We got a project from a big client, to train their staff on Power BI. Everything went smoothly till the procurement officer at the company asked for two additional documents. It was the first time we would be asked for those documents: three years audited financial statements and our income tax clearance certificate. The audited financials was a totally new one for me, but the tax registration one was a common one. We usually provide evidence of tax registration and payment. But the procurement person here wouldn't accept our other tax documents, it must be Income Tax clearance certificate.
Luckily, it is exactly 3 years now since we started business. 2014, 2015 & 2016. So we decided to do the audited account for all the years of our operations. And it has been a big eye opener. The accounting firm handling it was very professional about it and even helped us put in proper processes going forward in our company financial matters. So now, I would have to get monthly salary. No more helping the company with my personal funds without recording them. No more paying for official expenses from personal account (I still find it easier said that done, but at least I recognize the need for proper account reconciliation monthly or frequently).
Today, I finally got the audited copy of our financials, each year separately. Another need arose. By law the two directors must be registered with FRC (Federal Reporting Council of Nigeria). Again, it's one of those bump-into-it-before-you-know-it-existed thing I have gotten familiar with in running a business legally in Nigeria.
The company has two directors as its founders -- my dad and I. So I went to look up the registration process. Luckily, FRC has done a very nice job of making the registration process documented on their website: https://www.frcpay.com/professionals and http://www.financialreportingcouncil.gov.ng/registration/ I just have to decide which qualifying professional body to join. Or will my Microsoft Certificate work?
I think it would be good if the government has an agency, like other countries have, that provides entrepreneurs with the brochure of a detailed step by step list of all the regulatory requirements to meet right from day one of starting their business to the third or fifth year of running their business. Even a pamphlet listing something like the following would be very nice, one won't be having to pay unnecessary fines:
- Apply for desired company name with CAC
- After confirmation that the name is available and reserved, register your company with CAC
- Ensure you register under the appropriate category that will support your business' short and long term goals. There is Business Name, Limited Liability and Limited Partnership (don't know if there is more)
- Immediately register with FIRS for Tax purposes
- Get your FIRS Tax registration certificate
- Always file your VAT monthly, whether you made sales or not. (The penalty can be bloody, it piles up in a crazy way). BTW, if you didn't make sales just fill NIL and won't pay anything that month.
- Within the first 6 months you can apply and get your Income Tax Certificate (so I hear/read) without paying more than N25,000,
- After the year, file your annual returns with CAC.
- Have your account financials audited
- File your income tax no later than 6 months after the financial year or you risk being fined for each month delay (I don't think we can escape our own fine; I call it the cost of ignorance)
- Get your Income Tax Certificate