Formal registration of companies has many immediate benefits for the companies and for business owners and employees. Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. And their employees can benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk. Where governments make registration easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and generating more revenue for the government.
Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Nigeria. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.
| No. | Procedure | Time to Complete | Associated Costs |
|---|---|---|---|
| 1 | Check the availability of company name with the Corporate Affairs Commission | 5 days | NGN 200 application form |
| 2 | Prepare the requisite incorporation documents and pay the stamp duty | 7 days | 0.75% stamp duty paid on capital |
| 3 | Notarize the declaration of compliance (CAC 4) | 1 day | NGN 500 |
| 4 | Register the company with the Corporate Affairs Commission & pay fees at the bank desk at CAC | 11 days | NGN 59,592 legal fees + NGN 500 incorporation forms + NGN 20,000 incorporation fees + NGN 500 for each additional copy of Memorandum and NGN 500 for additional copy of the Articles of Association stamped + NGN 3,000 for certified true copy of memorandum and articles of association + NGN 2,000 for certified true copy of particulars of directors +NGN 2,000 for certified true copy of particulars of shareholders. |
| 5 | Register with the Federal Board of Inland Revenue Department of the Ministry of Finance for income tax and VAT | 4 days | no charge |
| * 6 | Register for personal income tax PAYE at the State Tax Office | 2 days, (simultaneous with previous procedure) | no charge |
| * 7 | Receive inspection from local government | 7 days, (simultaneous with previous procedure) | included in procedure 8 |
| 8 | Pay fees at a designated bank | 1 day | NGN 18,500 |