LLC vs BN in Nigeria: How to Choose the Right Structure for Your Business

LLC vs BN in Nigeria: How to Choose the Right Structure for Your Business

October 13, 2025

Starting a business in Nigeria often begins with one big question: Should I register as a Limited Liability Company (LLC) or a Business Name (BN)?

Both options are approved and regulated by the Corporate Affairs Commission (CAC), but the structure you choose can shape how your business grows, how you pay taxes, and even how potential clients or investors perceive you.

Let’s break down the differences and help you decide what’s best for you.

  1. Understanding the Basics

Business Name (BN)

A Business Name,  sometimes called a sole proprietorship or enterprise is the simplest form of business registration. It’s best for individuals running small or medium-sized operations under their personal control.

Example:

If “Efe Majemite” wants to run a fashion business, she can register “Efe Majemite Fashions” as a BN.

Limited Liability Company (LLC)

An LLC is a separate legal entity. This means the business exists independently from its owners (called shareholders or directors). It can own property, open bank accounts, and enter contracts in its own name.

Example:

“Efe Majemite Fashions Limited” would be an LLC — distinct from Efe herself.

  1. Key Differences Between LLC and BN
Feature Business Name (BN) Limited Liability Company (LLC)

 
Legal Status Not a separate legal entity A separate legal entity from its owners
Liability Owner bears all risks and debts personally Owners’ liability is limited to their share capital

 
Taxation Personal income tax Company income tax (currently 20–30%)
Ownership Usually one person One or more shareholders/directors
Perception Suitable for small or informal businesses Preferred by corporates, investors, and foreign partners

 
Compliance Minimal annual obligations Must file annual returns, maintain records, etc.
Raising Capital mostly personal funds Easier to attract investors or loans
Cost of Registration Cheaper More expensive and formal

 
Lifespan Ends with the owner Continues even after owners change

 

  1. When to Choose a Business Name (BN)

Choose a Business Name if:

  • You’re a freelancer, artisan, or small business owner starting out.
  • You want lower registration costs and simple compliance.
  • You’re not seeking major investment or partnerships.
  • You’re running a personal service business (e.g., makeup artist, tailor, photographer, small retail shop).
  • Tip: A BN is great for testing your business idea before scaling up.
  1. When to Choose an LLC

Go for an LLC if:

  • You want to limit personal liability for business debts.
  • You’re looking to attract partners, investors, or corporate clients.
  • You’re in a regulated industry (finance, tech, consulting, healthcare, etc.).
  • You plan to grow, hire staff, or bid for contracts.
  • You want to protect your business name nationally and appear more professional.
  • Tip: Many Nigerian companies and government agencies prefer to deal with registered companies, not individuals.
  1. The Cost and Process Difference

Business Name:

  • Registration: ₦20,000
  • Processing time: 5–10 working days
  • Requirements: One passport photo, business address, valid ID

LLC:

  • Registration: ₦30,000 – ₦70,000+ depending on share capital.
  • Processing time: 5–10 days.
  • Requirements: Company name, business address, directors’ details, shareholding, and objectives
  1. Can You Upgrade Later?

Yes.

You can start with a Business Name and later convert to an LLC when your operations grow. CAC provides a conversion process that allows you to retain your existing brand while gaining the legal benefits of a limited liability company.

Finally, here’s no “one-size-fits-all” answer. If you’re starting small and testing your market, a Business Name is often enough. If you’re serious about scaling, protecting yourself legally, and attracting growth opportunities, go for an LLC.

Either way, registering your business is the first real step toward legitimacy and long-term success.

 

Need Help Deciding or Registering?

At 618 Bees, we help entrepreneurs and investors set up the right business structure from CAC registration to full legal and regulatory support.

Email: hello@618bees.com

Location: Lekki, Lagos

 Get Started Today

Whether you’re registering your business or expanding your operations, we’ll help you stay compliant from start to scale.

Email: info@618bees.com

Visit: www.618bees.com

Call/WhatApp: +2349017190079

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

  • When are Annual Returns due for filing?

    A company’s first Annual Returns are due for filing after 18 months of its inception, subsequently it should be filed annually as the name implies. The filing dates could differ for each company depending on their financial year end but must be filed not later than 42 days after its Annual General Meeting.

    The Annual Returns for Business Names is due not later than the 30th of June each year except in the year the business was registered.
  • Must my Company Secretary be a Lawyer?

    Although it’s ideal to have a lawyer as a company secretary, it is not compulsory for small private businesses.
  • Why is mutual assent important in a contract?

    This is one of the key elements of a contract because is shows the meeting of the minds of both parties
  • What are the penalties for not registering my products with the SON?
      1. Seizure of goods by the Inspectorate and Compliance Directorate
      2. Payment of a fine.
      3. Prosecution

     
  • Is it legal to transfer the personal data you obtained legally to another person?

    No, its not legal. This is because the law prohibits anyone from transferring the data of a third party to another person without consent from the third party to do same even if the data was rightfully obtained in the first instance.
  • Why should I protect an industrial design?
    1. It gives commercial value to the owner.
    2. It protects the owner of the design from imitation of the design..
    3. It constitutes an asset of the company and it helps in fair return on investment.
  • When can I start renewal of the registration of my product(s) with NAFDAC?

    You can start renewal 6 months to the date of expiry.
  • What is share capital?

    The share capital in a private limited company is the amount of money invested by its owners in exchange for shares of ownership.
  • What is a trademark?

    A trademark can be any word, sign, symbol or graphic that you apply to your company, goods or services to distinguish them from those of your competitors; for example, a brand, product or company name, or logo. The trademark serves as a badge of origin for your business and its brands and products, and can consist of words, logos, slogans, colours and shapes, or a combination of all of these.
All FAQs
Call Us Now on +234 901 719 0079 Chat on WhatsApp