- March 21, 2019
- Posted by: admin
- Category: Company Registrations
Often times when people come to me to help them register their business and I ask them what kind of structure they want for their business a lot of them are unable to answer.
If we have ever had a conversation before you would remember that the first thing I always want to know is the structure of your business.
You see, it’s not just about the registration. There is a legal implication for any and every decision you take concerning your business.
So from the word, you must get it right and seek expert advice even for something as basic as choosing the right business structure.
Just so we are on the same page, let me quickly tell you what a business structure is.
A business structure is simply the legal status of your company. It can also be called a legal structure, forms of business or a “legal business structure” if you wish
There are basically Three (3) types of legal business structure that you can have whether as a pre-startup, Start-up or whether you are simply looking to expand the scope of your business.
You can Structure your business as follows:
- A Sole proprietorship.
- A partnership
- A Limited liability Company (LLC)
Sole Proprietorship Businesses are owned mostly by one man.
Businesses or companies that are registered as business name, Ventures or Enterprises are sole proprietorship businesses even though there may be two or more other people involved in the business.
Please note that a sole proprietorship is not necessarily a one man business as there may be other people involved in the business.
What makes it a sole proprietorship regardless of the number of persons involved is actually the legal implication.
A sole proprietorship does not create a separate legal personality from that of its owners unlike a corporation. In order words, it is just created for the ease of doing business majorly.
It is not a separate entity from its owners and offers no legal protection when the chips are down.
- A Partnership has at least a minimum of two persons and a maximum of 20 persons doing business as together as partners.
A partnership business can be registered as business name (enterprise, venture) or as a Ltd Liability Company.
In any case, there should be a thoroughly drafted and Comprehensive Partnership agreement between or among the partners depending on how many they are.
- Limited Liability Company.
This type of structure allows the business to maintain a separate identity from that of its owners who have limited liabilities and enjoy more legal protection than the business name owner.
The Company is seen as an artificial person with all the powers of a natural person.
An LLC must have at least two members and can be limited by shares or limited by guarantee but it is more common to have a company limited by shares.
There you go guys!
Those are the three major business or legal structure that you can have for your business. So it is not so much about the type of registration that you do but more about the legal implication of that on your business.
So before you run to catch up with 31st of March deadline for business name registration by the Federal Government be sure if that’s actually the kind of structure you want for your business.
Did you get value? If yes, please feel free to share the post someone might need this.
Endorsed by: Ola Isaac.