EBR - Easy Business Registrations

Introduction   NGOs, Not-for-Profits, Associations, Foundations, Clubs, Friendly Societies, Charitable Organisations, Religious Organisations – whatever you chose to call them, are all registered as Incorporated Trustees.  As not-for-profits, the general notion is that NGOs are exempt from taxes. However, NGOs do pay taxes to the government when they make profits on certain transactions. In this article, we will discuss the various taxes that NGOs are liable to pay, and when they are liable to pay them. Like business names, NGOs also have basically 5 taxes they should concern themselves with: 1. Capital Gains Tax (CGT) 2. Personal Income Tax (PIT) 3. Withholding Tax (WHT) 4. Stamp Duties (STD) 5. Value Added Tax (VAT) Capital Gains Tax (CGT) NGOs will be liable for CGT if they sell certain of their assets. Chargeable assets under CGT include shares, non-Nigerian currencies and real estate. The rate of CGT is 10% of the profits made from the sale. NGOs that make profits by s

Introduction Business names include Sole proprietorships and partnerships. Are they obligated to pay taxes to the government? If so, which taxes? Before discussing the few tax obligations of business names, we must bear two things in mind.  First is the relationship between business names and their owners. Under the law, business names and their owners are one and the same. So, tax obligations owed by business names are ascribed to their owners. For instance, if ABC Enterprise owes Capital Gains Tax to the government, its owner is also equally indebted to the government for the same tax.  Second is the tax authority responsible for collecting taxes from business names. Unlike companies and NGOs which pay their taxes to the government through the FIRS, business names pay their taxes to the government through the Internal Revenue Service of the State where they operate. This follows from the fact that taxes on business names are regarded as personal taxes, because they are no

Introduction This article is one in a series to examine tax obligations of the three major registrations under the CAC: Companies, Business Names, and NGOs.  Companies have the greatest tax obligations. Under the law, with regards to their tax obligations, companies are grouped into three: small, medium, and large. They are differentiated by their annual turnover. A company qualifies as large when its annual turnover is N100 million and above; medium, when its annual turnover is greater than N25 million but less than N100 million; and small, when its annual turnover is N25 million or less. So, depending on its annual turnover for a given year, a company’s status can fluctuate from small, to medium, and to large.  Small companies have the least tax obligations. Therefore, it may not be uncommon for certain companies to lie about their true state of affairs in order to evade taxes. This will not speak well of the company, especially one seeking to grow large.   A total of 9 t

NGOs are now registered under Part F of the Companies and Allied Matters Act (CAMA) 2020. Under the CAMA, NGOs are referred to as Incorporated Trustees, and they include such bodies as NGOs, churches, associations, charitable organisations, scientific or professional bodies.  Registering an NGO with the CAC is not the end of the obligations of the promoters. It is the beginning. In order to run an NGO successfully without any disturbance from the government, there are several obligations that the NGO must fulfil. These obligations are divided into three sets: CAC obligations, tax obligations, and other obligations.  CAC Obligations 1. NGOs are required by the CAMA 2020 to file Bi-annual Statement of Affairs with the CAC. The first biannual statement of affairs must be filed not later than the 15th day of July and must be for the period of the first half of the year – January to June, while the second statement is for the second half of the year – July to December, and must

Generally, Limited Liability Companies are regarded as being more advantageous than business names. In reality, they both have advantages and disadvantages over each other. However, LLCs have more advantages over BNs in several respects. Many of these advantages will be considered in this article under the following headings: CAC Matters, Tax Matters and Status. Advantages of LLCs over BNs CAC Matters 1. LLCs come with Tax Identification Numbers (TIN) at registration. This is contained at the bottom of the certificate of incorporation of LLCs. The purpose of the TIN is primarily to identify the company for tax purposes and to enable it open a bank account. BNs when registered do not come with TINs. Owners of BNs would have to apply manually for their business TINs at the nearest FIRS office. 2. LLCs have the advantage of combining several and varying objects in their memorandum and articles of association for registration. Presently, these objects can be as lengthy as 10 or

Many Nigerians, after incorporating their companies with the CAC, believe that they don’t owe any other obligation to the government. Some, who are not that naive, still hold to the belief that they owe the government no obligations after their registering their business. If it comes to the worst, they think, they would fold up the company.  No wonder then that many Nigerian companies don’t exist for long. In fact, some business men intentionally evade performing their obligations to the government for the purpose of gaining more profits, and after wards, when the government is on their trails, they declare the company bankrupt, and fold it up. Then they go on ahead to incorporate another company. And on and on.  Some people have become expert incorporators of companies. They incorporate a company solely for a particular purpose, like getting a contract from the government, or securing loan from the bank, or grant from a donor organisation. And once they get the money, the

For most small business owners, registration of their businesses is an ordeal task, and once that task is fulfilled, they think that owe no other obligations to the government. But that is far from the truth. Fortunately, or unfortunately, registering your business is just the beginning of a statutory mandate. In other to keep within the legal parameters of the law, there are several obligations that your registered business must meet, whether or not you have started operating the business. This is why it is advisable that, unless you have started or are about to start your business, don’t register it; because, from the moment you register your business, time to meet those obligations start running against you. This article takes a look at a list of some of those obligations that your registered business owes to government agencies. Obligations to the Corporate Affairs Commission Filing of annual returns Filing of annual returns is a compulsory post incorporation filing und