My name is Morenike Okebu and I’m writing this series to help all the Super Woman founders of SMES with some great Legal tips for their businesses. If you are the founder of an SME or start Up or are hoping to start one soon, then this series is for you. I know that so much goes into starting and running a business but as usual, we need to ensure that all areas that need to be covered are covered and my focus is on the legal aspect.
One of the first things that you need to have in mind when starting a business is the structure for your business. There are several options available to you:
- Sole proprietorship
- Partnership or Business Name
- Company limited by shares
If you choose to operate your business as a sole proprietorship then you need to know that this is the easiest form of business operation. You would not need to register your business at all with the Corporate Affairs Commission. However, there is a limit on what you can call your business. You would have to restrict the name you choose to your real name and your liability if anything goes wrong is unlimited.
You could also register a business name, this works if you are in partnership with someone. The benefits of a registering a business name is that you would have permission to conduct business in another name other than your name. It is also cheaper to register and allows you open a company account. However, your liability is still unlimited and you cannot own property in your business name.
EM ENTREPRENEUR; SEYI BANIGBE talks us through her businesses.
Another option available to you is to open a company limited by shares. This is a great option as you get 6 months tax free upon registration. Your liability is also limited by the amount of shares your company has and you can own property in your company name. However, it is more bureaucratic as you need to comply with procedures such as having company meetings, preparing annual returns and so on to be in good standing with the Corporate Affairs Commission.
When you have a great idea and you want to execute it, you should always consult a lawyer who would be able to advise you on the best business model for you. I have several clients who mistakenly registered business names when a company was more suited to their needs. Others have registered business names when they should have simply remained sole proprietorships. If you need any more information on this, feel free to contact me on morenike@renilegal.com. Reni Legal is a legal business which offers specialised services for SMES and Start Ups and is a sister company to GM George – Taylor & Co.
Next episode of Legal Tips For The SME Super Woman we’d discuss BUSINESS OWNERSHIP
Thank you for reading and have a great week.
