KADUNA POLYTECHNIC

COLLEGE OF BUSINESS AND MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT STUDIES

LEVEL: HND I POM (REGULAR)

GROUP ASSIGNMENT ON

COURSE: SMALL BUSINESS

COURSE CODE: POM 328

QUESTION:
Know the Legal Requirement of Small Business

COMPILED BY
GROUP C MEMBERS

SUBMITTED TO:
MAL. AHMAD GARBA BAKURI

DECEMBER, 2023

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 LIST GROUP C MEMBERS

S/N NAME REG. 18 HANNAH PAUL 22/0089

NO
19 JOSEPH 22/1081
1 BAHIJJA RABIU 22/011
20 ABDULRAHMAN MUKTAR 22/0563
2 SAFIYA MOMOH 22/0341
21 SHEFIU ABUBAKAR BASHIR 22/0531
3 ASMAU USMAN 22/0378
22 ABUBAKAR JARMA BAHAGO 22/0283
4 NAFISAT BELO 22/0120
23 UMAR USMAN 22/0359
5 SALAMATU IBRAHIM 22/0781
BAMALLI 24 ABDUL 22/

6 ASMA’U MUSA IMAM 22/0841 25 UMAR DAHIRU 22/1145

7 HAMIDAT AVOMO SULEIMAN 22/0221 26 UKASHA ABUBAKAR 22/0360

8 EDET EMEDIONG 22/1014 27 ISMAIL BELLO 22/2433

CHRISTOPHER
28 NASIR ABUBAKAR 22/0806
9 AFOLABI MARYAM 22/0226
29 EDWARD YESHU BOBAI 22/
KIKELOMO
30 UMAR FARUK UMAR 22/0016
10 OLUWASEYI GIFT AIYEROHUN 22/1004
31 MUHAMMAD SADIQ 22/0409
11 NURA IDRIS 22/0676
32 ABDULSALAM MAGAJI 22/0902
12 KERENHAPPUCH MAHAJI 22/1185
ABDULLAHI
13 EMMANUEL O. ABRAHAM 22/0427
33 MUBARAK SANI 22/0885
14 ZUBAIRU DANLAMI 22/1072
34 IBRAHIM KHALIL 22/0593
15 FATIMA UMAR SANDA 22/0565
35 SIRAJO HABIBU 22/0591
16 PEACE DAVID 22/0394
36 ASMA'U ABUBAKAR 22/0397
17 FARUQ SANNI 22/0807

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Introduction

A business which functions on a small scale level involves less capital investment, less

number of labour and fewer machines to operate is known as a small business. Small

scale Industries or small business are the type of industries that produces goods and

services on a small scale. These industries play an important role in the economic

development of a country. The owner invests once on machinery, industries, and plants,

or take is a lease or hire purchase. These industries do not invest more than one crore.

Few examples of small-scale industries are paper, toothpick, pen, bakeries, candles, local

chocolate, etc., industries and are mostly settled in an urban area as a separate unit

(Abdullahi et al 2015).

Characteristics of Small-Scale Industries (Christina, et al 2014)

Ownership: They have a single owner. So it is also known as a sole proprietorship.

Management: All the management works are controlled by the owner.

Limited Reach: They have restricted area of operation. So they may be a local shop or

an industry located in one area.

Labor Intensive: Their dependency on technology is very little because they are

dependent on labours and manpower.

Flexibility: Because they are small, they are open and flexible to sudden changes, unlike

large industries.

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Resources: They utilize local and immediately available resources. They do better

utilization of natural resources and limited wastage.

Categories of Small Business

On the basis of capital invested, small business units can be divided into the following

categories (Balunywa, 2010):

(1) Small Scale Industry (Before 2006): They invest in fixed assets of machinery and

plant, which does not surpass than one crore.

For export improvement and modernization, expenditure ceiling in machinery and plant

is five crores.

(2) Ancillary Small Industrial Unit: This industry can hold the status of an ancillary small

industry if it supplies a minimum 50 per cent of its product to another business, i.e. the

parent unit.

They can produce machine parts, components, tools or standard products for the parent

unit.

(3) Export Oriented Units: This industry can possess the status of an export-oriented unit

if it exports exceeds 50 per cent of its manufactures.

It can opt for the compensations like export bonuses and other grants awarded by the

government for exporting units.

(4) Small Scale Industries Owned by Women: An enterprise operated by women

entrepreneurs in which they alone or combined share capital minimum of 51 per cent.

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Such units can opt for the special grants from the government, with low-interest rates on

loans, etc.

(5) Tiny Industrial Units: It is an Industrial or a company whose expenditure on

machinery and plant does not exceed 2.5Million.

(6) Small Scale Service and Business: It is a fixed asset investment on machinery and

plant excluding land and building should not surplus 10million

(7) Micro Business Enterprises: It is a tiny and small business sector. The investment in

machinery and plant should not exceed 10million

(8) Village Industries: The industries which are located in rural areas and manufacture

any product performs any service with or without the utilization of power is called village

industries.

(9) Cottage Industries: It is also known traditional or rural industries. These industries are

not covered by the capital investment criterion. Cottage industries are characterized by

the following features. These are organized by a single, with private resources. Use

family labour and local talent, Simple instruments are used, Small capital investment is

involved, Simple products are made. And- Indigenous technology is utilized.

The legal Requirement of Small Business in Nigeria

In Nigeria, small businesses are subject to various legal requirements and regulations.

These requirements aim to ensure compliance, promote transparency, protect consumers,

and create a conducive business environment. While the specific legal requirements may

vary depending on the nature of the business and its location (Diana, & Nir, 2019).

Here are some common Legal Requirements for Small Businesses in Nigeria:

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Business Registration: Small businesses in Nigeria are required to register with the

Corporate Affairs Commission (CAC). The registration process involves choosing a

unique business name, completing the necessary forms, and paying the registration fees.

The registration provides legal recognition to the business and enables it to operate within

the law.

Tax Registration: Small businesses are required to register for tax purposes with the

Federal Inland Revenue Service (FIRS). This includes obtaining a Tax Identification

Number (TIN) and registering for Value Added Tax (VAT) if applicable. Regular tax

filings and payments are necessary to comply with tax laws and regulations.

Business Permits and Licenses: Depending on the nature of the business, certain

permits and licenses may be required. For example, businesses in specific sectors such as

food processing, pharmaceuticals, telecommunications, or transportation may need

additional permits or licenses from relevant regulatory bodies.

Employment Regulations: If a small business intends to hire employees, it must comply

with employment regulations. This includes adhering to minimum wage laws, providing

employment contracts, and complying with labor laws regarding working hours, leave

entitlements, and employee benefits.

Intellectual Property Protection: Small businesses that have unique products, services,

or brand identities may consider protecting their intellectual property rights. This can be

done through trademark registration, copyright protection, or patent applications to

safeguard their creations and prevent unauthorized use.

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Health and Safety Regulations: Small businesses must comply with health and safety

regulations to ensure a safe working environment for employees and customers. This may

include implementing safety measures, providing necessary equipment, and adhering to

hygiene standards.

Financial Reporting and Record-Keeping: Small businesses are required to maintain

accurate financial records and prepare financial statements in accordance with the

Companies and Allied Matters Act (CAMA) and the Financial Reporting Council of

Nigeria (FRCN) regulations. This includes keeping records of income, expenses, assets,

and liabilities.

Consumer Protection: Small businesses are expected to adhere to consumer protection

laws and regulations. This includes providing accurate information about products or

services, fair pricing practices, and addressing customer complaints or disputes in a

timely manner.

Steps involved in registering a small business with the Corporate Affairs

Commission (CAC)

Registering a small business with the Corporate Affairs Commission (CAC) in Nigeria

involves several steps. Here is an overview of the process:

Business Name Availability Search: Before registering your business, you need to

conduct a search to ensure that the desired business name is available and not already

registered by another entity. This can be done online through the CAC website or by

visiting a CAC office.

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Complete the Application Form: Once you have confirmed the availability of your

desired business name, you need to complete the CAC application form. The form can be

obtained from the CAC office or downloaded from their website. It requires information

such as the proposed business name, business address, nature of business, details of the

owners (proprietors or directors), and other relevant information.

Prepare Required Documents: Along with the application form, you will need to gather

certain documents. The specific documents required may vary depending on the type of

business structure you choose.

Generally, the following documents are needed:

Memorandum and Articles of Association (for companies)

Partnership Deed (for partnerships)

Certificate of Incorporation (for existing companies converting to a different business

structure)

Means of identification (e.g., national ID card, international passport) for the

owners/directors

Passport-sized photographs of the owners/directors

Utility bill or tenancy agreement to confirm the business address

Pay the Registration Fees: The registration process involves payment of the required

fees. The fees depend on the type of business structure and the authorized share capital

(for companies). The current fee schedule can be obtained from the CAC website or their

office.

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Submit the Application: Once you have completed the application form and gathered

the necessary documents, you need to submit them to the CAC office. You may need to

make multiple copies of the documents, as specified by the CAC.

Verification and Processing: After submitting the application, the CAC will review the

documents and verify the information provided. This process may take some time, and

the CAC may request additional information or clarification if needed.

Certificate of Incorporation: If the application is approved, you will receive a Certificate

of Incorporation or Registration from the CAC. This document serves as proof of the

legal existence of your business (Effiom, & Samuel, 2018))

It's important to note that the registration process and requirements may vary depending

on the type of business structure you choose, such as a company, partnership, or sole

proprietorship.

The duration of the verification and processing of a business registration application with

the Corporate Affairs Commission (CAC) in Nigeria can vary. The processing time

depends on various factors, including the workload of the CAC, the completeness of the

application, and any additional information or documents required.

In general, the CAC aims to process applications within a reasonable timeframe.

However, it's important to note that the process can take several weeks or even months,

especially during peak periods or if there are any issues or discrepancies with the

application.

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To get a more accurate estimate of the processing time, it is advisable to consult with the

CAC directly or check their website for any updates or announcements regarding current

processing times. The CAC may provide guidelines or estimated timelines for different

types of applications.

It's worth mentioning that the CAC has made efforts to streamline and expedite the

registration process in recent years. They have introduced online registration platforms

and initiatives to improve efficiency and reduce processing times. However, the actual

duration can still vary depending on the specific circumstances of each application.

Conclusion

The specific legal requirements may vary depending on the nature of the business, its

location, and any industry-specific regulations. It's important for small business owners in

Nigeria to consult with legal professionals or relevant government agencies to ensure

compliance with all applicable laws and regulations.

To ensure a smoother and faster registration process, it is recommended to carefully

follow the registration requirements, provide complete and accurate information, and

promptly respond to any requests or inquiries from the CAC during the verification and

processing stage.

x
Reference

Abdullahi, M. S. Abubakar, A.. Aliyu, R. L Umar, K.. Umar, M. B. Sabiu, I. T. Naisa, F.

K. Khalid, S. S & Abubakar, L. S. (2015.)“The nature of small and medium scale
Enterprises in Nigeria: (SMEs): Government and Financial Institution Support in
Nigeria. International Journal of Academic Research in Business and Social
Sciences. Vol. 5(3) 525-537.
Balunywa, W. (2010) “What are Small Scale Enterprises? Entrepreneurship and Small
Business Enterprise” Maere University Business School Journal,
Christina, B, Neelufer, A. &. Al Amri, S. (2014). “Challenges and Barriers encountered
by the SMEs Owners in Muscat” International Journal of Small Business and
Entrepreneurship Research. Vol.2 (3) 1-13.
Diana, R. T & Nir, K. (2019).“Big Data Solutions for Micro-, Small-, and Medium-Sized
Enterprises in Developing Countries” IEEE Computer Society, 67-70,.
Easterly, W. . (2004).“The Elusive Quest for Growth”. Macmillan Publishers.

Effiom, L and. Samuel, E. E. (2018) “Success of Small and Medium Enterprises in

Nigeria: Do Environmental Factors Matter?” Journal of Economics and
Sustainable Development, Vol. 9 (4), 116-131..

Eniola, A. A & Entebang, H. (2015) “Government Policy and Performance of Small and
Medium Business Management” International Journal of Academic Research in
Business and Social Sciences. Vol. 5(2).

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Khrystyna, K, Melina, L. M. & Rita, R. (2010) ‘Micro, Small and Medium Enterprises
around the World: How Many are there, and what affects the Count?’ IFC, the
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Ogechukwu, A. D. Oboreh, J. S.. Umukoro, F & Uche, A. V. (2013). “Small and

Medium Scale Enterprises (SMEs) in Nigeria: the Marketing Interface” Global
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Report of National Survey of Micro Small and Medium Enterprises (2017) available at:
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%20SMALL%20& %20MEDIUM%20ENTERPRISES%20(MSME S),
%20%202017%201.pdf

Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), 2007.

World Bank Group,(2002) An Assessment of the Private Sector in Nigeria. Washington.

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