Frederick Nkobowo: Why Registering your Business is Super Important

There was an emperor who loved new clothes so much that he bought them almost every day. One day, some swindlers posing as cloth weavers came into the city. They bragged that they could weave the most splendid of fabrics. According to them, the clothes made from their fabrics were always fantabulous and had the power to become invisible to stupid people or persons unfit for their political positions.

On getting to know these weavers and their fantabulous clothes, the emperor wanted the invisible clothes they spoke about. He reasoned that if he wore them, he would get to know the people in his kingdom who were unfit for their political appointments and those who were stupid (since they won’t see the emperor’s clothes). So he paid the weavers to start weaving this unique fabric that could be used to make invisible clothes.

The weavers got to work. They set up their looms and pretended to weave. There was nothing on the looms but they moved their hands as though they were weaving the special fabric. The emperor sent his old honest minister to inspect the progress of the weavers’ work. The minister saw nothing but to avoid being considered stupid or unfit to be minister, he told the emperor that the special fabric was the best ever made.

The emperor came to see the special fabric by himself. He saw nothing too but so as not to appear stupid or unfit to be emperor, he told the weavers they were doing well. The weavers finished their job and got their pay. The emperor eventually wore his new invisible clothes and went on a procession around the city, stark naked!

How Does the Emperor’s Story Relate to your Business?

For many start-ups and SMEs, their companies are like the emperor’s new clothes; they do not exist. And since no one wants to look stupid by telling them this, no one tells them the truth. So for these sets of SMEs and startups, a money-spinning venture may exist, but a company (or an actual business in the eyes of the law) doesn’t exist.

Let me explain. A company is a creation of the law and once it is created, it is seen as a living, breathing and walking being – almost equal to a human being, and many times even treated as one. Consequently, the company can sue, be sued, and even buy/own its own property just like any human being can do. As beautiful as this is, until a company is formally born (by the process of registration or incorporation) you cannot presume, think or imagine that it exists.

In various Nigerian cities, it is common to see persons who fry and sell akara by the roadside. As legitimate as that endeavour is, it is not a company until it is registered. You may think, why register or incorporate an akara business? Wouldn’t that be ridiculous? Actually, it is not. It depends on your goals for the business. Starbucks is a business that sells tea/coffee. Now think of our northern comrades who do something similar here in Nigeria. Even KFC sells well-fried chicken. It all depends on what goals you have for your business and what you see the commercial selling of tea or frying of fowl as – a business or something just to keep your bank account occasionally beeping.

In essence, anyone who wants to build a company or a long-lasting business must first of all be sure the business exists in the eyes of the law. To get this done, one has to choose an appropriate business structure and register/incorporate the business with the Corporate Affairs Commission (CAC).

Are there advantages to registering your business?

Yes, there are advantages to registering your business. And no, registering your business is not some mere fanciful or needless hoax. Precisely, business registration helps you:

• Develop a unique identity and compete with bigger businesses.
• Build a corporate image and earn more trust and credibility.
• Protect your assets from being consumed by your business’ liabilities.
• Structure your business for long-term growth.
• Get better access to government funding.
• Get better access to loans and angel investors.

If you have registered your business already, congratulations but there’s more to be done. Remember that what I’ve written is not legal advice. Where you desire legal advice, do well to speak with your lawyer. Cheers to your business success!

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Featured image by Jopwell on Pexels.