STARTING YOUR BUSINESS IN COMPLIANCE WITH THE LAW Starting a business can be a difficult step to take; potential entrepreneurs have lots of issues to worry about. The challenges of marketing, human resource and surviving in the economy usually top the list of most entrepreneurs. However, as sweet as an entrepreneur’s marketing and business plan may appear, it could be destroyed by an incompetent legal framework. A good business plan should have a solid legal foundation. Failure to provide this foundation could throw away the capital planted by the entrepreneur and in some circumstances put him/her in jail. Starting your Business The first legal hurdle to race over at the starting point is incorporation/registration of business. At this point, it is essential to note that, am entrepreneur has two options. He/She could either incorporate a company or register a business name. The key difference is that, a company in the eye of the law is an artificial person having similar right like a normal human being while the business name is merely a license to carry on business under name. Another difference is that a company cannot be formed by less than two persons while a business name can be formed by one person. In practice, business name is suitable for sole proprietorship, partnership, professional services, micro-risk investments and small scale business. The nature of the business will however determine which option is best for you. There are six different types of companies, kindly consult your Solicitor on advice as to which of the six types or business name is suitable for your business. Should your business be a partnership, you may need a partnership agreement which will spell out your rights, obligations and entitlements under the business. However in cases of companies, the Memorandum and Articles of Association seems mostly sufficient, however you may in some instances need a shareholders agreement or a joint venture agreement. It is in the interest of your business that you seek professional advice from your Solicitor. After Incorporation/Registration Having incorporated/registered the business at the Corporate Affairs Commission (CAC), then the business takes legal shape. The next step is to consider if there is any statutory law, stipulating certain condition(s) for carrying on such business. For instance, in Lagos State, persons who intend to do business of selling motor vehicles or its parts must register within 30 days of commencement of such business (See Sections 1 & 2(1) of Motor Vehicle and Motor Vehicles Spare Parts Law of Lagos 2004) To mention few of such businesses, a business of sand dredging in Lagos requires you to obtain permit from the office of the Special Adviser on Mineral Resources and Development, failing which, you will be liable for 6 months imprisonment or N1,000,000 fine (See Section 2 of Regulation of Sand Dealings and Dredging Operations Law 2004). Business of Estate agency also requires registration pursuant to Lagos State Estate Agency Regulatory Authority Law 2007. Failure to register as an Estate Agent in the case of an individual attracts a penalty of N100,000 and that of a company attracts a penalty of N500,000. The Hotel Licensing Law of Lagos 2010(as amended) also requires persons in hotel and tourism center business to register pursuant to Section 4 of the Law and further renew their license annually. The law also provides regulations for running hotel and tourism business. An example of such regulation is a requirement to display license on a conspicuous place in the hotel. Please consult your Solicitor on legal advice/opinion as regards the requirement of law guiding your proposed business. After complying with the registration and license requirements, then the next thing to do is to consider if what you sell (goods and service) falls under the goods taxable by the value added tax. If it does, then you have to register with the Federal Inland Revenue Service for VAT remittance. After all these, you business have taken legal shape, you now need those marketing and entrepreneurial skills to keep it moving at the pace you desire. Definitely, you will be considering labour, you should then consider the provisions of the 2014 Pensions Act for regulations as to the deductions you will make from employees salary for remittance to their pension funds administrators. Consult a Solicitor of your choice to take you through these legal hurdles, so that you will be able to confidently certify you operate business in accordance with the law. On a final note, as insignificant as it appear, book keeping and adequate record keeping is essential for every business. The keywords are that, you never can tell when you will need those documents, keep them well. Thank you. For further enquiries, please email dapodaniel@yahoo
Posted on: Sat, 11 Oct 2014 10:43:19 +0000
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