How to Register a Sole Proprietorship (Business Name) in Nigeria

In Nigeria, a sole proprietorship is officially known as a Business Name, and it remains the most common way for entrepreneurs to get started. For many small business owners and freelancers, this structure provides the fastest and most flexible path to entering the market. Registering a Business Name requires minimal paperwork, has no capital requirements, and allows you to begin operating almost immediately. Compared to other business structures, the process is relatively straightforward, though dealing with government procedures and ongoing tax compliance can still feel bureaucratic at times.

The main advantages of setting up as a sole proprietor include independence, affordability, and complete control over decision-making. On the other hand, challenges such as unlimited personal liability and limited access to funding can make this structure less suitable for businesses aiming to scale.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Nigeria?

While in Nigeria sole proprietorship is officially known as a Business Name, you might also hear it described in different ways, depending on who you’re speaking to. Lawyers and regulators usually call it a Business Name, while everyday entrepreneurs may use terms like sole trader or simply say they are self-employed. In international settings, it’s also common to describe it as working as an independent contractor.

All of these labels point to the same reality: one individual running a business on their own, without forming a company.

How does a sole proprietorship (Business Name) work in Nigeria?

Business Name vs. Limited Company in Nigeria

Before deciding whether to operate under a Business Name or register a limited company, it’s useful to understand the differences. Each structure comes with its own benefits and trade-offs, which affect liability, cost, taxes, and long-term flexibility.

Step-by-step: How to register a sole proprietorship in Nigeria

Step 1: Check your eligibility

To register a Business Name in Nigeria, you must be at least 18 years old and of sound mind. Only natural persons, not entities, can apply. Nigerian citizens and permanent residents may register freely, while foreign nationals can also register, provided they hold the appropriate immigration status and right to work in Nigeria. This typically means having a valid residence permit or business visa and ensuring their chosen sector is not restricted to Nigerian citizens only.

Step 2: Choose your business name

If you opt for a trade name (not just your initials or surname), you must register it. Use the CAC’s online Company Registration Portal (CRP) to search for name availability and reserve the name.

Step 3: Gather required documents

You’ll need to prepare and upload the following through CAC’s portal:

• Two proposed business names (primary and alternative)
• Completed CAC-BNo1 pre-registration form (submitted online through the CAC portal)
• Full personal details of the proprietor (name, address, phone, email)
• Passport-sized photograph of the proprietor
• Valid government-issued ID (National ID, passport, driver’s license, or voter’s card)
• Description of the nature of the business
• Proof of business address in Nigeria (e.g., utility bill, tenancy agreement, or bank statement)

Step 4: Register with CAC

Register online via the CAC Registration Portal (CRP) or at a CAC office. Create an account, reserve the name (₦500), complete the forms, and upload the documents.

Step 5: Pay registration fees and contributions

To complete your registration, you’ll need to pay the required fees through the CAC portal. The cost includes a ₦500 fee for reserving your business name and a ₦10,000 filing fee for the Business Name registration itself, bringing the total to ₦10,500.

The list of fees is provided on the CAC website.

Step 6: Complete post-registration obligations

Once registered, you will receive a Certificate of Business Name, which can be used to open a business bank account in Nigeria. You are also required to file an annual return with the CAC at a cost of ₦1,000 and register for a Tax Identification Number (TIN) with the Federal Inland Revenue Service (FIRS) to remain tax compliant. In addition, you must issue proper invoices for all business transactions, ensuring they include your registered business name and TIN for legal and accounting purposes.

Financial and tax obligations for sole proprietors in Nigeria

You are responsible for:

• Income tax: Sole proprietors in Nigeria are taxed as individuals, not as companies. Profits from your business are declared in your personal income tax return and assessed under the Personal Income Tax Act (PITA). The rates are progressive, starting at 7% and rising to 24% on annual income above ₦3.2 million. A minimum tax of 1% of gross income applies if your chargeable income falls below ₦300,000. Filing is done annually with the FIRS using your TIN.
• VAT: If your annual turnover exceeds ₦25,000,000, you must register for VAT with FIRS and charge VAT (currently 7.5%) on goods and services. Returns are generally filed monthly. Businesses below this threshold are not required to register but may choose to do so voluntarily, for example, to recover input VAT on business expenses.
• Social security contributions: Sole proprietors are not automatically enrolled in Nigeria’s social security or pension schemes. Statutory contributions like the National Housing Fund (NHF) or Pension Fund are generally tied to employer–employee arrangements. As a self-employed person, you can make voluntary contributions to pension funds or health insurance schemes for your own protection, but this is not mandatory.
• Record-keeping: You must maintain proper records of all invoices, receipts, and financial accounts to support your declared income and expenses. FIRS requires that documentation be kept for at least six years, as it may be reviewed in the event of a tax audit.
• Tax deductions and allowances: Ordinary business expenses such as rent, utilities, supplies, professional fees, and insurance can be deducted from your taxable income. Proper record-keeping is essential to ensure you claim all allowable deductions and reduce your tax liability legally.

Launch your contracting career and stay compliant with Deel

Registering a sole proprietorship gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
• Create, send, and sign localised work agreements
• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start a Business Name in Nigeria?

None — you can start with minimal or no capital.

Do Business Name owners need to register for VAT?
Only if your annual sales exceed the VAT registration threshold.

How much are the standard annual contributions?
As the owner of a Business Name in Nigeria, you are required to file an annual return with the CAC at a cost of ₦3,000 if submitted on time. In addition to this compliance obligation, you must also pay personal income tax each year through the FIRS, with rates ranging from 7% to 24% depending on your income level. Unlike employees, sole proprietors are not automatically enrolled in Nigeria’s social security or pension schemes, though you can choose to make voluntary contributions to retirement savings or health insurance programs for added protection.

Can a Business Name hire employees?
Yes. A Business Name in Nigeria can employ staff, but the proprietor is personally responsible for all employer obligations, including contracts, salaries, and statutory contributions such as pensions and social insurance.

How long does it take to register a Business Name?
Around two weeks after document submission and payment.

Can foreign nationals register a Business Name in Nigeria?
Yes, provided they are legally eligible and not barred from the business sector.

Do Business Name owners need a separate bank account?
Not mandatory, but highly recommended.

What happens if I stop working as a Business Name?
Submit a deregistration notice to CAC and file final returns.

Are there incentives for new Business Names?
No direct incentives, though government reforms aim to simplify processes.

Can I use Deel as a Business Name to get paid by international clients?
Yes — Deel enables international payments in multiple currencies.

Does Deel generate compliant invoices for Business Names?
Yes — Deel generates legally compliant invoices automatically.

Can Deel help with taxes as a Business Name?
Yes — Deel provides downloadable reports and payment records.

Does Deel offer contracts for freelancers and Business Names?
Yes — Deel includes contract templates compliant with Nigerian law.

Can I access benefits through Deel as a Business Name?
Yes — Deel offers optional benefits like health insurance and retirement savings plans.