TOP REGULATORY COMPLIANCE MOST BUSINESS OWNERS NEGLECT AND WHY YOU SHOULD OBSERVE THEM
TOP REGULATORY COMPLIANCE MOST BUSINESS OWNERS NEGLECT AND WHY YOU SHOULD OBSERVE THEM.
Let’s begin with a short story…
Sometime in December 2021, I was on call with a client discussing things she needs to add to her to-do list while wrapping up the business year and preparing for a great new business year. While on the call, a lawyer friend was with me and was able to deduce we talked about compliance from my response over the phone. As soon as we were done talking, there came what I call the question of the year from my friend… ”Do business name owners also have compliance obligations?”
You wonder why I called it the question of the year? It was interesting because this was a question from a colleague who I assumed should know the answer. Oftentimes, business owners assume that “compliance” is limited to incorporated companies. Some assume that it is limited to large companies. Yet, some also assume that it is only a thriving business that should do compliance. These metrics are field knowledge which I have seen in the years of dealing with hundreds of business owners.
In this article, I will refer to two major compliance obligations that business owners often neglect and also share why they should be prioritised when considering your business to do every year as long as the business continues to exist irrespective of the volume of business transactions.
Three top regulatory agencies that every business owner will have to relate with from the moment a company is birthed are the Corporate Affairs Commission, the Federal Inland Revenue Service and the respective State Tax authorities.
A unique feature of these agencies is that obligations owed to these agencies are often performed once in a year except for those which are on a monthly basis. This is to say that while you are making plans for the year or each month, your plans should also include strategies for complying with these obligations as may be required.
So what are these obligations? The first is filing of Annual Returns to the Corporate Affairs Commission at the end of every financial year. This is an obligation to be performed by operators of registered Business Name, Limited Partnership, Limited Liability Partnership, Companies, Incorporated Trustees of Religious Organizations, Non-government Organizations and other related institutions (as far as the entity is registered with the Corporate Affairs Commission).
TIMELINE FOR ANNUAL RETURNS FILING AT THE CORPORATE AFFAIRS COMMISSION.
For Business name operators you have a fixed timeline of not later than 30th day in the month of June to file your annual returns for the year.
A business registered as either a limited liability partnership or limited partnership is expected to file annual returns with the commission within 60 days of closure of its financial year.
For Incorporated Trustees, the trustees of the association are to file annual returns not earlier than 30th June or later than 31st December every year except in the year of its incorporation.
Every company, large or small has a duty to make and deliver to the CAC its annual returns at least once in every year. A knowledge of your company classification will further guide you in knowing how to go about your annual returns.
How do you know if your company is a small or large company? Here is a checklist to identify a small company:
it is a private company limited by shares;
the amount of your turn-over for the year is not more than N120,000,000;
Your net assets value is not more than N60,000,000
none of your members is an alien;
none of your members is a government, a government agent or nominee; and
directors hold at least 51% of the equity share capital of the company
Any filing done after this day attracts a monetary penalty which can be avoided. Late filing fee also applies to companies when annual returns are filed late.
The second compliance obligation of business owners and the most dreaded is “Tax Compliance”. Here, a business owner has two principal regulators to deal with, first is the Federal Inland Revenue Service at the federal level and the State Internal Revenue service at the state level for the purposes of remitting personal and staff taxes. Tax obligations can be one off, that is a once in a year activity. A common tax applicable to all registered companies except companies engaged in petroleum operations are the companies income tax and value added tax. While company income tax is a once in a year obligation, value added tax is a monthly obligation. Moreover, there are thresholds that you should know for your VAT and company income tax compliance. These thresholds determine whether or not you need to remit tax. You can check our article Tax Obligations of Sole Proprietorships, Partnerships and Incorporated Companies for further reading.
It is that time of the year again for you to save your business by filing your expected returns timely and in accordance with laid down regulations. For further enquiries do not hesitate to reach our nominees at firstname.lastname@example.org, email@example.com or on 09066093640. A nominee is always available to guide you through.