A Business Name is the name or style under which a business is carried on. Business Name can be registered as a Sole Proprietorship or Partnership business. Business Name helps to distinguish one business from another.
One may ask: Must I register my Business Name? You will find out shortly.
A Sole Proprietor does not need to register his business if he carries on his business under his surname, his surname and the initials of his forename, or under his full name. For instance, if I am doing business with my name – Ifeoma Ben, Ben & Ben, or I. Ben, I don’t need to register it. However, if I decide to do business under the name – Ifeoma Ben & Co, then I must register it.
Therefore, where business owners or group of partners use their actual names to operate their business, they need not register the name. But where they use assumed name, they must register it.
It is important to note that commercial banks in Nigeria require incorporation documents when you want to open a corporate account for your business. So, even if you operate your business in your full name, surname or surname and initials of your forename, you may need to register it for the purposes of operating a Corporate Account.
Now, why should a young Entrepreneur decide to use a Business Name instead of a Limited Liability Company? Business Name is suitable for small businesses. It is easy and cheaper to register and also easy to manage. For an Entrepreneur who is just starting up with a small income, you may consider registering a Business Name.
However, Business name has some limitations as against companies. In Companies, the Shareholders are not personally liable for the Company’s debt while in Business name, registered as Sole Proprietorship and General Partnership; the owners are personally liable for business debts.
Companies do not expire upon the death of the Shareholders, directors or officers. But where a Sole Proprietor dies, the business dies with him. The death of a Partner can also lead to the dissolution of the Partnership.
Business Names are easy and cheaper to set up and also easy to operate. Companies, however, cost more to set up and run.
Your choice of a business organization to register should depend on the type of business you want to do. Be properly guided. Seek legal advice and make the right choice.