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.
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.
INTRODUCTION: In Nigeria, partnerships are governed by the Companies and Allied Matters Act (CAMA) 2020. Partnerships in Nigeria can be classified into three types: general partnerships, limited partnerships, and limited liability partnerships.
GENERAL PARTNERSHIPS (GPs), are formed by two or more individuals who share the profits and liabilities of the partnership. The partners are jointly and severally liable for all the debts and obligations of the partnership, and each partner has the right to take part in the management and administration of the partnership.
LIMITED PARTNERSHIPS(LPs), on the other hand, consist of one or more general partners and one or more limited partners. The general partners are liable for all the debts and obligations of the partnership. In contrast, the liability of the limited partners is limited to the amount of capital they have contributed to the partnership. Limited partners do not have the right to participate in the partnership’s management and administration.
LIMITED LIABILITY PARTNERSHIPS(LLPs) are similar to limited partnerships, but the liability of all partners is limited to their capital contributions. This type of partnership is suitable for professional firms such as law firms, accounting firms, and consulting firms. An LLP may acquire, own, hold and dispose of property, as well as bring and defend actions in its own name. A partner in an LLP could be a Company. Each LLP must have a minimum of two authorized partners, at least one of whom must be a Nigerian national. LLPs are managed by a membership agreement or a partnership agreement and do not have any share capital.
To register a partnership in Nigeria, the appropriate forms and fees must be submitted to the Corporate Affairs Commission (CAC). Additionally, the partnership must have at least two partners and must be registered with the CAC.
It is strongly recommended that partners enter into a partnership agreement to govern the relationship between themselves and the partnership. It is also worth noting that Partnership is not taxed as an entity, but the partners are taxed on their own income.
In conclusion, understanding the nuances of the different types of partnerships and the registration process is crucial in ensuring the smooth running of the partnership business in Nigeria. It is advisable to seek legal advice before entering into a partnership agreement or registering a partnership with the CAC.
For more guidance and registration of Partnership in Nigeria, feel free to contact us
