Nigeria is becoming a hub for cross-border businesses. The AfCFTA agreement opens access to 1.3 billion people across Africa. AGOA extends duty-free access to US markets. Yet most entrepreneurs fail because they do not understand the regulatory landscape.
Whether you are exporting Nigerian products, importing goods for resale, or running a service business across borders, you need to navigate company registration, tax compliance, foreign exchange management, and customs procedures.
This guide walks you through every step.
Step 1: Choose Your Business Structure
Limited Liability Company (LLC) - Most common for cross-border businesses. Requires 2-7 directors, minimum ₦100,000 capital. Registration with CAC takes 3-7 days. Cost: ₦50,000-150,000.
Partnership - Simpler structure for 2-3 co-founders. Requires partnership agreement. Registration with CAC takes 2-5 days. Cost: ₦30,000-80,000.
Sole Proprietorship
Recommendation for Cross-Border: LLC provides liability protection, credibility with international partners, and tax efficiency. Most cross-border businesses should register as LLC.
Step 2: Register with CAC (Corporate Affairs Commission)
All businesses must register with CAC. Process:
1. Name Reservation: Submit 3 proposed company names to CAC. They check availability. Takes 1-2 days. Cost: ₦2,000.
2. Prepare Documents: Memorandum and Articles of Association (template available from CAC), directors' identification documents, registered office address, shareholders' details.
3. Submit to CAC: File documents online via CAC portal or through a CAC agent. Takes 3-7 days. Cost: ₦50,000-150,000 depending on company size.
4. Receive Certificate: Once approved, CAC issues Certificate of Incorporation. This is your proof of legal existence.
Timeline: 5-10 days total. Cost: ₦52,000-152,000.
Step 3: Obtain Tax Identification Number (TIN)
All businesses must register with FIRS (Federal Inland Revenue Service). You need a TIN to:
- Open a business bank account
- Import/export goods
- File tax returns
- Conduct transactions over ₦5 million
How to Get TIN: Visit FIRS office with CAC certificate, completed TIN form, and ID. Takes 1 day. Cost: Free.
Alternatively: Register online via FIRS portal (firs.gov.ng). Takes 2-3 days. Cost: Free.
Step 4: Open a Business Bank Account
You need a business account to separate personal and business finances. Required documents:
- CAC Certificate of Incorporation
- TIN Certificate
- Proof of registered office address
- Directors' identification and proof of address
- Shareholders' identification
Recommended Banks for Cross-Border: GTBank (strong international correspondent relationships), Access Bank (excellent cross-border services), Zenith Bank (good forex services), UBA (pan-African presence).
Timeline: 2-5 days. Cost: ₦0-50,000 (some banks waive fees for new businesses).
Step 5: Understand Tax Obligations
Corporate Income Tax (CIT): 30% on profits. For small companies (turnover <₦25 million), reduced rate of 20% applies.
Value Added Tax (VAT): 7.5% on goods and services. You collect VAT from customers, remit to FIRS, and claim VAT paid on inputs.
Withholding Tax (WHT): 5-10% on payments to suppliers, contractors, and service providers. You withhold and remit to FIRS.
Personal Income Tax (PIT): If you have employees, you withhold 1-24% PIT depending on salary and remit monthly.
Tax Filing: Annual returns due 3 months after year-end. Quarterly VAT returns required. Monthly PIT returns if you have employees.
Recommendation: Hire a tax accountant (₦200,000-500,000 annually). The cost is worth the compliance and optimization.
Step 6: Manage Foreign Exchange
If your business earns foreign currency (exports, international services), you must follow CBN forex regulations:
Domiciliary Account: Open a dollar/pound/euro account with your bank. Deposit foreign currency here. Convert to naira only when needed.
Repatriation: You can repatriate profits to your personal overseas account. Process: Submit repatriation form to your bank with proof of funds origin. Takes 2-5 days. CBN allows repatriation of legitimate business profits.
Exchange Rate: Use your bank's interbank rate (most favorable) or CBN official rate. Avoid black market rates—they are illegal and risky.
Step 7: Understand Import/Export Procedures
For Exports: Register with FIRS as exporter. Obtain Exporter Code. File export declarations with Customs. Provide bill of lading and commercial invoice. Goods are inspected and cleared by Customs. Timeline: 2-7 days depending on goods type.
For Imports: Register with Customs. Obtain importer code. File import declarations. Pay import duties and VAT. Goods are inspected and cleared. Timeline: 3-10 days.
Tariff Classification: Every product has a tariff code determining duty rates. Misclassification leads to penalties. Hire a customs broker (₦100,000-300,000 per shipment) to handle this.
AGOA Eligibility: If exporting to US under AGOA, your products must meet rules of origin. 35% of value must be from eligible African countries. Maintain documentation proving compliance.
Step 8: Compliance & Reporting
Annual Compliance: File tax returns with FIRS. File annual returns with CAC. Maintain accounting records for 6 years. Conduct annual audit if turnover >₦100 million.
Regulatory Updates: Monitor FIRS, CBN, and Customs websites for policy changes. Tax rates, forex rules, and import duties change frequently.
Professional Support: Engage a tax accountant (₦200,000-500,000/year), customs broker (₦100,000-300,000 per transaction), and lawyer (₦500,000-2,000,000 for annual retainer) as needed.
Timeline & Cost Summary
Business Registration: 5-10 days, ₦52,000-152,000
Tax Registration: 1-3 days, Free
Bank Account: 2-5 days, ₦0-50,000
Professional Setup: Accountant (₦200,000-500,000/year), Lawyer (₦500,000-2,000,000/year), Customs Broker (₦100,000-300,000/transaction)
Total Initial Cost: ₦352,000-652,000 (about $240-450 USD) plus annual professional fees.
Common Mistakes to Avoid
Not registering properly with CAC. Not obtaining TIN. Mixing personal and business finances. Not understanding tax obligations. Using black market forex. Not maintaining proper documentation. Ignoring regulatory updates.
The Bottom Line: Cross-border business setup is complex but manageable with proper guidance. The cost of getting it right (₦500,000-1,000,000 in professional fees) is minimal compared to the cost of getting it wrong (penalties, business closure, legal liability).
Overwhelmed by the regulatory maze? I-STRATA specializes in guiding entrepreneurs through business registration, tax setup, and cross-border compliance. We handle the paperwork so you can focus on growing your business.
Sources: CAC, FIRS, CBN, Nigerian Customs Service, AGOA Secretariat