You’ve dreamed of it for years, and now you want to start a small business in Nigeria.
But you’ll have to take care of a few things first. And that’s what this post is basically about.
Here is another complete article for those who want to start a business in the United States.
You’ll probably want to register your business name, and in some cases, this may be a requirement.
You’ll also have to register with your state to pay taxes, and you may have to obtain licenses and permits.
How to Start a Small Business in Nigeria
Actually, starting a business in Nigeria is pretty straightforward. There is no mago mago. If you can follow these steps, it will be easy for you. The only issue is that the people involved in these steps might waste your time.
There are some steps you must follow, except if the business is an ‘in the moment’ type, without plans of continuity.
Starting a small business involves more than having capital or a huge social media following.
Unless it is a side-gig, you must take these steps seriously.
Here’s a checklist to help you get started.
In Nigeria, business registration done, with the Corporate Affairs Commission, (CAC), established by the Companies And Allied Matters Act.
Whether you are running a solo venture, or a billion-naira business, the benefits of registering your business, cannot get overemphasized.
Your business gets on record and takes on a unique identity, separate from others, including businesses that offer similar services as yours.
A registered business name helps build trust and reputation with customers and clients.
This holds, especially, for online-based businesses, where customers have to pay before goods are shipped to them.
You can get legal liability protection when you register your business as a Limited Liability Company (LLC).
This means that you are a different entity from your company and will not get held personally responsible for certain accidents and other liabilities.
If you have plans of a business that would continue, even, when you are dead, or incapacitated, alongside having the right structure in place, registering your business would definitely help.
Registration with the Federal Inland Revenue Service, (FIRS)
This is another thing you need to know before starting a small business in Nigeria.
This registration is to enable your business to pay tax, which is a part of thewgat your business needs to do in Nigeria.
After your registration with FIRS, the commission will issue your business three vital documents.
- Tax Clearance Certificate (TCC)
- Tax Identification Number, (TIN)
- Value Added Tax, (VAT).
Trying to evade tax payments in Nigeria can be bad.
Your business could get confiscated by the government if you get caught.
Some government organizations will demand evidence of your business tax clearance certificate, before entering into business with you.
Registration with the State and Local Government Tax Offices
Businesses with physical offices are legally required to get taxed, by the local government tax authority.
Avoiding this could pose serious problems for your business, so, as soon as possible, locate their office and get registered.
Businesses operating as digital companies, without physical offices, are exempted from paying this tax.
You should register your staff at the State Internal Revenue Service, for the Pay As You Earn, so, their taxes can get remitted there on a monthly basis.
You will get compelled to, also, pay an annual Business Premises fee, to the State Internal Revenue Service.
Obtaining a Business Permit
This is only applicable to businesses owned by foreigners in Nigeria.
The business permit grants a foreigner permission to operate a business in Nigeria and the document gets issued, by the Ministry of Internal Affairs.
A business that is partly owned, by a Nigerian citizen and partly by a foreigner, however, does not require this form of legal backing.
If your business imports foreign goods into Nigeria, a permit is required.
You will need one from the National Agency for Food and Drug Administration and Control (NAFDAC), if you are involved in medical, pharmaceutical or food supplies.
You will need one from the Nigerian Communication Commission (NCC), if you are involved in telecommunication services.
The idea is to get your license from relevant bodies.
While these may pose a long process, the benefits cannot be ignored, especially when you can be harassed by officials because of your lack of these things.
You will need this information to start your small business.
It will matter if you want a business with continued presence and not just something merely for the moment.
Conclusion: Starting a Business in Nigeria
Starting a business in Nigeria can be challenging because of many factors. The country’s unstable political and economic environment is one of the most significant challenges. Corruption is also prevalent in many sectors of the Nigerian economy, making it difficult for new businesses to compete with established players.
Additionally, Nigeria has a complex regulatory environment that can be difficult for new businesses to navigate. The process of registering a business can be time-consuming and bureaucratic, and obtaining the necessary licenses and permits can be a challenge.
Infrastructure is another significant challenge for businesses in Nigeria.
The country’s roads, electricity supply, and internet connectivity are subpar, making it difficult for businesses to operate efficiently. Access to finance is also a significant challenge for new companies in Nigeria, as banks and other financial institutions are often reluctant to lend to small businesses without a solid track record.
Despite these challenges, there are still opportunities for entrepreneurs in Nigeria. The country has a growing population with significant demand for goods and services. The Nigerian government has also taken steps to improve the business environment, including implementing business-friendly reforms and investing in infrastructure.
Moreover, Nigeria has a vibrant startup ecosystem, with many successful startups emerging recently. The country’s entrepreneurial culture and dynamic youth population provide fertile ground for innovative and creative business ideas.
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