When it comes to starting a business in Nigeria, one of the first questions you’ll eventually face is:
“What type of company should I register?”

And honestly, the confusion is understandable. We see “enterprise”, “limited”, “PLC”, “LLP”, “guarantee”… and most people have no idea what any of these things really mean.

So in this guide, we’re going to break down all seven types of companies recognised under Nigerian law — in simple English, with real-world explanations.

Let’s get into it.

---

1. Sole Proprietorship / Business Name

The easiest and most common business structure in Nigeria

A Sole Proprietorship is basically what most Nigerians run without knowing the name for it.
This is when one person owns and controls the entire business.

If you sell clothes online, bake cakes, cut hair, do POS, run a small agency, repair phones, or operate a hustle where you alone do the work and make the decisions — that’s a typical sole proprietorship structure.

The important thing here is:

There is no separation between you and the business. Everything is in your name.

If the business makes profit, the money is yours.
If the business enters debt, the debt is also yours.

This structure is usually the starting point for many Nigerians because it’s the cheapest, fastest, and easiest way to kick off a business idea. But because everything rests on one person, it also has limitations.

Key Features

• Owned by one individual

• Unlimited personal liability

• Easy registration

• You pay personal income tax, not company tax

• Business ends when the owner dies

Advantages

• Very simple to start

• You make all the decisions

• Zero ownership conflict

Disadvantages

• Your personal assets are at risk

• Harder to raise capital

• Less credibility compared to a company

---

2. Limited Liability Partnership (LLP)

A partnership where everyone still gets liability protection

Think of an LLP as two or more people running a business together, but with the protection that normally comes with a company.

In a regular partnership (like two friends running a store), both of you can be personally liable if things go wrong. But in an LLP:

The partnership itself is treated like a “company.”
It can own property, enter contracts, sue, and be sued — without pulling your personal assets into the mess.

An LLP is great when two or more professionals want to co-run a business but still want to limit their individual risk — for example:
law firms, consulting firms, agencies, accountants, architects, or even co-founders of a tech startup.

Key Features

• Minimum of 2 partners

• Protects partners’ personal assets

• Legally recognized like a company

• Partners are taxed individually

• Requires partnership agreement

Advantages

• Good balance of flexibility + protection

• Profits go directly to partners

• Low setup complexity

Disadvantages

• Partners need to agree on major decisions

• Raising capital is still limited compared to a full company

---

3. Limited Partnership (LP)

More flexible than an LLP — but not a separate legal entity

A Limited Partnership is a partnership with two different roles:

• General Partners – the ones actively managing the business

• Limited Partners – investors who put in money but don’t run the business

This structure is more popular in investment groups, real estate projects, or ventures where people want to invest without being in daily operations.

Unlike LLPs, the business itself is not treated as a separate legal entity.
This means general partners still carry personal liability.

But limited partners are protected — their liability is capped at the amount they invested.

Key Features

• 2–20 partners

• Combination of general + limited partners

• Registered with CAC

• Profits taxed individually

• Can include corporate organizations as partners

Advantages

• Investors can join without full liability

• No corporate tax

• Simple structure

Disadvantages

• General partners carry full risk

• Slow decision-making

• Membership capped at 20

---

4. Private Limited Company (Ltd)

The most popular and most flexible proper company structure in Nigeria

If you’ve ever heard someone say “I want to register an LTD,” this is what they mean.

A Private Limited Company is a full, legally recognised company where ownership is divided into shares.
The company is treated as its own “person” in the eyes of the law.

That means:

Your business assets and your personal assets are separate.

You get credibility, you get structure, and you get protection.

This is the structure most SMEs, agencies, tech startups, and foreign-owned businesses use.

This is also the structure that allows you to raise capital from investors, add shareholders, hire formally, and run a fully structured business.

Key Features

• 2–50 shareholders

• Limited liability

• Pays corporate income tax

• Requires Memorandum & Articles of Association

• Must file annual returns

• Highest credibility for small/medium businesses

Advantages

• Strong legal protection

• Easier to raise money

• Business continues even if owners change

• Professional structure

Disadvantages

• Higher setup cost

• Requires proper documentation

• More compliance requirements

---

5. Public Limited Company (PLC)

For massive businesses that want to sell shares to the public

A PLC is the structure big companies use — especially companies that want to raise capital through the stock market.

If you see a company listed on the Nigerian Stock Exchange, it is a PLC.

They can raise billions by selling shares to the public, but in exchange, they must follow very strict regulations.

Key Features

• Minimum of 2 shareholders

• No upper limit on shareholders

• Overseen by CAC, SEC, and NSE

• Must publish a prospectus

• Very transparent reporting

Advantages

• Can raise huge capital

• Very strong credibility

• Perpetual existence

Disadvantages

• Very expensive to run

• Heavily regulated

• Requires frequent public disclosure

This is not what 99% of small businesses need.

---

6. Unlimited Company

Looks like an LTD, but without the “limited liability” protection

An unlimited company is extremely rare because the owners’ liabilities are… well… unlimited.

If the company fails:

Members must contribute their personal assets to settle the debt — without limit.

Why would anyone choose this?

Some businesses prefer it because it allows for more confidentiality in certain financial reports and provides more flexibility in structure.
It is sometimes used for very special financial or professional arrangements.

Key Features

• Owned by one or more persons

• Members have unlimited liability

• Registered like a private limited company

• Pays corporate tax

Advantages

• Greater flexibility in how the company operates

• Seen as a full corporate structure

• Can raise capital (privately)

Disadvantages

• Very high personal risk

• Not suitable for most entrepreneurs

---

7. Company Limited by Guarantee (CLG)

The structure used for NGOs and non-profits

This one is completely different from everything else on this list.
A Company Limited by Guarantee is made for:

• NGOs

• Charities

• Foundations

• Religious and social organisations

• Clubs

• Educational bodies

There is no share capital.
There are no shareholders.
The members don’t receive profit.

Instead, the company uses all its funds strictly for its mission — charity, education, community service, etc.

And if the company winds up, members only contribute the small amount they guaranteed (like ₦50,000 or ₦100,000).

Key Features

• No shareholders

• No dividends

• Members act as guarantors

• Registrar-General approval required

• Strict compliance rules

Advantages

• Limited liability

• Tax-exempt if properly registered

• Ideal for non-profits

Disadvantages

• Cannot distribute profit

• Approval process can take time

---

Final Thoughts — Which One Should You Choose?

The best structure really depends on what you are trying to build.

Here’s a simple breakdown: