Identify 5 different business that does NOT require registration and 3 that require registration. Discuss them to show why some should be registered and why some should not be registered.


This is sometimes referred to as the solve trader. Sole proprietorship is the type of business organization undertaken by a single person.
Function: the sale proprietor organized the business. He takes decisions about the location of the business the types of business to undertake how to procure capital for the business and above all, he bears all the risks involved in the business and therefore he could be regarded as the entrepreneur.

1.      The sole proprietor takes on-the spot decision when necessary about his business. He does not wait for authority from any quarter before he could take any necessary action in the running of his business.
2.      The sole proprietor is not bound to follow any established procedure of business operation rather his is free to introduce radical changes that can earn him economics advantage
3.      Due to the small number of his employees. He is close to them and is able to know their problem with the result that he usually gives the help where possible. This increases the interest of workers in their job resulting in increase in productivity.      
4.      The sole proprietor has tax advantages. He does not pay tax on his business, rather, the tax he pays is limited to his personal income tax. Since his incomes is not known to the public, he can understate his income with the result that the amount he pays in tax may be small.
5.      the sole proprietor enjoys privacy in his business. The account of his business is not usually exposed to the public if he likes, he keeps record of his business, if he doesn’t he may not keep it. Nobody has the right to question him about this. 

1.      He bears all the risks about his business.
2.      He may not have enough capital necessary for the expansion of his business. Besides, the possibility of raising capital from other sources is limited.
3.      the business does not enjoy the advantages of limited liability.
4.      Since the business operates on a small scale, it does not enjoy the advantages of large scale production.
5.      The continuity of the business may be hampered as a result of the death of the owner of the business.

The co-operative society is a form of business association. It is usually formed by either the producers, consumers or financiers for the benefit of members of the association. Types of co-operative society: there are many types of co-operative society in Nigeria and other West African counties, the best known types are the consumer’s co-operative society. A consumer’s co-operative society is a business association of consumers who pull their resources together to purchase consumer goods on whole sole basis which they store in their co-operative stores for resale to members and non-members at the prevailing retail prices.

There are two main forms of consumer co-operative societies which are:
1.      consumer co-operative wholesale associations
2.      Consumer co-operative retail associations.  

A producer’s co-operative society is an association of producers. These producers decided to come together in the producer’s co-operative society to pull their resources together for the purpose of large scale production.
This is most common in agricultural activities where farmers come together in the form of co-operative societies for larger scale agricultural production. Some producer’s co-operative societies engage in actual large scale production of agriculture products while others are engaged in the marketing of these products. Experience has shown that members of these co-operative ventures gain a lot both financially and maternally from the operations of their societies.

This is the types of co-operative societies formed by low income earners who find it difficult to save. The aim of this society is to make it possible for this group of workers to save for the rating day through this society. From the contributions of members, loans are given to needy members who request for such loans. Such loans are usually given to members at a very low rate of interest.

There are many advantages which members of a co-operative society derive from being members of such a society. Such advantages include:
1.      Members of a co-operative society have their common interests to protect. Therefore they work hard to make the society very profitable since they know that the profit belongs to them alone.
2.      members are encouraged to make purchases from the co-operative store since they know that the amount of the share of the profit of the business which they will get depends on the amount of purchases made from the co-operative.
3.      The society is run along democratic lines. Each members has one vote. He can vote or be voted for. This gives each member a sense of belonging.
4.      The society does not incur heavy expenditures of advertising as members buy from the co-operative store. They more often than not persuade the friends and relations to buy from the store.
5.      In most cases there is free entry and free exit into and out of the society depending on the rules and regulations governing the society?

1.      Sometimes, members of the society who are elected to manage the affairs of the society may not have the necessary managerial skill required for efficient management of the society business. This may lead to losses from the business operatives of the society. This sometimes makes it impossible or the society business operations to yield profit.
2.      Since membership of a co-operative society is not restricted, people of questionable character may join the business. Their membership of the society may lead to the downfall of the society.

A joint stock company may be defined as a unified association of individuals for achieving a particular objective, in most cases for carrying on business activities. It is usually made up of shareholders who invest their money in the business. They bear the risks involved in the business the business is handled by officers who receive salaries. They are usually supervised by the board of directors elected by the shareholders of the company. A limited liability company is a legal person quite different from its owners. It can take legal action against person or other legal entities. Also legal actions could be taken against it.

There are two types of companies. They are the following: the private company: This type of company has membership of two to fifty its shares cannot be offered to the general public. Also the shares of this company are not transferable unless with the full knowledge and support of other member. If the company happens to be owned by five or fewer peoples, it is called a close company.
The public company: the public company is owned by at least seven persons. Its shares are usually sold or bought in the stock exchange, it there is a quotation for the company’s shares. It is expected that the balance sheet of the company should be sent to the registrar of company every year for necessary inspection.

1.      The company is a limited liability company the shareholders of the company enjoy the advantages of limited liability. This is the restriction of an owner loss in a business to the amounts of capital invested in it. For example, if Mr. A. invested N100 in a company and the company happens to go into liquidation because of in solvency etc Mr. A will only lose the N100 he invested in the business. This is unlike the sole trader or partnership where as a result of business failure, the owners have to sell even their property outside the business to pay for all the debt incurred by the business.
2.      Because the company can raise capital through many sources, it can be expanded to any size the board of directors may deem necessary.
3.      There is continuity of the business the death of a member does not lead to the end of the business. If a member dies, his shares can be transferred to his children or they may be sold if the children do not want to continue with the share holding. When these shares are sold the ownership changes hand but the business continues to exist irrespective of who owns it.
4.      The public company is an open company this means that the company is open to anybody who wants to becomes a co-owner. The is possible through the buying of shares of the company. Workers employed to work in the company may become co-owners if they want to by buying shares of the company.

1.       Joint Stock Company has no privacy the statement of account of the company is usually made public so that members of the public know its financial position.
2.       The company has no tax advantage since the financial position of the company is always made public, the government can easily ascertain the amount of money the company make as profit. This profit is usually taxed heavily after allowance has been made for incentive motive.
3.       Shareholders who are the real owners of the business do not control the business. They live in different part of the world although it is expected that they should elect the members of the board of directors who control the business in most cases only a few shareholders attend meetings where board members are elected.
4.       The management is made up of salaried persons. Sometimes they may pursue policies aimed at achieving their own selfish ends. This may be against the interest of shareholders in precise terms, the management may misappropriate funds of the company thereby reducing the profit of the company. This is against the interest of the shareholders.

A debenture is a loan capital or corporate bond. it is as instrument for a limited liability company to raise long term capital. It is not a share and so debenture holders are not co-owners of the business. They are creditors to the company. They don’t share the risks of the business like shareholders and have no say in the management of the business. A debenture is a fixed interest bearing security with a specified maturity date. The owner can claim his capital on maturity. Debenture holders receives a fixed rate of interest on their capital. They are entitled to their interest payment whether profit are made or not and are paid before any dividends can be paid to the shareholders. If the business fails, the debenture holders are first repaid their capital before the shareholders.

There are two major types of debenture:
1. Mortgaged debentures: such debentures are issued on the security of the company fixed assets. If the company is not able to pay the fixed rate of interest or to repay the loan on maturity, the fixed assets of the company such is land and buildings are sold and used first to meet the debts owed to mortgaged debenture holders.
2. Floating debentures: Floating debenture are not tied to any particular asset of the company. However, they have to be paid their fixed rate of interest whether profit are made or not.

Main features or characteristics of private enterprises are as followings:-
1.        The business is owned and run by private individuals or groups of individuals. They include the one-man business, the partnership, and the limited liability companies.
2.        Capital is provided by private individuals. Such capital could be from past savings, or money borrowed from friends or banks (as with the sole proprietorship and partnership). The limited liability companies raise capital from commercial banks and other specialized institutions, or through the issue of shares and debentures.
3.        The main aim of setting up private business concerns is to maximize profits.
4.        Business risks are borne by the owners who may be sole proprietors or partner in the small business, or the shareholders in the companies of high profits are made, they gain but if there are no profits, they lose.
5.        Control and management of the business is in the hands of private individuals. The sole proprietor controls and manages the business himself. Control of the business in the limited liability companies is exercised by a board of directors appointed by the shareholders. They make policy decisions, while the day to day running of the business is the responsibility of the managers or managing director employed by the owners.
6.        Private enterprises are accountable to the owners. In the large business concerns an annual statement of income and expenditure is given by the management to the shareholders.

Three that require registration:
The partnership:
A partnership could be defined as an unincorporated business formed by an association of two to twenty persons, who by an agreement, (usually legal) decide to run a business together and share the risks and profits of the business. In Nigeria the companies act limits the number of partners. The maximum number of partners is likely to differ from country to country.

1.      The number of partners in Nigeria ranges from two to twenty for most business, but two to ten for a banking business.
2.      The partners usually take the major decisions together.
3.      The partners contribute capital or skill or both, according to the agreement reached in return, each of them receives a proportion of the profits as agreed in addition, money could be borrowed from banks.
4.      The partners bear the risks of the enterprise jointly with the exception of the limited partner, the partners have unlimited liability.
5.      The business is not a separate legal entity and cannot therefore sue or be sued in its own name.
6.      The business has no board of directors. The control and management of the business is in the hands of the active partners.

There are two major types of partners: the ordinary or general partner, and the sleeping or limited partner. In addition to the contribution of capital, the ordinary partner takes an active part in the organization and management of the business. He has unlimited liability.
The sleeping partner is the partner who contributes capital but takes no active part in the organization and management of the business in most cases, he has limited liability. A limited partner does not receive a dividend. He receives a fixed rate of interest on his capital.
Articles of partnership:
A partnership is usually governed by a written agreement which is usually drawn up by a legal practitioner the agreement is called a deed of partnership or the articles of partnership. The deed of partnership gives some details about the business such as:
1. The name of the business.
2. The nature of business  to be undertaken
3. The amount of capital or resources to be contributed by each        partner.
 4. How profits and losses are to be shared among the                          partners.
5.         How the partnership may be brought to an end, if need be.
6.         How responsibility for the management of the business is to be shared or delegated.
7.         The method for admitting new partners. The partnership is common among lawyers, accountants, architects and other professionals who are privately employed.

Merits of partnership:
The partnership has a number of advantages.
1.      Capital is more easily obtained, either to begin the business or for business expansion than in thee sole-proprietorship the partners can raise more capital by pooling their resources. The partners also find it easier to borrow money lenders have greater confidence in a group of persons than in only one person. Also, a group may be in a better position to offer the collateral security required for obtaining loans from banks.
2.      The business has greater continuity than the sole proprietorship. The death of a partner may not lead to a total dissolution if the business since the other partner can still go ahead. Also, a partner can enjoy holidays, or take a rest due to illness, without adversely affecting the normal course of business.
3.      There is privacy in conducting business affairs. Like the sole proprietorship, the partnership can keep its business affairs private since it is not required to make its accounts available for public inspection.
4.      Business risks are shared among more people. Each partner is jointly liable with his co-partners for all the debts of the partnership. This reduces the liability of each partner in the event of business failure.
5.      There is the advantage associated with specialization there could be specialization among the partners in the organization and management of the business. Some partners may specialize in sales, auditing, administration advertisement, etc. this could lead to greater efficiency.
6.      The diversity of talents and skills which exist in the partnership could led to greater business efficiency. Each partner may have a special skill or talent which may lead to greater success of the business. The introduction of new partners could help to bring in extra talent and new ideas to make the business more successful.   
7.      There is the likelihood that better decisions would be taken. Since decisions are jointly taken, each partner will contribute his own ideas. The best ideas are taken, and the partners are likely to come up with better business decision, hence, the saying that two head are better than one.
8.      There is still personal contract with both employees and customers. This is because of the relatively small size of the business when compared with the limited liability companies.
9.      Like the sole proprietors, the partners can set up another small business. Also, while having a joint business, each of them could still run another small business on his own.

Disadvantages of partnership:
1.      The partnership has limited capital. The maximum number of partners in the partnership is twenty therefore, the amount of capital that can be contributed. by the members is relatively small compared with those of companies. It cannot raise capital by issuing debentures and shares. The limited resources of the business limit business expansion.
2.      There is unlimited liability for the active partners as there is for the sole proprietor if the business fails, the private assets of the active partners may have to be sold to meet the business debts.
3.      The business may not have perpetual existence. The death or withdrawal of a partner may lead to the end of the partnership. If a partner dies, his relative may want to withdrawal his share in the business the death or withdrawal of a partner may necessitate the drawing up of new partnership agreements. Therefore, the continuity of the business may be adversely affected.
4.      The business is not a separate legal entity. A partnership cannot sue or be used in its own right the partners can be sued separately or jointly as a result of may breach of contract on the part of the business.   
5.      Each partner is responsible for the action of the others. Each partner can enter into a contract for the partnership which is binding on the others. This is disadvantageous because a partner may be called upon to pay for losses caused by the faults of his partners.

Limited liability companies:
Limited liability companies are of two types the private limited liability company or the close company and the public limited liability company or the joint stock company.
The private limited liability company features:
1.         The number of owners (who are shareholders) ranges from two to fifty. They own the business and bear the risks jointly.
2.         The business is a separate legal entity. It is recognized as a personality in law it is quite distinct from the owner in the eyes of the law. The business can sue or be sued in its own name without involving the owners it is registered as a company a corporate body.
3.         The shareholders have limited liability in the event of business failure the amount which a shareholder can lose is limited to the fully paid up value of his share or the capital he has invested in the business. His personal assets are protected by the law.
4.         There is continuity of business operations. The withdrawal or death of a shareholder may not affect the existence of the company.
5.         There is a board of directors who control the business by taking most of the major decisions. Management or day to day running of the business is in the hands of a managing director.

Advantages of private limited companies
1.      They can raise capital more easily than the sole proprietorship or the partnership. They can raise capital by issuing debentures, unlike the sole proprietorship or partnership. It can also borrow money more easily from banks. Since the maximum number of shareholder is up fifty, more capital can be raised through selling shares.
2.      The shareholder have limited liability if the business fails, the lose only the full paid up value of their shares in the business the shareholders personal assets are thus protected from business bankruptcy or insolvency.
3.      The business is a separate legal entity. The owners are different from the business in law. The business can use or be sued in its own name. The owners of the business can not be sued personally for breach of contract on the part of the business.
4.      The business enjoys internal economics of large-scale production. Since the business is large production can be carried out on a large scale, leading to economics in production.
5.      The business has greater continuity than the sole-proprietorship or partnership. The illness or death of a shareholder does not affect business operations adversely. The business continues to exist unless it becomes bankrupt or is wound up.

Co-operative associations:
A co-operative society is a form of private business organization. It is a self help organization formed either by consumers or producers who have common interests. It is therefore set up for the benefit of the members who have pooled their resources.
1.      There is no limit to the size of it membership. It is usually open to persons with identical interests who high to join.
2.      Profit or dividends are shared according to the purchases from or sales to the society within a given trading year, that is, according to the member’s patronage. All the member bear the risks of the business together.
3.      They have unlimited liability.
4.      The aim of setting up a co-operative society is to help the members who have pooled their resources.  
5.      A co-operative society is a high democratic form of business organization. Each members has one vote only and can stand for election into an office. They have equal right. Although a management committee is elected to run the business, the control of the business in the hands of all. Each of them takes part in major decisions.

Types of co-operative associations:
Different types of co-operatives exist in West African
1.      Producer’s co-operatives:- A producer’s co-operative society is an association of producers of a particular commodity. They usually come together for the purpose either of producing the commodity or of marketing their products. A numbers of producers could pool their resources and produce jointly they could be farmers, industrialists, etc. a good example of a producers co-operative is an agricultural co-operative society. Agricultural co-operatives are very common in West African countries. Amy small scale farmers pool their resources in order on order to produce on a large scale and enjoy economics of large scale production. The farmers could jointly own and cultivate hand for planting food crop such as yams, maize, cassava or cash crops such as coca, palm produce, cotton etc. They could also practice other forms of agricultures such as poultry-rearing fishing, forestry, etc. There are also industrial co-operatives which engage in manufacturing.
2.      Consumer’s co-operatives: A consumer co-operative is an association of consumers. They buy goods in bulk at wholesale prices and sell them at retail prices to both members and non-members of the co-operative.

Consumers’ co-operative societies do not usually take part in the production of the commodity which they sell. They are usually concern with the marketing or distribution of commodities.

Why some should be registered and why some should not be registered are:
Those does require registration, them the one who take their risks by themselves and also some does not pay tax and take it as a profit in the business.

Why those are require registration their obtain the power or authority over their business, make them to have the confidence over their business and also to pertronis in the market by the government authority and power over their business, and in the international.
Share on Google Plus


The publications and/or documents on this website are provided for general information purposes only. Your use of any of these sample documents is subjected to your own decision NB: Join our Social Media Network on Google Plus | Facebook | Twitter | Linkedin