LLC vs BN in Nigeria: How to Choose the Right Structure for Your Business

LLC vs BN in Nigeria: How to Choose the Right Structure for Your Business

October 13, 2025

Starting a business in Nigeria often begins with one big question: Should I register as a Limited Liability Company (LLC) or a Business Name (BN)?

Both options are approved and regulated by the Corporate Affairs Commission (CAC), but the structure you choose can shape how your business grows, how you pay taxes, and even how potential clients or investors perceive you.

Let’s break down the differences and help you decide what’s best for you.

  1. Understanding the Basics

Business Name (BN)

A Business Name,  sometimes called a sole proprietorship or enterprise is the simplest form of business registration. It’s best for individuals running small or medium-sized operations under their personal control.

Example:

If “Efe Majemite” wants to run a fashion business, she can register “Efe Majemite Fashions” as a BN.

Limited Liability Company (LLC)

An LLC is a separate legal entity. This means the business exists independently from its owners (called shareholders or directors). It can own property, open bank accounts, and enter contracts in its own name.

Example:

“Efe Majemite Fashions Limited” would be an LLC — distinct from Efe herself.

  1. Key Differences Between LLC and BN
Feature Business Name (BN) Limited Liability Company (LLC)

 
Legal Status Not a separate legal entity A separate legal entity from its owners
Liability Owner bears all risks and debts personally Owners’ liability is limited to their share capital

 
Taxation Personal income tax Company income tax (currently 20–30%)
Ownership Usually one person One or more shareholders/directors
Perception Suitable for small or informal businesses Preferred by corporates, investors, and foreign partners

 
Compliance Minimal annual obligations Must file annual returns, maintain records, etc.
Raising Capital mostly personal funds Easier to attract investors or loans
Cost of Registration Cheaper More expensive and formal

 
Lifespan Ends with the owner Continues even after owners change

 

  1. When to Choose a Business Name (BN)

Choose a Business Name if:

  • You’re a freelancer, artisan, or small business owner starting out.
  • You want lower registration costs and simple compliance.
  • You’re not seeking major investment or partnerships.
  • You’re running a personal service business (e.g., makeup artist, tailor, photographer, small retail shop).
  • Tip: A BN is great for testing your business idea before scaling up.
  1. When to Choose an LLC

Go for an LLC if:

  • You want to limit personal liability for business debts.
  • You’re looking to attract partners, investors, or corporate clients.
  • You’re in a regulated industry (finance, tech, consulting, healthcare, etc.).
  • You plan to grow, hire staff, or bid for contracts.
  • You want to protect your business name nationally and appear more professional.
  • Tip: Many Nigerian companies and government agencies prefer to deal with registered companies, not individuals.
  1. The Cost and Process Difference

Business Name:

  • Registration: ₦20,000
  • Processing time: 5–10 working days
  • Requirements: One passport photo, business address, valid ID

LLC:

  • Registration: ₦30,000 – ₦70,000+ depending on share capital.
  • Processing time: 5–10 days.
  • Requirements: Company name, business address, directors’ details, shareholding, and objectives
  1. Can You Upgrade Later?

Yes.

You can start with a Business Name and later convert to an LLC when your operations grow. CAC provides a conversion process that allows you to retain your existing brand while gaining the legal benefits of a limited liability company.

Finally, here’s no “one-size-fits-all” answer. If you’re starting small and testing your market, a Business Name is often enough. If you’re serious about scaling, protecting yourself legally, and attracting growth opportunities, go for an LLC.

Either way, registering your business is the first real step toward legitimacy and long-term success.

 

Need Help Deciding or Registering?

At 618 Bees, we help entrepreneurs and investors set up the right business structure from CAC registration to full legal and regulatory support.

Email: hello@618bees.com

Location: Lekki, Lagos

 Get Started Today

Whether you’re registering your business or expanding your operations, we’ll help you stay compliant from start to scale.

Email: info@618bees.com

Visit: www.618bees.com

Call/WhatApp: +2349017190079

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Frequently Asked

  • Why must I file Annual Returns?

    It is a mandatory statutory requirement under the Companies and Allied Matters Act to file Annual Returns yearly. 
  • What is the first thing I must do to register a business in Nigeria?

    To register a business in Nigeria; you would need to conduct a name search of the business. You can achieve this using your CAC-CRP account.
  • What is a testimonium clause in an agreement?

    This is the part of the agreement where the witness attests to have witnessed the execution of the agreement.
  • What is SON?

    SON stands for ‘Standards Organization of Nigeria’
  • What is classified as personal data?

    Name, photograph, personal health/bio information, account/financial information, phone number, Address, date of birth, place of birth, Email address, etc.
  • What is eligible for Patent registration?

    Patents are granted for the invention of products or processes. However, for it to be patentable, the invention

    • Must be new,
    • Must have an inventive step that is not obvious to someone with knowledge and experience in the subject,
    • Must be capable of being made or used in some kind of industry and not be, a scientific or mathematical discovery, theory or method, a literary, dramatic, musical or artistic work, a way of performing a mental act, playing a game or doing business, the presentation of information, or some computer programs, an animal or plant variety, a method of medical treatment or diagnosis,
    • And must not be against public policy or morality.
  • What are the product categories available when registering with NAFDAC?

    The product categories include: Food, Cosmetics, Drug, Medical Device, Agro-Chemicals & Pesticide, Veterinary Products, Vaccines & Biologicals, Herbal and Nutraceuticals and Water
  • What’s the difference between a business name and an LLC?

    • A business name is a sole proprietorship, usually owned and managed by one individual only. Legally, the sole proprietor and his business are one. It simply means an individual trading with an alias. The sole proprietor is personally liable for all business related obligations.

    • A limited liability company on the other hand is a separate business entity from the individuals that hold its shares and act as directors. Legally, it’s a separate business entity and a person on its own who can transact business, own property separate from its owners and can sue or be sued. 
  • Can I trademark my logo and name separately? Why is this a good idea?

    Yes you can. The advantage is that it gives you the opportunity to have more than one logo or the opportunity to change your logo easily as opposed to registering the name and the logo as one trademark.
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