FAQ About Smartbiz Enterprise

Here's Why You Need To Register Your Business With Corporate Affairs Commission (CAC)?

1. You can now open a corporate account in the bank.

2. Your prospects (customers) would feel more comfortable paying into a corporate account because they know their money can be traced.

3. You can now apply for loans and grants when your business is registered with CAC (e.g. COVID-19 FGN Survival Fund).

4. It makes your customers trust your business because they see it as legit and reliable.

5. Registering your business is the first step to getting your business structured. Without registering your business, you are running a glorified hobby.

6. If you need a supporting hands with little pay such as getting a Corp Member (Corpers) as an intern. A registered business can get you one.

7. A registered business gives clients confidence that they are dealing with a reputable organization.

8. Your business lives on even after death or if you become incapacitated, especially when you have the right structure in place.

9. A registered business gets easy access to loans and boundless opportunities.

10. You have better access to investors with a registered business as investors look at the business structure first before investing.

SCUML is Special Control Unit Against Money Laundering.

It is totally different from CAC Registration.

SCUML was created as part of the measures for the implementation of the Financial Action Task Force (FATF) Recommendations on Anti- Money Laundering/Combating the Financing of Terrorism (AML/CFT) in Nigeria.

You know some entities are involved in some businesses that may allow for easy laundry of funds and as such this Certificate is necessary.

Once you have this Certificate it means that an investigation has been carried out on the Business and your business activities are pure and clean.

The following Businesses are required to have a SCUML Certificate

*Audit Firms*

*Cars & Vehicles*

*Chartered Accountants*

*Clearing and Settlement*

*Construction Company*

*Consultants and consulting company*

*Dealers in jewelries and Luxury*

*Dealers in Real Estate*

*Estate Surveyors and Valuers*

*Hotel & Hospitality*

*Legal Practitioners*

*Mechanized Farming*

*Mortgage Brokers*

*Non Profit Organisations*

*Pool,Betting,Lottery and Casino*

*Precious Stones & Metals*

*Supermarket*

*Tax Consultant*

*Trust and Company Services*

BUSINESS NAME VS COMPANY NAME

A Business name is the name you register to do business with. It’s governed under Part B of the Companies and Allied Matters Act (CAMA) 2004 and the registration is administered by the Corporate Affairs Commission (CAC) here in Nigeria.

Business names do not end with Limited or Company. Business names are usually Enterprises or Ventures

Business names registration number starts with BN not RC

A Business name can be run as a sole proprietorship or partnership. They do not have directors or shareholders. They are most suitable for a one-man business.

The Owner of a business name has no separate liabilities from the Business name in order words, in a legal suit, the assets of the business and that of the owner can be gotten.

They are less expensive to register WHILE

Limited Liabilities are governed under Part A of the Companies and Allied Matters Act (CAMA)2004 and the registration is administered by the Corporate Affairs Commission(CAC) here in Nigeria.

Limited Liability can either be Private or Public.

Limited Liability Companies end with Limited or Ltd.

Their registration number starts with RC

Limited liabilities have directors and shareholders.

They do not by structure run as a one man business.

Limited liabilities business has its own legal identity separate from its directors.

The company is a person and enjoys the benefits ordinarily put on a natural person such as right to own property in its own name, it can borrow, can sue and be sued etc.

Limited Liability has perpetual succession.

This means that the death of a member does not end its existence.

Members of a Limited Liability are not personally liable for its debts; the liability of members is limited by shares.

The company is liable for its own debts.

Limited liabilities are governed strictly by CAMA and need close monitoring.

Limited liabilities are required to notify CAC on any change that happens in the Company

Limited liabilities are more expensive to register compared to a Business Name.

SMEDAN stands for Small and Medium Enterprises Development Agency of Nigeria.

 And their core mission is to facilitate the access of micro, small and medium entrepreneurs and investors to all resources required for their development.

The partnership between the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the Corporate Affairs Commission (CAC) aims to simplify and fast-track business registration processes for micro, small and medium enterprises (MSMEs), a significant step towards the formalization of the nation’s largely informal economy.

While CAC known as Corporate Affairs Commission was formulated to regulate the formation and management of companies in Nigeria. It is endorsed with the power of creating legality out of small and medium businesses. The corporate affairs commission was established to be responsible for the registration and administration of companies.

While SMEDAN affords your business a unique identification number and a digital certificate. With a unique identification number, you can easily apply for loans and support funds both within and outside the country. It also grants you access to funding from the government and private sector. 

Differences between CAC and SMEDAN

What you get

When you register your business under CAC, you will be issued a certificate of incorporation by the appropriate government agency. In Nigeria, CAC’s sole responsibility is to administer the Act, including the regulation and supervision of the formation, incorporation, management, and winding up of companies.

While SMEDAN gives businesses access to business insurance. Business Insurance, in this concept, is an insurance type established to protect businesses from unforeseen losses that may arise in the course of the business. So one of the benefits of SMEDAN registration for your business is that it grants you access to business insurance. You are assured that your business is in safe hands regardless of future occurrences.

SMEDAN GRANTS FOR ENTREPRENEURS

SMEDAN Grant program was developed by the United States. The main objective is to help improve the Micro, Small Scale, and Medium Enterprises in Nigeria and Africa. The project will give technical support to small companies.

The worth of SMEDAN grant 2022 is worth between 100,000 dollars and 1 million dollars. This is an amazing opportunity for entrepreneurs from Nigeria and Africa. Businesspersons should make full use of this opportunity to develop their businesses.

TAX IDENTIFICATION NUMBER(TIN) is a special code that is assigned to people, businesses that have registered with the government, and corporations that have been formed for the purpose of paying taxes used by the INTERNAL REVENUE SERVICE in the administration of tax laws.

Tax ID numbers combined with other forms of personal data, are worth more on the black market than stolen credit card information because tax ID information can be used repeatedly to file insurance claims, apply for loans and open new credit card accounts.

Benefits Of Tax Identification Number

1. File business taxes and avoid tax penalties. 

2.Prevent identity theft. 

3.Add credibility as a freelancer or independent contractor. 

4.Speed up business loan applications. 

5.Open a business bank account. 

6.Build trust with vendors.

7. It is needed for registration of cars.

8. You need it for application of C of O and many more.

9 It's needed for some legal registrations

What are Annual Returns?

An annual return is not the profit your company made in a year, it is not a financial document, but rather a yearly statement by an active registered business name or company which is meant to keep CAC updated about the company’s activities, composition, and its financial position.

Chapter 16 of the Companies and Allied Matters Act (CAMA 2020), covers everything pertaining to filing returns.

Section 418 of CAMA 2020 states:

The annual return by a company having shares other than a small company shall contain with respect to the registered office of the company, registers of members and debenture holders, shares and debentures, indebtedness, past and present members, directors and secretary, the matters specified in Part I of the Seventh Schedule to this Act, and the return shall be in the form set out in Part II of that Schedule or as near to it as circumstances admit.

Simply put, it is an application to show the regulatory commission that the company is still active in business.

Failure to perform this over a period of years will lead to a heavy fine and may also lead to the delisting of your company.

There are some misconceptions about an annual return in Nigeria. Some companies, most especially sole proprietorship, believe that they might be heavily taxed if they continue to file annual returns with the CAC. This is not true

Here is a scenario…

Mr Goodness (not real name) registered Granula Enterprise (Business Name) in February 2006, but since then he had never filed an annual return and in 2021 he’s ready to do the needful.

In this situation, Mr Goodness will have to file returns from August 2007 till 2021, that’s 14 years (5137 days).

5137 * 150 = 770550

The above excludes the service charge of an accredited agent.

When to file annual returns:

Limited Liability Company (LLC) and Business Name, and every registered business in Nigeria are expected to file their annual returns with the Corporate Affairs Commission not later than 30th June every year.

The only exception to this is when the calendar year in which the business name is registered does not end by December.

When Should a New Business Start To File Annual Returns In Nigeria?

Usually, a newly incorporated company is given the grace of the first 18 months while Business Name is given 12 months before filing a return.

What this means is that a company that was incorporated in January 2020 will have to start filing beginning from July 2021.

Although, the older companies are expected to file their return not more than 42 days after its Annual General Meeting.

Consequences of Failing To file annual returns

Three things will happen if you fail to file annual returns with the Corporate Affairs Commission (CAC):

1) Your company may be delisted if you failed to do so for several years

2) You will pay a fine if you want to reactivate your company name which will be more than the actual return

3) You will find it difficult to apply for a government contract or government credit facility. Now that you know the importance of filing annual returns of your company, see below what you need to get it done

Key Requirements for Filing of Company Annual Returns

A photocopy of your Business Certificate

A copy of the Company’s CAC Form 7.

A photocopy of the Memorandum of Association

Before the commission went digital, applicants would have to download CAC Form 10 or obtain it at any of their branch offices, but the online issue resolution has invalidated this method, as such you don’t need to go for an assessment at CAC office any longer. All you need are the requirements and an accredited agent.

Take away

1) Filing of annual returns doesn’t only save you the yearly penalties by CAC, it also shows that you are law-abiding

2) It will also give you an edge when accessing government loan

3) Annual returns is completely different from tax payment.