Freelancers and online sellers usually choose between two CAC structures: a business name or a private limited company. The right one depends on liability and cost, not on which sounds more serious.
The core legal difference
A business name is a trading name for one person or a small group of proprietors. It has no legal identity apart from the people who own it, so its debts are their debts.
A limited company is a separate legal person. It can own property, sign contracts and owe money in its own name, and a shareholder's loss is usually capped at what they put in.
That gap matters most when something goes wrong: a client dispute, a supplier debt, or a lawsuit. Under a business name, your personal savings and property sit on the same side of the ledger as the business. Under a company, they usually do not.
What each costs to register
| Business name | Private limited company | |
|---|---|---|
| Name reservation | ₦1,000 | ₦1,000 |
| Registration or incorporation | ₦20,000 | ₦10,000 for every ₦1 million of share capital or part of it |
The company's incorporation fee climbs with share capital. A business name's fee does not, since a business name has no share capital to measure.
What each costs to keep going every year
A business name files an annual return for ₦5,000. A limited company also files one every year, on its own form and schedule, which our CAC annual returns hub covers in full.
Weigh this yearly cost alongside the registration fee, not just the day-one price, before you choose. A structure that is cheap to start but expensive to keep compliant is not automatically the cheaper option over several years.
A business name also has a lighter paper trail generally: no separate audited accounts, no board minutes, and no share register to maintain. A company's extra paperwork buys the separate legal identity, not just a longer form.
Who a business name usually suits
A freelancer working alone, or a small online shop run by one or two people, rarely needs a separate legal person yet. The lighter paperwork usually makes more sense at that stage, even though a company at its lowest share-capital band no longer costs more to register.
A business name is also simpler to walk away from if the venture does not work out. Winding up a company involves more steps and more filings than closing a business name.
Payment platforms and marketplaces increasingly ask for some form of CAC registration before they pay out to a seller. A business name usually satisfies that check just as well as a company.
Who a limited company usually suits
Once a bank, a bigger client or an investor asks for a registered company rather than a business name, the limited company becomes the practical choice, whatever the extra fee costs.
A company also outlives a change of proprietor more cleanly, since shares can move without unwinding the whole registration. If that describes where your business is heading, you can start a CAC company registration directly, or read how CAC calculates your incorporation fee for how the cost scales with share capital.
Ask an accountant which structure suits your tax position before you commit. This article compares CAC's fees and legal forms, not your tax outcome.