Nigeria is a great place to start your business, whether a small scale or a large scale business, due to a number of reasons. The first is that the governmental policies in Nigeria are not ones that crush the private sector—instead, they help the private sector bloom. The second is that the population of Nigeria favors the growth of businesses.
Being the most populous black nation in the world comes with its gains. Numbers, you should know, are just what you need for your business. Whether a citizen or someone who has just moved to the country, this is how you start a business in Nigeria:
Is it Hard to Start a Business in Nigeria?
Basically, the answer is No. It is not hard to start a business in Nigeria. As mentioned earlier, the governmental policies in Nigeria are such that the private sector is allowed room to thrive. Though sustained mostly by the exportation of oil, the Nigerian economy also thrives on the private sector.
For this reason, you will find many, many commercial enterprises and businesses in Nigeria, such as Dangote, Flutterwave, etc.
To start a business in Nigeria, more often than not, you only need a couple of things such as:
- A clear description of what kind of business you want to start: As you most probably already know, there are many different kinds of businesses. Be clear about which one you want. Be clear about the services you want to provide and the group of people your services will be directed to. In Nigeria, you’ll do a lot better if you target the average/middle class of the population.
- Funds: you need money to start a business in Nigeria, just as it is with every other place in the world. The money has to be enough to start and also enough to keep the business running; you know, handling the taxes and all of those.
- Permit from the government: before you establish and run a business in Nigeria, you must be permitted by the government. You must have a residency permit, a bank account, and a tax payment system.
Taxes in Nigeria
All businesses and enterprises are expected to pay taxes in Nigeria, as the government runs on the monies of taxpayers. There are different kinds of taxes in Nigeria. Every business owner should be aware of the following:
- Value Added Tax: This tax is paid by customers or consumers when they purchase goods or services. Businesses in Nigeria do not pay the Value Added Tax directly to the government. However, they are expected to include the VAT in all their dealings with customers so that this tax can then be paid to the tax body directly.
- Personal Income Tax: This tax is expected to be paid by individuals and businesses registered under the government. The personal income tax has to be paid to the State Inland Revenue service.
- Withholding Tax: This is a system of taxing where the personal income tax is collected in advance, at specific points and occasions. Withholding tax isn’t viewed as a separate tax on its own.
- Company Income Tax: This is the tax slashed out of the profit companies operating in Nigeria make. The Federal Inland Revenue service administers this tax and charges 30% for every profit a registered company makes annually.
- Education Tax: The education tax is payable by every company registered in Nigeria and is charged in relation to profit. The tax amounts to 2 percent of profits made and is used to finance the growth of Nigeria’s education sector.
Please note that very small-scale businesses in Nigeria are exempted from paying any taxes. For example, a company that does not have a gross annual turnover of up to N25 Million is not expected to pay the company income tax. So, you won’t have to worry much if your business is still small and growing.
Cost of Living in Nigeria
The cost of living in Nigeria, compared to other countries in the world, such as the US and France, is relatively low. But it depends on a few factors, the paramount being location.
Please note that ‘cost of living’ as used in this article refers to the cost of accessing basic needs such as housing, food, business, employment, etc.
In the urbanized areas of Nigeria, such as Lagos and Abuja, the cost of living is considerably higher. This might have a lot to do with population density.
Lagos is known to be the most populated State in Nigeria, and so one can only expect that the demand for certain products and services is going to be high, and thus there will be price hikes. A typical example is housing. Housing is expensive in Lagos, chiefly as a result of the dense population.
The same can be said about Abuja.
On average, you will be fine surviving in Nigeria with about 500 dollars every month.
How to Register a Business in Nigeria
Every business that the government must recognize in Nigeria has to be registered under the Cooperate Affairs Commission.
To register a business in Nigeria, you are expected to have the following:
- A business name
- A filled pre-registration form
- Relevant documents which include:
- Memorandum of Association
- Stamp Duty/Fee
Please note that before your company or business is registered, it should have up to two to fifty members, all of whom should be up to or more than eighteen years old. All members have to be mentally stable, too, without any pending criminal allegations. Your company ought to have a minimum share capital of ten thousand Naira, too.
Take the necessary documents to the cooperate affairs commission. Be sure to visit with your lawyer or legal team. Necessary steps will be taken at the cooperate affairs commission, and your business will be registered for you.
Read: Facts About Lagos State
Open a Bank Account in Nigeria
To open a personal bank account in Nigeria, you only have to go to the bank of your choice with the necessary documents, and an account will be opened for you in no time. The process isn’t tedious at all, and you can easily be done in just a couple of hours:
The documents you need are:
- Proof that you are legally living in Nigeria. If you are a Nigerian, you should present your utility bill and your ID cards. If you are a visitor and plan to stay for a while, you should present your residency permit, your VISA, and your passport.
- A BVN: The BVN, or bank verification number, is a requirement for opening a bank account, as it offers added security and makes banking in Nigeria easier. The bank verification number is only issued once, and after that, you can open as many bank accounts as you please. The bank you choose to open your first account with issues you with your BVN.
If for some reason, you need to open a cooperate account, then you need:
- Document validating address
- Passport photographs
- The ID of every signatory
- Residence permit
- Certificate of business registration
- Search report
- Memorandum of Incorporation
For many banks, the minimum amount of money required to open a corporate account is fifty thousand Naira only.
Finding a Tax Advisor in Nigeria
The truth is, your business needs a tax advisor, especially if it’s going to grow into a large-scale business.
The good news is that tax advisory services are not difficult to come by in Nigeria. Companies that offer tax advice can easily be found online or offline and usually consist of a team of lawyers and accountants well vested in tax dealings.
Check such companies out in adverts and social media promotions. Be sure to also confirm their credibility. Read customer reviews and be sure that they are great at what they do.
Layout your terms and payment plans as you reach an agreement with them and begin talks with their consultants. Some renowned tax advisors in Lagos are Zadoc, Beckley Consulting Limited, Masal Consults, etc.
Read: I Want to Move to Lagos
Getting a Trade License
A trade license is a government-issued document that permits an individual to conduct businesses within the location overseen by that government.
To get a trade license in Nigeria, what you need is:
- Certificate of Incorporation
- Copies of tax clearance documents.
- CAC forms C02 and CO7.
- Company shareholding
- Residence Permit, etc.
Take these to the cooperate affairs commission.
Get the Right Residence Permit
To open a business in Nigeria as a visitor or one who isn’t a citizen of Nigeria, you need a residence permit.
The Nigerian Immigration service issues Residence Permits after proper evaluations have been carried out and an individual is deemed fit to live and run a business in Nigeria.
The right residence permit you should be getting in Nigeria is the Green Card, which is given to naturalized foreigners.
To get this card, visit the immigration service with your necessary documents, and it’ll be processed for you in no more than a month.
Photo by Cytonn Photography on Unsplash