How to Choose the Structure for your Business in Nigeria (And Register It Properly)

Know all the processes, steps, and choices available to you when choosing the right structure for your small business

November 25, 2025

Starting a new craft or business can be a really exciting thing. You get the idea, you run it by a couple of your friends, and if you are lucky, some are ready to invest in this new business idea.

You can even have a physical outlet as your sales point of operations, running for years. But yet, you don’t have a business name, and for years, you have been nicknamed  “iya oni ta rice.”

If you are okay being “iya oni ta rice,” that’s fine. But if you are ready to switch your business up a notch, start legal incorporation of your business for better accounting, know what your business is worth in the market, and choose a business structure. Keep reading as we break it down bit by bit.

A free advice to any entrepreneur: before you finish your ideation phase, your business structure and registration should be one of the first things on your to-do list. Any serious person looking to offer products, services, or digital skills that people can purchase must be prepared to legitimize that business model.

The good news? Beginning is simple. You can either complete the process yourself through the CAC portal or hire a CAC agent to assist with your business registration.

For today, we will walk through the standard business structures anyone in Nigeria can set up for their registration.

Table of Contents

Types of Business Structures Available in Nigeria

1. Sole Proprietorship

As the name implies, “sole” means you solely own this business venture. When you register under this structure, your business gains and profits are yours to enjoy, and the same applies to potential losses incurred.

Under Nigerian law, this structure is best for small businesses with minimal risks attached.

How to Get Started:

  1. Visit the CAC portal

  2. Create an account

  3. Apply for name reservation

  4. Proceed to register your business name

2. Partnership

This structure is recommended for individuals who wish to co-own a joint venture. The good part is that the burdens, responsibilities, and profits can be shared among the partners. If you are looking to start a business and have a partner ready to join you on that adventure, then this is a great pick for your business.

How to Create a Partnership in Nigeria:

  1. Register under “Business Name” on the CAC portal

  2. Fill in partner details instead of just one owner

  3. Upload your partnership agreement (recommended, but not mandatory)

3. Special Purpose Vehicle (SPV)

A Special Purpose Vehicle (SPV) is a smart way for entrepreneurs to structure a partnership while protecting their entire company from any potential risks incurred from a partnership agreement. For example, you are Sassy’s Couture Ltd (fashion designer) and want to partner with Carol’s Bags Ltd (a bag seller) to sell bags. Instead of merging your entire company (Sassy’s Couture Ltd) into this new partnership, you both create an SPV. The SPV is a new company specifically for the bag business.

If this new venture fails, only the SPV is affected. Sassy’s Couture Ltd is still safe because the risk was isolated.

How to Create an SPV in Nigeria:

  • Both parties must already be an LLC or PLC

  • Register a new LLC (the SPV) together on the CAC portal

  • Draft a shareholder agreement outlining the scope of the SPV

Note: Only businesses registered as a Limited Liability Company (Ltd) or a Public Limited Company (PLC) can enter into an SPV agreement.

4. Limited Liability Company (LLC)

This is the most common and advisable structure for any kind of business. An LLC separates your business from your personal assets. If your business is sued, your personal assets are safe. Think of it as: you (individual) vs your company (its own individual).

With an LLC, you can apply for investments, grants, and loans across the world. But you will also need to define share capital and issue shares.

How to Create an LLC in Nigeria:

  1. Go to the CAC portal

  2. Reserve your business name

  3. Fill in the registration form

  4. Prepare and upload incorporation documents

  5. Pay filing fees (varies by share capital)

5. Corporation (PLC)

They are also called Public Limited Companies (PLCs). This structure is not for small businesses. PLCs handle big things like IPOs, public shares, and the global stock exchange.

With a PLC, the public can buy stocks and shares in your company.

How to Create a PLC in Nigeria:

  • Similar process as LLC, but choose Public Company Limited by Shares

  • Must have at least 2 directors

  • Minimum share capital of ₦2 million

  • Register through CAC

  • Comply with the Securities and Exchange Commission (SEC) if planning to list publicly

How to Search for the Availability of a Business Name on CAC

Before you even finish drafting your idea, register your business name first. Business names are unique, and there can only be one Google in the world.

Steps to Check Name Availability:

  1. Go to the CAC online portal

  2. Click on public search

  3. Type the business name you want in the search bar

  4. Click Search

    • If the name exists, the details of the registered business will show

    • If not, the name is likely available to use

Best Practices for CAC Compliance

1. Keep Your CAC Status Active

  • Visit the CAC online portal

  • Click on public search

  • Enter your business name to see if it is ACTIVE or INACTIVE

2. File Annual Returns

  • Sole Proprietorship & Partnership must file an annual return after the first 18 months, then every year

  • LLCs & PLCs must file an annual return one year after registration, then every year

Note: If you don’t file, your business won’t be deleted immediately,  but it will be flagged as INACTIVE. After years of neglect, CAC can strike it off the register.

Conclusion

Taking these legal steps can be daunting. Doing it yourself might leave you lost in legal gibberish. If this is your first time registering a business, contact the service of a CAC agent (CAC authorizes lawyers and chartered accountants).

Quick Checklist to get Started Today:

  • Select a business name

  • Contact a CAC agent

  • Research which structure best suits your business

  • Seek counsel

  • Pay the filing fee

  • Receive your CAC certificate and documents (RC number, TIN, date of registration).

  • For LLC and PLC, you also get your MEMART and CAC status report.

New to all this? Don’t panic. Just take it step by step.

Team Thrive

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