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The Difference Between A Business Name And A Limited Liability Company

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The Difference Between A Business Name And A Limited Liability Company - ESY MEDIA
The Difference Between A Business Name And A Limited Liability Company

Are you thinking of registering your business, but not sure of the differences between a business name and a limited liability company? Or you don’t know the various legal business structures in Nigeria?

Well, this post will clear your curiosity of the differences between a business name and a limited liability company.

When starting business, a lot of entrepreneurs are faced with difficulty of choosing the right business structure. This to me can be attributed to two major factors; the lack of knowledge pertaining to the various forms of business in Nigeria and the notion of keeping everything at a low cost for those who know the types of business structures.

However, while maintaining cost is important, we must also consider the purpose and future of the business.

While both business name and a limited liability company is regulated by the Corporate Affairs Commission, there are quite a number of differences between the both.

Before I enumerate the difference, a business name is registered under Part B of the Companies and Allied Matters Act. It’s the name you register to do business with.

Having said this, here are the differences between a business name and a limited liability company.

RECOMMENDED: Various Business Legal Structures In Nigeria

 Difference Between A Business Name And A Limited Liability Company

Business Name:

A business name is most suitable for solo-preneur; that is a one man business.

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One of the remarkable thing about a business is it registration number which begins with the letter BN

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Another difference is that a business name doesn’t end with the word limited. Most times a business name goes with the word, enterprise or venture

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 A business name doesn’t give the owner a separate legal identity. Thus, the liability of the business is that of the owner – if the business owes money, the assets of the business and the owner can be confiscated to settle the debt

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A business name doesn’t have shareholders or directors. The business is registered and run as sole-proprietorship or partnership

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A business name is affordable  to register and run

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RECOMMENDED: Benefits Of Registering A Business Name

Limited Liability Company:

A limited liability company can be registered as either a public or private company. The registration of a limited liability company is regulated under Part A of CAMA.

Here are the distinguishing factors between a limited liability company and a business name.

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A limited liability company makes use of the word limited at the end of its name, abbreviated as ltd for private companies, example Farm Chain Limited and plc for public companies, example – First Bank Nigeria PLC

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Another identifiable factor is that the registration number of these types of company starts with RC as opposed to the BN used for business name

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Businesses registered as a limited liability company has a separate legal identity – different from that of its owners. The company can enter into a contract, borrow money in its own name, buy properties like a natural person

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The liability of the company is not that of its owners

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A limited liability company has directors and shareholders

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A company is expensive to registered compare to a business name

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CONCLUSION:

Each of these forms of business is unique, so also is the tax paid by them. A limited liability company pays more tax than a business name.

Remember before you opt for any of them; consider what you need in your business and where you intend to be.

It’s also important to state that you can convert a business name to a limited liability if you so which in the future.

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So, tell me, has this article Difference Between A Business Name And A Limited Liability Company, helped you?

esy

Helping Entrepreneurs, SMEs to grow and scale their businesses. WhatsApp: +234(0)9025411894

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