SMALL ONE-MAN BUSINESS - BENEFITS OF REGISTRATION WITH THE CAC AND SMEDAN.

Few days ago, one of my viewers sent me an email with the poser on whether it is compulsory for him to register his small one-man business with the CAC and SMEDAN. Here is my legal advice to him, I thought to share it here for the benefits of all.

CORPORATE AFFAIRS COMMISSION (CAC) 

It is not compulsory to register your small one man business with The Corporate Affairs Commission (CAC) but it is extremely necessary that you register your small business with the CAC if you want to enjoy the following benefits:

1. Your business name will gain relevance on the CAC portal and database any day, any time.

2. Your business name takes priority as the CAC will not register any other name exactly or similar to your registered business name.

3. Security of name till eternity: Failure to register your business name as soon as you commence business may expose you to the risk of losing the name if you take step to register it in future since another business-oriented fellow may have possibly registered your exact business name. The effect is enormous, you may be forced to register a new name unknown to your already-built-client base, you may lose customers as a result and tend to start from square one in building your client base.

4. If you anticipate growth of your small business in the near future, it is ideal to register your business name now and secure the name in case you desire to convert the business into a company.

5. Registration of your business name with the CAC entitles you to open a bank account in the name of the business so registered. With this, you will have an edge over fellow businesses that are unregistered. Think of the credibility your business gets when you give your customer/client a bank account details in the name of your business rather than one in your individual names.

6. Registration of your business name hypes customers trust and confidence in doing business or dealing with you. This also builds your business Goodwill dramatically.

SMALL AND MEDIUM ENTERPRISES DEVELOPMENT AGENCY OF NIGERIA (SMEDAN).

On the other hand, The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) registration/certificate is not evidence of registration of a business name under the Companies and Allied Matters Act, 2020 which establishes the Corporate Affairs Commission (CAC). No. It is not.

Also, SMEDAN certificates are not like the CAC certificate in terms of their legal strength, notwithstanding the fact that SMEDAN is also a government agency like the CAC. 

Another peculiar difference is that while CAC registration is for all businesses (companies and enterprises) and incorporated associations, SMEDAN Registration is meant only for small and medium businesses.

The benefits of registration with SMEDAN are:

1. It helps a small or medium scale business owner access loan facilities or funds from the government or loans from microfinance banks.

2. Also, registration with SMEDAN entitles a registered business to enjoy free accommodation/relevance in the SMEDAN database which habours all small and medium scale business enterprises in Nigeria.

You can register your small business name with both CAC and SMEDAN for the purpose of the benefits enumerated above.

These and so much more are juicy benefits of registration of your business name with the CAC and SMEDAN. As you can see, you have nothing to lose registering your small one man business, rather plenty to gain.