Starting a business in Nigeria comes with important legal decisions, and one of the first is choosing how to register your business: Business Name or Limited Liability Company (LLC).
While both are valid and recognized under the Corporate Affairs Commission (CAC), they are very different in structure, benefits, and legal implications. In this post, we’ll break down the key differences and also explain how a Business Name can be upgraded to a Limited Liability Company as your business grows.
What is a Business Name Registration?
A Business Name is the simplest form of business structure in Nigeria. It’s commonly used by sole proprietors or partnerships — individuals who want to operate under a business name rather than their personal names.
Features of a Business Name:
- Owned by one person or a group (in case of partnership).
- The owner is personally liable for all business debts and obligations.
- Low cost and fast to register.
- No separation between personal and business finances.
- Ideal for freelancers, small traders, artisans, and side hustlers.
What is a Limited Liability Company (LLC)?
A Limited Liability Company (LLC) is a separate legal entity from its owners. It can own assets, sue or be sued in its own name. This is the most recommended structure for growing businesses in Nigeria.
Features of an LLC:
- Has at least one director and one shareholder (can be the same person).
- Offers limited liability protection — meaning personal assets of directors are safe.
- Can raise funding and attract investors more easily.
- Suitable for medium to large-scale businesses or startups with growth plans.
- Requires more compliance, including annual returns and tax filings.
Key Differences Between Business Name and Limited Liability Company
Feature | Business Name | Limited Liability Company (LLC) |
Legal Status | Not a separate legal entity | Separate legal entity |
Liability | Unlimited – owner is personally liable | Limited – owners’ personal assets protected |
Ownership | Sole proprietorship or partnership | Shareholders and directors |
Registration Cost | Lower | Higher |
Compliance Requirements | Minimal | More formal (annual returns, tax filings) |
Credibility | Moderate | Higher credibility with banks/investors |
Funding Opportunities | Limited | Better access to funding and contracts |
Can You Upgrade a Business Name to a Limited Liability Company?
Yes, you can!
Many Nigerian business owners start with a Business Name to test their idea, then upgrade to an LLC once they’re ready to scale, hire staff, or seek investors.
How to Upgrade:
- You register a new Limited Liability Company with the desired name.
- Once approved, you can cease using the old Business Name or convert it officially.
- Notify your customers, banks, and vendors of the new legal structure
- You can also transfer assets, clients, and contracts from the business name to the new company.
Tip: Use the opportunity to rebrand and reposition your business while upgrading.
Which One Should You Choose?
Here’s a quick guide to help you decide:
You Should Choose… | If You… |
Business Name | Are a freelancer, artisan, or testing a small idea |
Limited Liability Company | Want to build a scalable business, attract investors, or limit personal risk |
Conclusion:
Choosing between a Business Name and an LLC is about more than just cost — it’s about long-term strategy, protection, and growth. If you’re just starting out and want something quick and affordable, a Business Name is fine. But if you want to build a brand that attracts clients, investors, or partners, an LLC is the way to go.
And remember: starting with a Business Name doesn’t lock you in. You can upgrade to an LLC later when your business is ready.
Need Help Upgrading or Registering?
At MARB Corporate, we help business owners make the right registration choice — and guide them from Business Name to LLC when it’s time to grow. Whether you’re starting out or scaling up, we’ve got you covered.
Contact us today to register your business the right way.
08083240193