Why incorporating your business as a limited liability company (LLC) may be your best business decision yet.

Why incorporating your business as a limited liability company (LLC) may be your best business decision yet.

July 23, 2019

When a business is incorporated, it simply means the business has completed the process of becoming a corporation, as recognized by law. If that business is incorporated as a limited liability company, it then means the company is a legal entity in its own right, separate from those who own it, the shareholders. Registering a limited liability company may not be the cheapest to set up but the benefits are numerous

It simply means a business has completed the process of becoming a corporation, as recognised.

  1. ASSET PROTECTION

When a business Is duly registered as a limited liability company, it is recognized under law as a separate legal entity separate from and apart from its owners. It is responsible for its liabilities and its debt thereby protecting its owners from personal liability and corporate debts.

2. CORPORATE IDENTITY

In the eyes of the law, a registered company is a legal person. It can sue and be sued, it can buy property, contract and be taxed.

3. PERPETUAL LIFE

Corporations are the most enduring legal business structures. The life of an incorporated company is not dependent on the life of a particular individual(s), manager, shareholder, director or officer. It can continue indefinitely until it accomplishes its objectives, merges with another business, or go bankrupt. This means that by incorporating your business, you may be able to avoid the legal entanglements that could result with other business structures. In other words, unless stated otherwise, an incorporated company could go on indefinitely.

4. TRANSFERABILITY OF OWNERSHIP

When a business is incorporated, the ownership interest you have in it can be readily sold, transferred, or given away to another family member. The divesting process in proprietorships and partnerships can be costly and cumbersome as property has be retitled, new deeds drawn, and a whole lot of other administration processes have to be done to transfer ownership. This is not the case with incorporated businesses as all of the individual owners’ rights and privileges are represented by the shares they hold which can be easily transferred, sold or otherwise disposed off by completing/signing a transfer form. This is a very straight forward and easy process.

5. ABILITY TO BUILD CREDIT AND RAISE CAPITAL

It is a lot easier for incorporated businesses to raise capital since a corporation can issue shares making it easier for the company to grow and develop. As an incorporated company, getting loans from the bank is a lot easier as banks would rather lend money to an incorporated business than an unincorporated business venture. This is because corporations generally have access to more alternative sources of capital through which they can pay off debts.

6. ENHANCE YOUR BUSINESS CREDIBILITY

When a business is incorporated, the business is more likely to be viewed by customers, suppliers and other business associates as being more stable than unincorporated businesses. In a sense, the word “Limited” after the business name conveys permanence, credibility, and stability, and also communicates your commitment to the ongoing success of your business venture.

7. GAIN ANONYMITY

If you want to run a small business and don’t want your involvement to be public knowledge, your best choice may be to incorporate a company. Incorporation can offer anonymity to its owners.

8. TAX SAVINGS

As a separate legal entity, a corporation is taxed based on its profits. Those taxable profits can be reduced by qualified business expenses which could include operating costs, marketing and advertising expenses, travel and entertainment expenses, and other costs. Other deductions that can be made by an incorporated business includes employee salaries, health benefits, and pension contributions.

Best regards,

Efe Ugboro

CEO, 618 Bees

The information in this blog post (“post”) is provided for general informational purposes only, no information contained in this post should be construed as legal advise, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through this post without seeking the appropriate legal or professional advise from the particular facts and circumstances at issue from a lawyer.

This post is protected by intellectual property law and regulations. It may however be shared using appropriate sharing tools provided that our authorship is always acknowledged and this Disclaimer Notice attached

More Articles

Search

Connect With Us

Got any questions?

If you are having any questions, please feel free to ask.

Send us an email

Frequently Asked

  • Why must I file Annual Returns?

    It is a mandatory statutory requirement under the Companies and Allied Matters Act to file Annual Returns yearly. 

  • What’s the difference between a business name and an LLC?
    • A business name is a sole proprietorship, usually owned and managed by one individual only. Legally, the sole proprietor and his business are one. It simply means an individual trading with an alias. The sole proprietor is personally liable for all business related obligations.

    • A limited liability company on the other hand is a separate business entity from the individuals that hold its shares and act as directors. Legally, it’s a separate business entity and a person on its own who can transact business, own property separate from its owners and can sue or be sued. 

  • What are the terms of a contract?
    • an offer and an acceptance.
    • competent parties
    • Consideration
    • Legal subject matter
    • Mutual agreement/ Assent
    • Conesus ad idem
    • Obligation
  • If I have NAFDAC Registration number, do I still need SON registration number?

    SON Product Registration scheme is mandatory for all SON’s regulated products as mandated by SON Act 56 of 1971, 20 of 1984, 18 of 1990 as amended.

    This is irrespective of the registration done by NAFDAC

  • What is data protection?

    Data protection is a legal process of protecting sensitive data.

  • Can I grant another person the permission to use my design?

    The right of the owner of an industrial design includes the licensing and authorization of another person to use the design.

  • Do I have to physically drop off my product sample at NAFDAC office?

    No, you can choose to have it sent to NAFDAC office

  • How many directors do I need to start a company?

    A minimum number of one (1) adult director is required to form a company.

  • Why do I need a trademark?

    You need to register your trademark because if you don’t register it, someone else can! It helps identify you as the source and indicates a consistent level of quality of your products and services. Securing a registered trademark protects your brand, and provides you with tools to prevent someone else from using similar signs and riding off the back of your business.

Call Us Now on +234 901 719 0079 Chat on WhatsApp