How To Set Up A Limited Company – How Much It Cost And More Details. In comparison to the work necessary in launching your firm, forming a limited company is shockingly quick and simple. In fact, depending on the method you follow, you may establish a limited company in as little as 24 hours and for less than the cost of a typical takeaway supper. Nonetheless, if you wish to know more about a limited company, read this article.
About Limited Company
A Limited Company is a business structure with its own legal identity. It is statutorily controlled and incorporated with the goal of maximizing profits. All companies, whether private limited companies, private unlimited companies, or corporations limited by guarantee, must be registered in compliance with the Companies and Allied Matters Act (CAMA), which is the primary law that governs businesses in Nigeria. The criteria for creating a corporation in Nigeria are simple and easy.
The Corporate Affairs Commission (CAC), formed under the rules of CAMA, is the commission in charge of the regulation and monitoring of the registration of corporations. In one of our earlier posts, we described a step-by-step procedure for forming a corporation.
See also: How To Get An LLC For A Small Business
What is the importance of company registration?
1. Distinct Legal Entity: By law, your incorporated business is considered a separate legal entity. It has the same rights and privileges as a human being and can own property (it is illegal for an unregistered business to buy or sell land in Nigeria).
2. Raising considerable funds: It will be simpler to attract investors and raise funding for your firm. Investors are more willing to invest in a registered company than in an unregistered corporation with no legal structure. Furthermore, investors prefer to invest in registered firms over unregistered companies because they know there is a formal system in place to take their money. Loans are straightforward to obtain for a registered corporation.
3. Reputation and Prestige: Your company’s reputation and prestige are improved. The incorporation of your company might imply that it is stable and devoted to effective and responsible management.
4. Legal Protection: Once your firm is registered or incorporated with the Corporate Affairs Commission, your business name is protected, and no one else in Nigeria may use the same or a name that is similar to it.
What do I need to set up a limited company?
1. A business name
A registered name is required when forming a private limited business. There are a few ground rules: your name cannot be the same as one that is already registered, it cannot be offensive, and it must normally include the term ‘restricted. There are certain exceptions, such as if your company’s articles of incorporation state that it is unable to pay its shareholders. Furthermore, if you want to trade under a name other than your registered business name (which you can), your trading name must not include the word ‘limited.’
2. A Memorandum of Understanding
If you’re enrolling by mail, you’ll simply need one paper. If you register online, it will be created for you automatically as part of your registration. The Memorandum of Association is a legal document signed by all of the firm’s first shareholders or guarantors indicating their agreement to start the company. It will include your new limited company name, address, and kind of business.
3. Complete the pre-registration form
After compiling the paperwork, the individual is expected by the CAC to fill out a form, indicating all of the relevant data, and resubmit it to the CAC, along with all of the appropriate documents. The documentation procedure is as follows:
- All directors must complete the Particulars of Director form.
- The Statement of Share Capital and Return of Allotment form must be completed by one director.
- The Notice of Situation/Change of Registered Address form must be completed by a director and the Company Secretary.
- A CAC-accredited firm can complete the Declaration of Compliance with the Company and Allied Matters Act (CAMA) form.
4. Pay the stamp duty and the filling fee
After completing the registration form and drafting the Memorandum of Association, you must pay the stamp duty. Because stamp duty is a tax, it must be paid to the Federal Inland Revenue Services. Following payment, the applicant will go to the Stamp Duty Commission to have the Memorandum and Articles of Association, as well as some of the incorporation papers, stamped. Forms and stamped papers are sent to the CAC when they have been completed. The Certificate of Incorporation will be issued six weeks following the date of filing.
How much does it cost to form a company with the help of an accountant?
If you’re new to all of this, having an accountant on your side can help you feel more confident. They will assist you in completing all of the paperwork, but they will also be able to advise you on the following stages. You now have a number of statutory duties as a result of your registration with Companies House. Your accountant can assist you in understanding them and ensuring that you submit all of your financial statements properly and on time in order to remain compliant.
An accountant may offer to set up your limited business for free if you join up for their monthly services. If not, there will be a one-time cost that may vary depending on how engaged you are.
What happens once you register a limited company?
You will get a Certificate of Incorporation after your business has been legally registered. This document establishes your company’s legal existence and displays your company’s name and date of incorporation. There’s an extra benefit to enrolling online: you’ll also be enrolled for Corporation Tax. If you registered by post or through a formation agent, you must also register for Corporation Tax within three months of commencing your firm.
What are the additional costs of maintaining a limited company?
Aside from these expenses, the costs of running a limited business include general rent, utilities, labor, digital marketing assets, accountant fees, insurance, and so on. The total cost of these items is determined by you and your company.
If you want to establish your own business, you must budget from the beginning. Before you do anything else, you must first figure out your money. This allows you to assess your startup and operating costs and determine what you can and cannot afford.
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