Starting your entrepreneurial journey is exciting, and one important legal step is registering your venture with the Corporate Affairs Commission. However, it’s essential to know what type of registration you need—whether it’s a business name or a company name.
Many business owners mistakenly believe that a business name and a company name are the same, but there are important differences between the two.
In this article, we’ll look at what a business name and a company name are, as well as the main differences between them. This will help you make informed decisions when registering your venture.
Does a Business or Company Name Matter?
Your business or company name is often the first thing a potential customer will remember when searching for your brand online. It represents your brand’s identity and plays a crucial role in building customer loyalty and brand consistency, which can lead to long-term growth in revenue.
Having a strong business name is essential for your brand’s success, and understanding the differences between the types of registrations is important for every business owner.
What is a Business Name?
Before defining a business name, let’s clarify what a business is. A business is any activity carried out to make a profit. This can include various operations such as partnerships, sole proprietorships, and corporations, and it can vary in structure, size, or complexity.
In simple terms, a business involves exchanging goods or services for profit.
So, what is a business name? A business name is the title under which a venture operates for commercial purposes, also known as an enterprise. The Companies and Allied Matters Act (CAMA) 2020 defines a business name as the style or name under which businesses operate, whether in a partnership or otherwise.
When you register a business name, you are formally registering your venture with the Corporate Affairs Commission (CAC), allowing you to legally operate under that name.
Once you successfully register your business name with the CAC, you receive a Certificate of Registration and a Certified Extract of Registration Information. This ensures that your business is recognized and compliant.
Requirements to Register a Business Name with the CAC
To register a business name with the CAC, you need to provide the following:
- Two preferred business names
- Your business address
- Your residential address
- The nature of your business
- An identification card (such as a National Identity Card, voter’s card, or driver’s license)
- A passport photograph
- Your phone number
- Your email address
What is a Company Name?
A company consists of people who come together to achieve a common goal of doing business and making a profit. Once registered, a company becomes a separate legal entity distinct from its owners.
A limited liability company is a specific type of company that limits the personal liability of its owners in case the company incurs debts. Companies can be either private or public and can be classified into three types based on their structure: limited by shares, limited by guarantee, or unlimited.
- Limited by shares: In this case, the owners own shares in the company, which represent their ownership stake.
- Limited by guarantee: Here, the members’ liabilities are limited to the amount they agree to contribute to the company’s assets if it faces bankruptcy.
This means that an individual’s liability for the company’s debts is limited to the capital they invested or the guarantee they provided.
What is Company Name Registration?
Company name registration legally establishes your business as a public or private limited company with the Corporate Affairs Commission (CAC). It provides your company with a legal identity separate from its owners.
When registering your company, you’ll need to provide the following details or documents:
- Two preferred names for your company
- Company address
- Nature of business
- Residential address
- Memorandum and Articles of Association
- Share allotment
- Phone number
- ID card of directors
- Signatures of directors
Company Name vs. Business Name Registration
Now that you understand what a business name and a company name are, as well as the requirements for registering each, let’s explore their differences.
As a business owner, you may choose to convert your business name to a company name. Several factors can influence this decision, such as the need to raise capital, apply for loans, or acquire assets.
Regardless of your reasons, make sure to complete the process correctly through the CAC portal and provide all necessary documents and proof.
Wrapping Up
Understanding the difference between registering a business name and a company name is crucial for any aspiring entrepreneur.
While both terms relate to commercial activities, it’s important to recognize their differences in terms of legality, taxation, liability protection, and more.
If you’re considering registering your business or company with the CAC, take the time to analyze your goals and long-term plans. This will help you make the best choice for your venture.