What is a Sole Proprietorship?

A Sole Proprietorship is a business that can be owned and controlled by an individual, a company, or a limited liability partnership. There are no partners in the business.

A sole proprietorship is very different from a Limited Liability Company (LTD), or a Limited Liability Partnership (LLP), in that no separate legal entity is created. As a result, the business owner of a sole proprietorship is not exempt from liabilities incurred by the entity. If you own a sole proprietorship, you are entitled to all profits and are responsible for all your business’s debts, losses, and liabilities.

SplashDict's services include facilitating registration with the Corporate Affairs Commission (CAC), obtaining your Tax Identification Number (TIN), and other comprehensive business support.

Sole Proprietorship Registration

Register your Sole Proprietorship Business in Nigeria

Starting your own business as a sole proprietor can be a thrilling idea. However, the process of getting your business registered might feel like a maze. That's where we step in to make things easier for you.

Here's how SplashDict's team of CAC-accredited consultants can help:

  • Business Name Search and Reservation: We'll search to see if your desired business name is available and then reserve it with the Corporate Affairs Commission (CAC) to keep it safe for your use.

  • Documentation Preparation: We'll help you get all the necessary documents ready for registration hassle-free.

  • Submission and Processing: Once your documents are ready, we'll handle the submission process on your behalf, ensuring that all requirements are met and that your application is processed efficiently by the CAC.

  • Tax Registration: We'll assist you in registering for taxes and obtaining a Tax Identification Number (TIN) with the Federal Inland Revenue Service (FIRS).

  • Ensuring Legal Compliance: Our team ensures your business registration follows all the laws and regulations in Nigeria, including getting any needed permits or licenses.

  • Delivery of documents: As soon as your business is registered at CAC, we will deliver a full set of digital company documents to you, including; Certificate of Registration and Status Report.

  • Secure Digital Storage: We keep your documents safe online for easy access whenever you need them, at no extra cost. No waiting or paying fees like on the CAC portal.

  • Free Business Bank Account: We offer you a choice of up to 8 business bank or payment institution accounts, including popular ones like GTB, UBA, and First Bank.

  • Free Domain Name: To help establish your business online, we'll give you a free .com or .com.ng domain name for a year, through our partnership with a leading domain provider in Nigeria.

Packages

Find the best package to start your business:

Standard

₦25,000

  • Registration of Sole Proprietorship Business Name.
  • CAC Filing Fee Included.
  • Preparation and submission of required documents.
  • Digital delivery of Certificate of Registration and Status report.
  • Digital Storage of Documents.
  • Registration and provision of Tax Identification Number (TIN).
  • 2 to 7 Business Days Delivery.

Premium

₦60,000

  • Registration of Sole Proprietorship Business Name.
  • 1-year Full Corporate Secretarial Support.
  • CAC Filing Fee Included.
  • Preparation and submission of required documents.
  • Digital delivery of Certificate of Registration and Status report.
  • Digital Storage of Documents.
  • Registration and provision of Tax Identification Number (TIN).
  • VAT Registration.
  • PAYE Registration.
  • Business Seal.
  • Business Bank Account opening assistance.
  • Free .com or .com.ng Domain Name.
  • 2 to 10 Business Days Delivery.

Features of Sole Proprietorship Business

How Does a Sole Proprietorship Work?

  • Lack of Legal Formalities: A sole proprietorship does not have a separate law to govern it. And so there are not many special rules and regulations to follow. 

  • Liability: Since there is no separation between the owner and the business, the owner's personal liability is also unlimited. So if the business cannot meet its debts or liabilities, it will fall upon the proprietor to pay them.

  • Risk and Profit: The business owner is the only risk bearer in a sole proprietorship. If the business fails or suffers losses, the principal will be affected. However, the principal also enjoys all the profits from the business. 

  • No Separate Identity: In legal terms, the business and the owner are the same. No separate legal identity will be bestowed upon the sole proprietorship. So the owner will be responsible for all the activities and transactions of the business.

  • Continuity: Death, retirement, bankruptcy, insanity, imprisonment, etc will affect the sole proprietorship. In such situations, the proprietorship will cease to exist and the business will come to an end.

requirements

Requirements for Registering a Sole Proprietorship in Nigeria

To complete the Registration of Your Sole Proprietorship Firm in Nigeria, you'll have to provide the following details upon Submission;

  • Proposed Name of the Business (2 Names).
  • The objectives and nature of business.
  • Address of the Business (Can also be a residential Address).
  • Particulars of the Proprietor including - Name, occupation, residential address, email address, phone number, and means of identification (National Identification Card, Data Page of International Passport, Driver’s Licence, or Voter’s Card).

Benefits of Sole Proprietorship Business

Sole proprietorships have several advantages that make them popular:

  • Easy and inexpensive to form: Sole proprietorships have few legal requirements and are not expensive to form, making them the business organization of choice for many small companies and start-ups.

  • Profits all go to the owner: The owner of a sole proprietorship obtains the start-up funds and gets all the profits earned by the business. The more efficiently the firm operates, the higher the company’s profitability.

  • Direct control of the business: All business decisions are made by the sole proprietorship owner (Principal) without having to consult anyone else.

  • Freedom from government regulation: Sole proprietorships have more freedom than other forms of business with respect to government controls.

  • A Unique Identity: Registration of your new business name makes it unique as nobody can bear such a business name subsequently.

  • No special taxation: Sole proprietorships do not pay special franchise or corporate taxes. Profits are taxed as personal income as reported on the owner’s individual tax return.

  • Ease of dissolution: With no co-owners or partners, the sole proprietor can sell the business or close the doors at any time, making this form of business organization an ideal way to test a new business idea.

Example of a Sole Proprietorship Business

A sole proprietor can work as an independent contractor or operate a small business and can own businesses in many industries. Examples include:

- Legal Services: Solo Practicing Lawyer, Legal Consultant, Paralegal Services.

- Financial Services: Financial Consultant, Tax Preparation Service, Bookkeeping Services.

- Real Estate: Real Estate Agent, Property Manager, Vacation Rental Owner.

- Entertainment and Event Services: Event DJ, Party Planner, Magician, Event Photographer.

- Art and Design: Freelance Artist, Interior Designer, Tattoo Artist, Craftsmanship.

BUSINESS NAME REGISTRATION - SOLE PROPRIETORSHIP

- Retail Businesses: Grocery Store Owner, Boutique Owner, Electronics Shop Owner, Bookstore Owner, etc.

- Food and Beverage Businesses: Restaurant Owner, Food Truck Owner, Coffee Shop Owner, Juice Bar Owner, etc.

- Health and Wellness Businesses: Fitness Trainer, Yoga Instructor, Massage Therapist, Nutritionist, etc.

- Home Services: Electrician, House Cleaning Service, Landscaper, Pest Control Operator, etc.

- Technology and IT Services: Computer Repair Technician, Software Developer, IT Consultant, Digital Marketing Specialist, etc.

- Beauty and Personal Care Services: Hair Salon Owner, Nail Salon Owner, Spa Owner, Makeup Artist, etc.

- Construction and Trades: General Contractor, HVAC Technician, Roofing Contractor, Carpentry Services.

- Education and Tutoring: Private Tutor, Educational Consultant, Language Instructor, Test Preparation Tutor.

- Transportation Services: Ride-share Driver, Courier Services, Car Detailing Services, Vehicle Rental Services.

- Travel and Tourism: Travel Agent, Tour GuideVacation Rental Management.

- Consulting and Coaching: Business Consultant, Life Coach, Career Advisor, Wellness Coach.

- Environmental Services: Environmental Consultant, Recycling Services, Eco-friendly Products Retailer.

- Manufacturing and Production: Handmade Product Manufacturer, Custom Clothing Designer, Artisanal Food Producer, Specialty Product Manufacturer.

 

These examples demonstrate the diverse range of industries and professions in which sole proprietors can operate their businesses.

Frequently Asked Questions (FAQs)

You can find some of our most frequently asked questions below;

A Sole Proprietorship is a business structure owned and operated by a single individual, where there is no legal distinction between the business and its owner.

A sole proprietor has complete control over the revenue and operations of their business. However, the sole proprietor is also personally responsible for all debts, lawsuits, and taxes their company accrues.

So, if their business is sued, personal assets like their home, credit score, and savings are unprotected.

Registering your business offers simplicity in formation, control over decisions, and easy tax reporting. A unique name distinguishes your business and is necessary for opening a bank account and obtaining a tax clearance in Nigeria. Proper registration enhances credibility and facilitates business transactions.

Disadvantages include unlimited personal liability for business debts, limited access to financing options, and potential difficulty in raising capital.

While not always required, it's advisable to register your business name to protect it and establish legal rights. Registration also lends credibility to your business.

You can register your business name with the appropriate government authority, such as the Corporate Affairs Commission (CAC) in Nigeria. The process typically involves submitting the required documents and paying the registration fee.

SplashDict is equipped with accredited experts and the necessary resources to assist you in completing the Sole Proprietorship Business Name Registration in Nigeria.

Choose a name that reflects your business's identity, is memorable, and is not already in use by another business. Ensure it complies with naming guidelines and is available for registration.

Apart from resonating with your brand, your business name must comply with the CAC’s naming guidelines, which are in place to make sure business names are special, fitting, and don’t infringe on someone else’s trademark. 

Here are some of CAC’s naming guidelines: 

  • Your business name has to stand out and be different from other business names or trademarks.
  • Your business name should be related to what your business does; It shouldn’t mislead or confuse folks. For example, your business name should not imply you own a makeup studio if you are running a fashion store. 
  • Your business name must not be offensive, rude, discriminatory, or go against what’s considered good behavior in society.
  • Your business name must follow all the laws and regulations in Nigeria. Don’t pick a name that suggests anything illegal or unethical. Also, don’t choose names that could trick or fool the public.
  • Certain words are off-limits unless you get special permission. For example, words like “Federal,” “National,” and “Government” are reserved and need clearance from the right authorities before you can use them in your business name

The documents for registering your business name with the CAC include:

  • Proof of your business’s registered address, such as a utility bill or lease agreement. 
  • A valid form of government ID (National identity card, international passport, driver’s license, voter’s card)
  • National Identity Number (NIN)

The registration process timeline varies depending on CAC and the efficiency of processing. This is the timeline:

  • Name Search and reservation: 6 - 24 hours from submission.
  • Grant of Certificate of Registration: 24 -96 Hours from filing.
  • Total time: Approximately 2 - 7 days.

Yes, you can operate multiple businesses under the same Sole Proprietorship. However, each business name may need to be registered separately if they are distinct from each other.

In a Sole Proprietorship, the business is solely owned and operated by one individual, while a Partnership involves two or more individuals sharing ownership and responsibilities. The primary distinctions lie in ownership structure, decision-making authority, and liability.

In a Sole Proprietorship, the owner retains full control over business decisions, whereas in a Partnership, decision-making is shared among partners.

Additionally, in terms of liability, both structures expose owners to personal liability for business debts, but in a Partnership, this risk is distributed among partners, whereas in a Sole Proprietorship, the owner bears it alone.

Sole Proprietorship is ideal for individuals seeking complete control over their business operations, while Partnership suits those looking to share responsibilities and resources with others. Choosing between the two depends on factors such as ownership preferences, risk tolerance, and long-term business objectives. 

The primary differences between Sole Proprietorship and Limited Company (LTD) lie in ownership structure, liability, taxation, and regulatory requirements.

In a Sole Proprietorship, the business is owned and operated by a single individual, who has unlimited personal liability for business debts and obligations. On the other hand, a Limited Company is a separate legal entity distinct from its owners (shareholders), providing limited liability protection to shareholders, meaning their assets are generally not at risk for business debts.

In terms of regulatory requirements, setting up and operating a Sole Proprietorship is relatively simple and inexpensive, with minimal formalities required. In contrast, forming a Limited Company involves more complex procedures, such as registration with CAC, drafting Articles of Association, and compliance with ongoing reporting and disclosure obligations, including annual filings and maintaining corporate records.

Overall, while Sole Proprietorship offers simplicity and full control to the owner, it comes with unlimited personal liability. Limited Company status provides limited liability protection to shareholders, but entails more formalities and potential tax complexities. Choosing between the two depends on factors such as risk tolerance, tax considerations, growth plans, and long-term business goals. 

Yes, you can convert your Sole Proprietorship into a different business structure, such as a Limited Liability Company (LTD), if needed. The process involves registering the new structure and complying with relevant regulations.

Transitioning from a Sole Proprietorship to a Limited Liability Company (LTD) is a significant step that offers various advantages, including limited liability protection and potential tax benefits.

Sole proprietorship and One-Person Company are two different forms of ownership. In a sole proprietorship, a business is managed and controlled by a person.

However, in the case of an OPC, an individual can commence the operation as per the rules and regulations of laws. Moreover, an OPC is registered under the Registrar of the Company.

A limited liability company (LTD) provides the business owner with liability protection and tax advantages, while sole proprietors bear personal liability for their business. Additionally, an LTD can be owned by investors, while a sole proprietorship is usually owned and managed by an individual.

Blog & Insights

We’ve got the expert insights your business needs. Check out our resource center to learn more about Sole Proprietorship Business Name Registration:

Why choose SplashDict?

Fast

Register on our platform in 5 minutes - we'll then prepare and file all the necessary documents.

Efficiency

100% digital processes - ensuring smooth delivery, from anywhere, anytime.

Reliable

Founders can always rely on us to securely manage their confidential information—safe from any unauthorized and prying eyes.

Transparent pricing

No hidden fees, no bad surprises - helping you plan ahead.

Our Process

Make Payment Online

Add the product to the cart below, then proceed to checkout and complete the secured online payment.

Tell us about your business

Come up with a name for your business and Answer a few questions. Our easy online form can be completed in just 5 minutes or less.

We'll process Application

Based on the information you provide, We will process and file the documents.

Receive your documents

Once your incorporation documents have been approved by the Federal Ministry, you will receive your completed business entity package by e-mail/mail.