ESTABLISHING

A BUSINESS IN NIGERIA
hat you need to know...

IJEOMA U
Managing Coun
TEMPLA

19 March 2

TLINE

Preliminary Considerations
Deciding on an appropriate Business Structure
Legal and Compliance Matters
Frequently Asked Questions
Checklist for Setting Up

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ELIMINARY CONSIDERATIONS

Do I need to set up that business?

What if the idea is not mine?
How much money do I need to start up?
Would the income exceed my expenses?

Now that I have an idea:

How do I manage my business?

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ELIMINARY CONSIDERATIONS contd

at are the benets of setting up a formal business structure?

Separate Personality

Limited Liability

Attracting third party investors

Positioning for future expansion/ raising capital

Perpetual life

Continuity of management

Easy transfer of ownership

Estate planning

Control

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CIDING ON AN APPROPRIATE BUSINESS STRUCTURE

pes of Business Structures

Sole Proprietorship

Partnership/Firm

Private or Public limited liability company

Unlimited liability company

Company limited by guarantee

Others:
- Non-prot NGOs
- Cooperative Societies
- Incorporated Trustees

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CIDING ON A STRUCTURE contd

hat are the most common structures?

most common structures when people seek to

ablish prot making ventures in Nigeria are:

Business Names (which could be set up as sole

proprietorship or partnership); and

Limited liability companies (which could be either
public or private).

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CIDING ON A STRUCTURE contd

onsiderations for choosing a Business Name

You & the business are one and the same

Easy and inexpensive to form

Unlimited personal liability

Reduced tax burden

Complete Control

More dicult to raise large capital

Succession is not guaranteed

Most appropriate for small businesses and

professional services

Partnerships generally have some

advantages over sole proprietorships
because:

- Liability and management duties are

shared among partners
- Shared nancial commitment
- Complimentary Skills

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CIDING ON A STRUCTURE contd

nsiderations for choosing a Limited Liability Company

Independent legal entity from its shareholders
Limited liability of shareholders
Perpetual succession
More attractive to third party investors/easier to raise capital
More regulated and formal
Heavier tax burden
More expensive to operate
Most appropriate for medium to large-scale businesses

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CIDING ON A STRUCTURE contd

sts of setting up each common structure

stablishing a Business Name

- Corporate Aairs Commission N10,000

- Legal Fees Negotiable but this can be done personally

stablishing a Limited Liability Company
Corporate Aairs Commission Depends on share capital but could be as low as N10,000
Federal Inland Revenue Service Depends on the share capital but could be as low as N7,500
and a duty of N1,000 for stamping the registration documents
Legal Fees Negotiable but can only be done by lawyers and some accredited professionals

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LEGAL AND COMPLIANCE

GAL AND COMPLIANCE MATTERS

taining appropriate licences and registrations

ertain businesses require particular industry registrations and permits: NAFDAC for food and
ugs; DPR for oil industry services.

ways check whether there are specic registrations, permits or licences for your kind of business

hat if a Non-Nigerian is involved?

orget Business Name

Obtain work permits and expatriate quota (if applicable)

egister with NIPC

Consider NOTAP registration (where applicable)

btain Business Permit

Get a CCI for the foreigners investment

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GAL AND COMPLIANCE MATTERScontd

ve unto Caesar

Register for tax (FIRS and SIRS)

Pay tax on taxable income
- Income tax for companies 20% or 30%
- Education tax 2%
- Personal income tax Graduated income level(could be up to 24%)
- Value Added Tax 5%
- Withholding 5% -10%
- State and Local Government taxes
- Mandatory contributions Pension, ITF, ECF, NHF etc.
Tax incentives
- Pioneer Status
- Export incentives
- Public Infrastructure & Employment Relief

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GAL AND COMPLIANCE MATTERS contd

rotecting your ingenuity and brand

Copyright
Trademarks
Patents
Industrial Designs

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GAL AND COMPLIANCE MATTERScontd

outine lings and returns

Annual Returns to the Corporate Aairs

Commission

Tax Returns

Returns and lings with industry regulators

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EQUENTLY ASKED QUESTIONS

How much stake can the foreigner have?
Must directors be shareholders and vice versa?
How many shareholders or directors do I need?
Must the directors be Nigerians or Nigeria resident?
Can my family members be directors and shareholders?
What is the minimum share capital?
Must the share capital be fully paid up?
Do I need to present elaborate documentation to set up a business?
How long does it take to set up?

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ECKLIST FOR SETTING UP

Make the decision

Set up the appropriate structure
Register for tax
Obtain the relevant permits & licenses
Start making the prots!

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ESTIONS

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THANK YOU