Press "Enter" to skip to content

Difference Between Company and Business

Olaniyan Toni 2
Business formation is an essential stage in a long business journey that must be handle with care. Failure to do so may lead to avoidable errors that can prove costly now or in future.
Consequently, in this post, I’m going to cover the difference between a company and a business. And in addition give some advice on what I think may be best for your business based on your business goals and objectives.

What is a Business?

A business is a legal entity that create and deliver goods or services to the market for a profit. In Nigeria, a business can either be register as a business name or a company.

What is a business name registration?

Business name registration is the process of legally registering a name, which upon approval by Corporate Affairs Commission, can then be use to carry out business transaction with a third party within or outside Nigeria.
From both legal and Corporate Affairs Commission (CAC) standpoint. A business name structure does not separate the business from the owner. The implication of this is that the owner of the business is held responsible and liable for all debts incurred in the cause of carrying out the business.
In other word, if you have 10 million and your business owes 10 million; you can be compelled to pay up the 10 million to the creditor.

What is a Company?

Whereas a business name does not separate the owner from the business. Company at the other hand is a separate legal entity from its owners. What that means is that, from the day it gets incorporated; a company is basically another human being in its own right with its own right and obligation.
Another obvious difference between a business name registration and company is how the business is value. While the worth of a business is the worth of the owner, a company’s worth is in its share capital.
Furthermore, to register a company will requires directors, shareholders and in certain instances secretary, meanwhile a business name can be register by one person.

What is Company Registration?

Company registration is the process of incorporating a business entity with the objective of carrying out a business. To register a company in Nigeria, you will have to provide a minimum of a director, shareholder and one secretary. The only body responsible for the approval of company in Nigeria is CAC.

How much is Company registration in Nigeria?

That depends, If you want to carry out the registration by yourself using CACCRP, I’ll say keep 25k naira.
This’s the breakdown of the cost:
  • 500 naira for name reservation/approval
  • 15,500 naira for company registration. (This will be paid into CAC account and it include the default constitution)
  • 8,700 naira for FIRS stamp
  • The rest will go for bank and payment gateway charges.
Our step by step company registration guide will guide you through the process. But if you don’t have the time and want to engage the service of a consultant, one million share capital will cost around 50,000 naira.

How much is business registration in Nigeria?

Just like company registration, if you’re planning to DIY using CACCRP, keep #13,00.
The breakdown is as follows:
  • Name reservation/approval = #500.
  • Registration = #10,000.
  • Other cost = #2,500.
We have a step by step guide that can guide you through the process.
But if you’re going to engage the service of a business agent, in 2021 business registration is between 20,000 and 25,000 naira.

What should I choose a business name or a company?

This is a tricky question. Without understanding your business goals and objectives; it would be difficult to say with absolute certainly whether a business name or company is best for your business.
Notwithstanding, if you are a small scale business owner like electrician, plumber, hairstylist, carpenter and petty traders business name registration is better suited for you. But if you are a long term thinker who want to secured his/her children and spouse future in the business , or you have a Co-founder, plan to raise pre-seed, seed and growth fund from investors now or in future, company will be most suited for such.
In summary, while business name and company are very similar in that they are both profit driven. Yet, they are fundamentally different in legal formation.

Conclusion

With the above knowledge, I believe you can reasonable know where your business idea belong, the business or company category. If you need more clarity regards business, company, church, school and ministry and NGO registration, you are one click away from me.
  1. Emeka Emeka

    Excellent points, thank you Toni.

Leave a Reply

Your email address will not be published. Required fields are marked *