Choosing the best structure for your business– sole proprietorship or Limited Liability (LLC)?

Choosing the best structure for your business– sole proprietorship or Limited Liability (LLC)?

October 19, 2018

You probably already have a rough idea of how you want your business structure to be but may still have a little difficulty understanding whether you should set up a limited liability company or a business name/sole proprietorship. When deciding on the appropriate structure to pick, many people consider the incorporation cost the most important factor instead of the most suitable for their particular business. It is important that when making the decision on which business structure to choose you put into consideration;

  1. How many people will own the business and;
  2. What types of services or products the business will provide.

If you know that you will be the only owner of the business, then a sole proprietorship may be your best bet as opposed to a partnership or limited liability company. But if your business will engage in high risk activities, rack up large business debts and have a significant number of investors, then you will not only need to buy insurance, but may want to consider forming an entity that provides personal liability protection which can shield your personal assets from business debts and claims. If you plan to seek investors in order to raise capital or wish to give your employees stock options, then your best option is to incorporate a company.

If these issues raised are duly considered, then choosing a legal structure becomes easier to decide on.

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

  • 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.

  • 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 benefits of Registering with SON?
    1. Product traceability in the Nigerian market
    2. Detection of counterfeit products
    3. Barriers to the circulation of substandard goods
    4. The official SON Product Registration Logo and number are displayed on registered products.
  • How many directors do I need to start a company?

    A minimum number of two (2) directors is required to form a company.

  • 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.

Call Us Now on +234 1 280 3791