More often than not, you are advised as a business owner in Nigeria to consider registering your business. It is usual to ask if it is needed, especially when your business is a small one and is just starting. However, small business or not, going through the seemingly stressful process of registering your business comes with some benefits.
The first reason you should probably think of registering your business is that your business will eventually grow. When your business does grow, you will need to get that registration done, and you may not be pleased to find out that your business name has been taken by someone else.
A major problem with that is the fact that a lot of people as your business grew, have learned and adjusted to that name. You will have to change the name so that a registration can be done, and doing that may just land you and your business into an identity crisis. That is the first reason people usually register their businesses, but, of course, there are other benefits involved and here they are –
- Investment from sales of shares in your business
- Access to government and commercial bank loans
- Grants and foreign aid
- Business continuity
- Legal status
Investment from sales of Shares in your Business
People hold their money very dear to their hearts, and they will not invest in a business that is not registered. You will not invest in and buy shares from a business that is not registered.
Investing in an unregistered business is like walking blindly into a room filled with mattresses and wooden furniture, then hoping you land on the mattress. Your eyes are closed, what is the guarantee that you would land on a mattress? None.
Investors do not want to invest money in a business that they do not trust. If your business is not registered, they cannot trust you, their lawyers will not trust you. As a matter of fact, you will most likely be asked for proof of registration before anyone buys shares from your business. They want to be sure that your business is recognized by the authorities that matter. No one likes surprises.
Access to Government and Commercial bank loans
As time goes on, unless you have a rich uncle funding your business from his pockets, you will need loans. Loans will keep you afloat for a while until you start making just enough profit to cover for the cost of operation. Either that or you will join the number of startups who do not make it past the second year.
From time to time, the government makes loans available for SMEs to take advantage of at little or no interest rates. All efforts to take advantage of that loan will be futile if your business is not registered with the government. When they ask for proof of registration and you fail to provide that, it will be taken that you have not exactly started a business. For you to access government loans, amongst other criteria, the said business must be registered according to government policies.
An example of this was the loan that was supposedly let out for small businesses in Nigeria to survive amidst COVID-19. Applying for that loan without proof of business registration would have been a silly thing to do.
Another loan that you should be able to access if you have registered your business is a commercial bank loan. It does not matter how impressive your proposal is written, how cogent the reasons are, how good the business looks. You simply will be ignored when they ask for proof of registration and you have none.
Proof of registration means that they are giving the loan to a business that could be held accountable. At this point, your business does not seem like one that could be held accountable. However, if your business is not registered, and you need a loan of less than ₦1,000,000, you can apply for a loan with Lendigo. It is not required that your business is registered to get a loan less than ₦1,000,000 from us
Grants and Foreign Aid
Nigeria is a third world country, and often, when third world countries seem to be struggling with either a natural disaster or something else, there is help from countries that are already developed. These aids usually come in food, clothes, and in some cases money for business which have been affected by the events.
There are a lot of businesses which will be applying for the said loans, best believe that the ones that would be paid attention to are the registered ones. An unregistered business begs the question of how far it will go. More importantly, a registered business presents a front that says ‘there is a move for growth and employment in the future’.
Foreign aids will only go for registered businesses because they seem more genuine, not a bogus whipped-out-of-thin-air business looking for funding. They want to help already established and struggling businesses. They are not trying to push money into something that still looks like a plan. A business that has not been registered looks more like a business plan than an actual business.
Just like aids, grants do not come with a payback option. You are not working to pay back that money, it is given to you free of charge to grow your business. This is why, more than anything, they want to make sure that they are giving it to an actual business, not one that is still in the works.
Submitting proof of registration immediately makes you eligible for the grants. It does not matter what the other criteria are and if you meet them, if you have not registered your business, you will not be considered and that’s that.
Business Continuity
Unless you are building a business that will die with you, you will need to register your business. Registering a business is like creating a legacy that your family will carry on and on after you are long gone.
Not registering your business is like opening a small kiosk, and then when you die, the family just closes it down and share the goods inside with different people. If you want your business to be one that would last, you will need to register it as early as you start. Whether you are there or not, the company stands in your name, it remains.
Legal Status
You are a different entity from your business, and unless you do not want that stamped, you need to register your business. If you are unable to pay back a loan and assets are getting seized, the only things that would get seized are company properties.
Registering your business as an entity on its own saves you the stress of having your issues affect your business. If you do not do this, you and your business will be seen as one, and this will pose future problems. You get protection when you register your business.
The benefits are way more than these that have been listed so far. There is the credibility that comes from giving out the account name for that business to customers instead of your account. There is the reputation aspect of this, your reputation as a business owner is on the good side when your business is registered.
Does registering your business sound like a lot of work? Yes. Is it for nothing? Absolutely not! When people upload their Certificate of incorporation given to them by the Corporate Affairs Commission after registration on social media, it is not for the ‘congratulations’. They are telling you that ‘We are a registered business now, you can trust us’.
You should be able to say that too, register your business today!