A Guide to Starting a Business in Nigeria
Nigeria, thanks largely to its massive oil and gas production, claims one of the largest economies in Africa. Over the past decade, the nation has enjoyed a 6.9% GDP growth, and is currently the African FDI’s (Foreign Direct Investment) largest beneficiary.
Naturally, this growth and progress makes Nigeria a tempting spot for entrepreneurs looking to start or expand their business journeys, and in this blog, we will be covering the essential steps for starting a business in Nigeria.
Starting a Business in Nigeria:
Step 1 – Formulating a business plan:
While you can seek someone else’s services for writing a plan for your business, it is best if you perform this activity yourself.
A business plan covers plenty of things, but the most essential features of any business plan are:
Step 2 – Registering the business:
Once you have prepared a solid business plan, it is time to take the first step towards putting that plan into action. In other words, you need to get the business registered through the CAC (Nigerian Corporate Affairs Commission). This organization is responsible for the registration of every Nigerian business.
Before you get your business registered, you will have to decide on a couple of things:
Essentially, Nigeria offers three options with regards to business structures:
- Sole proprietorship.
- PVT (Private Limited Company).
- PLC (Public Limited Company).
You need to be careful while choosing your business’ legal structure, since it can determine your tax and personal liability, as well as the kind of venture that you want to enter into.
In order to get the business verified with the commission, you will have to provide a name for your company. Sometimes, your desired company name is not available since it has already been chosen by another business. Hence, you need to make sure that the business name that you have picked is vacant.
Once you have ensured this, you need to visit one of the 36 CAC offices across the country. Since you can visit any of these offices for your business registration, you should choose go for the closest one. Alternatively, you can perform the entire registration process over the internet without having to visit a CAC office at all.
After the commission verifies your business name, it will provide you with a form. Make sure to fill that form and pay any required fee. Once this is done, the CAC will start processing your business application. It can take about 3-4 weeks for the processing to conclude, at which point you can move on to step number three.
Step 3 – Registering for taxes:
The third step is getting the business registered through the taxation office. The FIRS (Federal Inland Revenue Service) is responsible for any tax-related issue.
Here, you will be submitting VATs (Value Added Taxes), income taxes for your company, as well as any withholding taxes. Therefore, make sure to get the company registered with the office closest to you.
After the tax registration process is completed, you will get a TIN (Tax Identification Number); you will be using this number for every tax process.
Step 4 – Obtaining any required permits:
Since every business is supervised by a specific association, you must make sure to get your business registered with the body that is responsible for monitoring the businesses in your particular industry.
Also, enquire about any stipulated charges and other requirements that you need to fulfill before initiating your business operations.
Failure to adhere to requirements can have financial and other legal consequences – the courts do not have any patience for ignorance. Often, you need to submit fees and follow other guidelines, so make sure that you are not skipping any part of the process.
After sorting out the permits and fulfilling other necessary requirements, you can advance towards step number five.
Step 5 – Acquiring office space:
This step is a rather flexible one; you can lease or rent an office at any point during steps 2-4.
A lot of businesses owners in Nigeria and around the world start off their ventures from their homes. However, once your business grows beyond a certain point, an office might become necessary, since you would have to accommodate more clients and hire a certain number of employees.
In addition, there are a lot of businesses that are heavily dependent on their locations. Fast food businesses, for instance, needs to operate in commercial rather than residential areas. If you feel that your business belongs to this category, make sure that you conduct ample research before picking a workspace.
Once you have acquired the premises, you can furnish and design it according to your personal preferences and business requirements. At this point, you can also bring in your inventory. If you are running a service business, you can bring in the materials you will need to execute that service on a daily basis.
Over the last decade, Nigeria – just like much of Africa – has become a highly desirable spot for entrepreneurs with their eye on the future. We hope that this guide will prove to be a helpful resource to you as you embark on your Nigerian business journey.
To learn more about doing business in Nigeria, explore business opportunities in the country, or for assistance in the business registration process, feel free to reach out to us.