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)?

July 23, 2019

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 is the first thing I must do to register a business in Nigeria?

    To register a business in Nigeria; you would need to conduct a name search of the business. You can achieve this using your CAC-CRP account.
  • What is a testimonium clause in an agreement?

    This is the part of the agreement where the witness attests to have witnessed the execution of the agreement.
  • Is there a penalty for late renewal of registration of products with NAFDAC?

    Yes, there is a late renewal fee, which is dependent on the category of the product.
  • What is classified as personal data?

    Name, photograph, personal health/bio information, account/financial information, phone number, Address, date of birth, place of birth, Email address, etc.
  • When registered, how long does a patent last for?

    Once granted, a patent is valid for 20 years.
  • What are the product categories available when registering with NAFDAC?

    The product categories include: Food, Cosmetics, Drug, Medical Device, Agro-Chemicals & Pesticide, Veterinary Products, Vaccines & Biologicals, Herbal and Nutraceuticals and Water
  • 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.
  • Can I trademark my logo and name separately? Why is this a good idea?

    Yes you can. The advantage is that it gives you the opportunity to have more than one logo or the opportunity to change your logo easily as opposed to registering the name and the logo as one trademark.
All FAQs
Call Us Now on +234 901 719 0079 Chat on WhatsApp