If you have any plans of taking OPM (Other People’s Money) and these other people happen to be institutions, this is the vehicle for you. That advantage notwithstanding, incorporating a company creates some degree of additional complexity and expenses as compared to opting for a business name. 

One of the advantages of a company is its ability to continue to exist beyond the death of its shareholders, unlike in a Business Name or a Partnership (except the Partnership Agreement states otherwise). Companies like Coca- Cola, Procter & Gamble, Apple etc. are examples. It is also a separate entity distinct from its shareholders as such it is possible for a company to be liable for an action whilst the shareholders are shielded from such liability.

On the other hand however, setting up a company can be expensive, there are numerous filing obligations (annual returns, resolutions, change of directors and/or shareholders etc.), and the oft mentioned double taxation.

Double taxation, as the name implies, means being taxed twice, and this is absolutely legal. So how does this happen? When a Company declares profits, it pays tax at a corporate level, i.e. as a company to the Federal Government through the Federal Inland Revenue Service (FIRS). And then when it distributes profits (dividend) to its members, each member pays personal income tax on that dividend to the government of the state where they are resident. So if you live in Lagos, the Lagos Inland Revenue Service (LIRS) would be the agency you will be paying your taxes to.

Having a company also limits your privacy. As a company, you are statutory obligated to file annual returns, which must be supported by the company’s audited accounts.
If you are looking at types of business entities, you should know the core people who will need for each of them. We have listed out the key roles you need to fill in your company formation. Find out