Should I register my freelance business as a Business Name or a Private Limited Company?

Q: Should I register my freelance business as a Business Name or a Private Limited Company?

In 2026, the choice between a Business Name (BN) and a Private Limited Company (LTD) depends largely on your projected income and your long-term goals. The Nigeria Tax Act 2025 has made both options more attractive for small businesses, but they are taxed under entirely different systems. 1. Comparison: Business Name vs. Limited Company 2. The Tax Difference in 2026 This is the most critical part of your decision: As a Business Name (Enterprise): You are taxed as an individual. In 2026, the fir

In 2026, the choice between a Business Name (BN) and a Private Limited Company (LTD) depends largely on your projected income and your long-term goals. The Nigeria Tax Act 2025 has made both options more attractive for small businesses, but they are taxed under entirely different systems.

1. Comparison: Business Name vs. Limited Company

Feature	Business Name (BN)	Limited Liability Company (LTD)
Legal Status	You and the business are the same.	Separate legal entity from you.
Liability	Unlimited: Your personal house/car can be seized for business debts.	Limited: Your personal assets are protected from business debts.
Tax Type	Personal Income Tax (PIT)	Company Income Tax (CIT)
2026 Tax Rate	Progressive: 15% to 25% (after ₦800k tax-free).	0% if turnover is ≤ ₦100 million.
Setup Cost	Cheaper (approx. ₦10,000–₦20,000).	More expensive (approx. ₦50,000+).
Credibility	Lower; some big clients prefer LTDs.	Higher; required for most govt contracts.

2. The Tax Difference in 2026

This is the most critical part of your decision:

As a Business Name (Enterprise): You are taxed as an individual. In 2026, the first ₦800,000 you earn annually is tax-free. Anything above that is taxed at progressive rates.
As a Limited Company (LTD): Under the 2026 reforms, if your annual turnover is ₦100 million or less, you pay 0% Company Income Tax. You only pay Personal Income Tax on the specific salary you pay yourself from the company.

3. Which Should You Choose?

Choose a Business Name IF:

You are a solo freelancer (e.g., writer, designer, social media manager).
Your annual profit is relatively low (under ₦5 million).
You want the lowest registration and compliance cost (Annual Returns for a BN are much cheaper and simpler than for an LTD).
You don't plan to take on investors or partners anytime soon.

Choose a Private Limited Company (LTD) IF:

You plan to scale and hire many employees.
You want to bid for government contracts or work with large multinationals.
You want to protect your personal assets from potential lawsuits or business debts.
You expect your turnover to grow toward the ₦100 million mark, as the 0% CIT provides a massive tax shield.

Can you change your mind later?

Yes. Many freelancers start with a Business Name because it is fast and cheap. If your business grows, the CAC allows for a Conversion/Upgrade from a Business Name to a Limited Company. You will keep your brand name but get a new RC Number and more legal protection.