial. A holding company can hold subsidiaries that operate in different locations, making it easier to manage operations in various countries or regions. According to the National Bureau of Statistics, in 2020, Nigeria’s export trade was dominated by crude oil, accounting for 73.27% of total exports. Companies looking to expand into the export market can benefit from a holding company structure.

3. LIMITED LIABILITY PROTECTION: A holding company structure can provide limited liability protection for its subsidiaries. This means that the holding company’s assets are separate from the subsidiary’s assets, protecting the holding company’s assets from any liabilities or debts incurred by its subsidiaries. This protection can be crucial for companies operating in high-risk sectors, such as the oil and gas industry or construction sector. The Companies and Allied Matters Act (CAMA) 2020 governs holding companies in Nigeria, and it provides provisions for limited liability protection for holding companies and their subsidiaries.

4. TAX PLANNING: A holding company structure can also provide tax planning benefits. Holding companies can take advantage of tax incentives, such as tax holidays, and can also reduce their tax liability by consolidating tax returns for their subsidiaries. This tax planning can be crucial for companies that operate in sectors with high tax rates, such as the telecommunications industry.

5. SIMPLIFIED CORPORATE GOVERNANCE: Holding companies can simplify corporate governance by consolidating the management and decision-making processes for their subsidiaries. This consolidation can reduce bureaucratic processes and improve decision-making efficiency. For example, Dangote Industries Limited, a Nigerian multinational conglomerate, has a holding company structure that oversees the operations of its subsidiaries, including Dangote Cement, Dangote Sugar Refinery, and Dangote Flour Mills.

In conclusion, determining whether your company is ripe for a holding company structure in Nigeria requires a thorough evaluation of your company’s operations, expansion plans, risk management, and tax planning. By considering these tips, your company can take advantage of the benefits of a holding company structure, such as diversification of operations, limited liability protection, tax planning, and simplified corporate governance. With the recent passage of the CAMA 2020, Nigerian businesses can now enjoy more flexibility and options in structuring their businesses.

Regville Associates offers end-to-end legal, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

WHY DELAWARE INCORPORATION HAS BECOME A GAME CHANGER FOR NIGERIAN STARTUPS: EXPLORING THE BENEFITS AND TRENDS

Welcome to Delaware – Endless Discoveries

Delaware incorporation has become a common trend among Nigerian startups in recent years, and for good reason. The state of Delaware has a business-friendly environment that offers many benefits to startups, including strong legal protections, tax advantages, and access to a well-established legal system.

According to a recent report by Crunchbase, over 60% of Nigerian startups that have received funding have been incorporated in Delaware. This trend is a significant shift from a few years ago when most startups in Nigeria were incorporated locally. So, what has caused this shift, and why are more Nigerian startups incorporating in Delaware?

One significant factor contributing to the popularity of Delaware incorporation is its strong legal system, which provides businesses with significant protection. Delaware courts are well-known for their expertise in corporate law and their willingness to rule in favor of businesses. Additionally, Delaware has a well-established legal infrastructure that provides fast, efficient, and consistent court decisions, which is essential for startups looking to establish and grow their business.

Another reason why more Nigerian startups are choosing Delaware incorporation is the tax advantages it provides. Delaware has no sales tax, and its corporate income tax is relatively low compared to other states in the US. This means that startups can save money on taxes, which can be reinvested back into their businesses.

Moreover, Delaware is home to many venture capital firms and investors, which makes it an attractive location for startups looking to raise capital. Many investors prefer investing in Delaware-incorporated companies because of the legal protections and other benefits it provides.

Finally, incorporating in Delaware can also provide a level of credibility to startups. By incorporating in a state known for its business-friendly environment, startups can signal to investors and customers that they are serious about their business and are willing to take the necessary steps to protect their interests.

To illustrate the trend of Nigerian startups incorporating in Delaware, we can look at some examples. Flutterwave, a Nigerian fintech company that raised $170 million in a recent funding round, is incorporated in Delaware. Another example is Paystack, a Nigerian payments startup that was acquired by Stripe in 2020 for over $200 million. Paystack was also incorporated in Delaware.

In conclusion, the trend of Nigerian startups incorporating in Delaware is a significant shift in the country’s startup ecosystem. The benefits of incorporating in Delaware, including strong legal protections, tax advantages, access to venture capital firms, and credibility, are driving more and more Nigerian startups to incorporate there. As Nigeria’s startup ecosystem continues to grow, it is likely that more startups will follow this trend and choose Delaware incorporation as their preferred option.

Regville Associates offers end-to-end legal, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

THE IMPORTANCE OF OBTAINING A SCUML COMPLIANCE CERTIFICATE FOR BUSINESSES IN NIGERIA

In recent years, money laundering and terrorist financing have become a major threat to the stability of the global financial system. To address this issue, governments around the world have implemented various measures aimed at preventing and detecting these illicit activities. In Nigeria, the Special Control Unit on Money Laundering (SCUML) was established to combat money laundering and terrorist financing in the country. One of the key requirements for businesses operating in Nigeria is to obtain a SCUML compliance certificate. In this article, we will discuss why the SCUML compliance certificate is needed.

Firstly, obtaining a SCUML compliance certificate is mandatory for designated non-financial businesses and professions (DNFBPs) operating in Nigeria. DNFBPs include entities such as real estate agents, dealers in precious metals and stones, lawyers, accountants, and trust and company service providers. These entities are considered high-risk for money laundering and terrorist financing because they deal with large amounts of money and are in a position to facilitate illicit financial activities. The SCUML compliance certificate demonstrates that these entities are in compliance with the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) laws and regulations in Nigeria.

Secondly, obtaining a SCUML compliance certificate helps businesses to avoid penalties and legal repercussions. Non-compliance with AML/CFT regulations can result in severe penalties, fines, and even criminal charges. By obtaining a SCUML compliance certificate, businesses can demonstrate to regulatory authorities and law enforcement agencies that they are committed to complying with AML/CFT laws and regulations. This can help businesses to avoid penalties and legal repercussions, and also enhance their reputation as responsible and trustworthy entities.

Thirdly, obtaining a SCUML compliance certificate can improve business relationships and opportunities. Many financial institutions and other businesses are required by law or their own policies to only do business with entities that have obtained a SCUML compliance certificate. By obtaining a SCUML compliance certificate, businesses can demonstrate that they are in compliance with AML/CFT laws and regulations, which can enhance their credibility and make them more attractive to potential business partners and customers.

Finally, obtaining a SCUML compliance certificate can help to prevent money laundering and terrorist financing. The AML/CFT regulations in Nigeria are designed to prevent illicit financial activities and promote the integrity of the financial system. By obtaining a SCUML compliance certificate, businesses can demonstrate that they are committed to preventing money laundering and terrorist financing. This can help to deter criminals and terrorists from using these businesses to facilitate their illicit activities.

In conclusion, the SCUML compliance certificate is an important requirement for businesses operating in Nigeria. It demonstrates that businesses are in compliance with AML/CFT laws and regulations, helps to avoid penalties and legal repercussions, improves business relationships and opportunities, and helps to prevent money laundering and terrorist financing. Therefore, businesses operating in Nigeria should ensure that they obtain a SCUML compliance certificate to demonstrate their commitment to compliance and responsibility.

Regville Associates offers end-to-end legal, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

5 KEY INDICATORS TO DETERMINE IF YOUR BUSINESS IS READY FOR FUNDING

Securing funding is a critical part of any business’s growth and success. It can provide a company with the resources necessary to expand its operations, invest in new projects, and compete more effectively in the market. However, not all companies are ready for funding. Before seeking investment, businesses need to ensure that they have the right foundation in place to attract and retain investors. In this article, we’ll explore some key indicators that can help determine whether your company is ready for funding.

1. A STRONG BUSINESS PLAN

A well-developed business plan is a crucial component for securing funding. It outlines your company’s goals, target market, products or services, marketing strategy, and financial projections. A solid business plan demonstrates that you have a deep understanding of your business and the industry you operate in, as well as a clear path to growth and profitability.

“Having a strong business plan is one of the most important factors for attracting investors. It shows that you have a clear roadmap for success and that you have thought through all aspects of your business,” says Rebecca Price, founder and CEO of ChickTech, a non-profit organization that supports women in technology.

2. EXPERIENCED MANAGEMENT TEAM

Investors are looking for companies with a strong and experienced management team. A team that has experience in your industry, with a proven track record of success in managing teams, developing and executing strategy, and driving growth, can instill confidence in potential investors that your company is in capable hands.

“Having a strong management team is key. Investors want to see that the people leading the company have the skills and experience to execute on their plans and drive growth,” says Josh Siegel, managing partner at Rubicon Venture Capital.

3. FINANCIAL STABILITY

Financial stability is crucial when it comes to securing funding. Investors want to see that your company is financially stable and has a clear path to profitability. This means having a sound financial plan in place that demonstrates how you plan to generate revenue, manage costs, and achieve your financial goals.

“Financial stability is critical. Investors want to see that your company is on a path to profitability and that you have a plan for managing your finances and mitigating risk,” says Jesse Podell, managing partner at Startup Bootcamp.

4. STRONG MARKET TRACTION

A proven track record of success is also essential for securing funding. This means having a growing customer base, increasing revenue, and positive customer feedback. Investors want to see that your business has a loyal customer base and is gaining momentum.

“Having strong market traction is key. It’s important to show that you have a clear value proposition and that your customers are responding positively to your product or service,” says Meagen Eisenberg, CMO at TripActions.

5. SCALABLE BUSINESS MODEL

Finally, investors will want to see that your business has a scalable business model that can support growth and expansion. This means having a plan for how you will continue to grow your business while maintaining profitability. It’s important to demonstrate that you have identified new markets, products, or services that you can expand into and that you have a plan for how to execute on those opportunities.

“Having a scalable business model is crucial for attracting investors. It shows that you have a clear plan for growth and that you can continue to expand while maintaining profitability,” says Bobby Franklin, President and CEO of the National Venture Capital Association.

In conclusion, securing funding can be a critical step in your business’s growth and success. However, it’s important to ensure that your company is ready for funding before seeking investment. By focusing on these key indicators, including a strong business plan, experienced management team, financial stability, strong market traction, and a scalable business model, you can position your company for success and attract the right investors.

Regville Associates offers end-to-end legal, tax and compliance service for companies.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

UNDERSTANDING THE DRAWBACKS OF USING A BUSINESS NAME INSTEAD OF A LIMITED LIABILITY COMPANY (LLC)

One major drawback of using a business name over a Limited Liability Company (LLC) is that a business name does not provide limited liability protection for its owners. This means that if the business incurs any debts or legal liabilities, the owners’ personal assets may be at risk.

In contrast, an LLC is a separate legal entity from its owners and provides limited liability protection. This means that the owners’ personal assets are generally shielded from the debts and legal liabilities of the business.

Additionally, having a business name alone does not provide the same level of credibility and professionalism that an LLC can provide. An LLC is a formal business structure that is recognized by the law and offers certain legal and tax benefits. It can also help establish credibility with potential customers, suppliers, and investors.

Another potential disadvantage of using a business name is that it may be more difficult to obtain financing or attract investors compared to an LLC. Investors and lenders may view an LLC as a more stable and secure investment opportunity because of the legal protections it offers.

Overall, while a business name may be a simpler and more flexible option for some entrepreneurs, it lacks the legal and financial protections and advantages that an LLC can provide.

Regville Associates offers end-to-end legal, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

NAVIGATING THE LEGAL LANDSCAPE: ESSENTIAL COMPONENTS OF AN INDEPENDENT CONTRACTOR AGREEMENT

Close-up Of Hand With Pen And Eyeglasses Over Contractor Agreement

When hiring an independent contractor, it’s important to have a written agreement that outlines the terms of the arrangement. This agreement should provide a clear understanding of the work to be performed, the payment terms, and the expectations of both parties.

Here are some key elements to look out for in an independent contractor agreement:

1. SCOPE OF WORK: The agreement should clearly outline the specific tasks the contractor will be responsible for. This includes the expected deliverables, deadlines, and any required resources. The scope of work should also include a description of any limitations or restrictions, such as access to company information or tools.

2. PAYMENT TERMS: The payment terms should be clearly defined in the agreement, including the payment amount, payment schedule, and any payment-related fees. It’s important to make sure that the payment terms are fair and reasonable for both parties. This may include specifying the payment method, invoicing requirements, and any late payment penalties.

3. INTELLECTUAL PROPERTY RIGHTS: The agreement should specify who owns the intellectual property rights to any work created by the contractor. This includes any copyright, trademark, patent, or trade secret. It’s important to ensure that the agreement is clear on this point so that there is no confusion or disputes down the line.

4. CONFIDENTIALITY: The agreement should contain a confidentiality clause that outlines the contractor’s obligation to keep any company information or trade secrets confidential. This includes any customer data, business plans, or financial information. The confidentiality clause should also specify the consequences of any breaches of confidentiality.

5. TERMINATION: The agreement should include a termination clause that outlines the conditions under which the agreement can be terminated. This may include situations such as a breach of the agreement, unsatisfactory work, or changes in the company’s needs. The termination clause should also specify any notice period or severance payments that may be required.

6. LIABILITY AND INDEMNIFICATION: The agreement should specify the contractor’s liability in case of any damages or losses that may result from their work. The agreement should also include an indemnification clause that protects the company from any claims or lawsuits resulting from the contractor’s work.

7. DISPUTE RESOLUTION: The agreement should include a dispute resolution clause that outlines the process for resolving any disputes that may arise between the parties. This may include mediation or arbitration, rather than litigation, which can be time-consuming and costly.

In conclusion, an independent contractor agreement is an essential tool for ensuring a successful working relationship between a company and a contractor. By paying attention to the key elements outlined above, both parties can ensure that the agreement is fair, reasonable, and provides a clear understanding of the expectations and obligations of each party.

Regville Associates offers end-to-end legal, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

WHY NIGERIAN COMPANIES MUST PRIORITIZE PAYMENT OF ANNUAL RETURNS TO THE CORPORATE AFFAIRS COMMISSION

Annual Returns

The Corporate Affairs Commission (CAC) is the regulatory body responsible for the formation and management of companies in Nigeria. One of the statutory obligations of registered companies with the CAC is the payment of annual returns. This is an important requirement for the compliance and sustainability of businesses in Nigeria.

Annual returns refer to the filing of financial statements and other relevant information of a company with the CAC on an annual basis. It is a mandatory requirement for all registered companies, and failure to comply can lead to penalties or the revocation of the company’s registration. The annual returns must be filed with the CAC within 42 days of the company’s Annual General Meeting (AGM).

The payment of annual returns is crucial for several reasons, some of which include:

1. COMPLIANCE WITH REGULATORY REQUIREMENTS: Payment of annual returns is a regulatory requirement that all registered companies in Nigeria must comply with. Non-compliance can lead to penalties, revocation of the company’s registration, and other legal consequences.

2. PUBLIC RECORD OF COMPANY INFORMATION: Filing annual returns with the CAC ensures that the public has access to the company’s up-to-date information, including its directors, shareholders, financial statements, and other relevant information. This promotes transparency and accountability and helps to build public trust in the company.

3. MAINTENANCE OF THE COMPANY’S LEGAL STATUS: Payment of annual returns is essential to maintain the legal status of the company. A company that fails to file its annual returns for a consecutive period of time may be struck off the register of companies. This can have serious consequences for the company, including the inability to engage in legal transactions, inability to access loans, and other financial support.

4. ACCESS TO FINANCIAL SUPPORT: Companies that comply with regulatory requirements such as payment of annual returns are more likely to have access to financial support, including loans and other forms of financial assistance. This is because compliance with regulatory requirements is an indication of good corporate governance and financial management.

5. TRAVELLING REQUIREMENTS: It is also important to note that Embassies now require companies to present their active company documents as evidence of their legal standing. An “inactive” status could result in Embassies not considering a company as an eligible business for visa applications.

In conclusion, the payment of annual returns to the Corporate Affairs Commission is a legal requirement that is essential for the compliance and sustainability of businesses in Nigeria. It promotes transparency, accountability, and good corporate governance, and helps to maintain the legal status of the company. Companies should ensure that they file their annual returns on time to avoid penalties and other legal consequences. It is also important to note that an “inactive” status could result in Embassies not considering a company as an eligible business for visa applications, tenders, or other services.

Therefore, Nigerian companies should prioritize payment of annual returns as part of their corporate compliance obligations. This will help to ensure the continued growth and success of their businesses.

Regville Associates offers end-to-end legal, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

KEY FIGURES TO CONSIDER IN AN AUDITED FINANCIAL STATEMENT

In the last article, we wrote about the key components of an audited financial statement, in this article we shall be looking at the key figures to consider in an audited financial statement, these includes:

1. REVENUE: This figure represents the total amount of money the company has earned from its operations during the reporting period.

2. GROSS PROFIT: Gross profit is calculated by subtracting the cost of goods sold from revenue. This figure provides a measure of the profitability of a company’s core operations.

3. OPERATING EXPENSES: Operating expenses include all costs incurred during the normal course of business, such as salaries, rent, utilities, and advertising.

4. NET INCOME: Net income is calculated by subtracting total expenses from total revenue. This figure represents the company’s profit or loss for the reporting period.

5. ASSETS: Assets are resources owned by the company that have monetary value and can be used to generate future economic benefits. Examples include cash, investments, and property.

6. LIABILITIES: Liabilities are obligations owed by the company, such as loans, accounts payable, and taxes owed.

7. EQUITY: Equity represents the residual interest in the assets of the company after liabilities have been subtracted. This figure represents the value of the company’s assets that is owned by its shareholders.

8. CASH FLOW: Cash flow represents the amount of cash the company generates from its operations, investments, and financing activities.

9. RETURN ON INVESTMENT (ROI): ROI is a measure of the efficiency and effectiveness of an investment. It is calculated by dividing net income by total assets.

10. TAX PROVISIONS: The tax provisions represent the estimates of tax liabilities the company has incurred but has not yet paid.

It’s important to take note of these figures because they provide important information about a company’s financial health and performance. For example, a company’s revenue and net income can give an indication of its overall financial performance, while its assets, liabilities, and equity can provide insight into its financial position. Understanding these figures can help investors make informed decisions about whether to invest in a company and can also help assess the overall risk of lending money to the company.

Regville Associates offers end-to-end legal, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667