Choosing the right business commencement date during CAC registration is one input that many CAC agents always struggle to get it right.
The Corporate Affairs Commission usually asks for Business names to state their commencement date in the registration process.
The issue of commencement date has caused a lot of confusion, especially for inexperienced professionals such as lawyers or accountants who are involved in the registration process.
What is the CAC Business Commencement Date in Nigeria?
The CAC business commencement date is simply the date on which you file the registration with the commission.
Yes, you got me right.
Whether you are an agent or a business owner trying to register your business, your business commencement date should be the date you carry out the registration, not the date you started your business.
If you have been in business since 2023, and you are registering it in 2025, choose the date of the day and month in 2025 as your business commencement date.
This is because, according to the company law CAMA 2020, any new business in Nigeria is supposed to register with CAC within 28 days of operations.
If you backdate your business commencement date in Nigeria, you will be required to pay CAC a penalty fee of ₦150 starting from the date you submitted and made payment for registration to the present date.
Let’s say you selected Jan 1, 2023, as your business commencement date, you will be paying ₦150 multiplied by the number of days from 2023 to the present date and year (2025)
Now you see, this little mistake can cost you a lot of money. That is more than the cost of registration
Why the Commencement Date Matters for Nigerian Businesses
Business commitment date in Nigeria means different things to different people. To CAC, they want to assess if the business failed to comply with the mandatory requirements of incorporation within the first 28 days to charge the relevant penalties.
To the business owner, the business commencement date is the date he finally launched, publicized his business and made his first sale.
For tax purposes, or let me say the tax body in Nigeria, the commencement date is applied differently
The commencement rules govern how the profits derived from a company which can be taxed will be determined in the first three years of business. The old rules were worked in a way that the same set of profits would be subjected to tax in multiple tax years.
So, in essence, when filing tax returns, use the original date of commencement of the business, but when registering with CAC, use the current date you are making the filing and payment to avoid penalties.
Difference Between Incorporation and Business Commencement Date
The incorporation date is simply the date your company was registered and approved by the Corporate Affairs Commission as a legal entity. This approval comes with a BN, RC, or IT number as a unique identifier for your registered name.
If you submit a registration to CAC and make payment the same day, the incorporation date will be the day CAC finally approves the registration after you have attended to all necessary queries (If any)
On the other hand, the business commencement date is the date you launched your business, held an opening ceremony and made your first sale to a customer client
Choosing the Right Commencement Date for Tax Efficiency
For tax purposes, the business commencement date should always be the date you started the business. The preceding year basis is usually applied when computing the tax base for companies.
FAQs About CAC Business Commencement Date in Nigeria
Below are some FAQs you need to check on the business commencement date in Nigeria
Q: What is a Business Commencement Date in CAC registration?
A: This is the date you are making the filing to CAC and not the date you started business
Q: Is the commencement date the same as the incorporation date?
A: No. For tax purposes, the commencement date is the date you started business. On the other hand, the incorporation date is the date you registered with CAC
Q: Can I choose a future date as my commencement date?
A: Yes. CAC usually allows you to specify a future date as your commencement date, especially if your operations will start later. This can be strategic for tax planning and compliance scheduling
Q: Can I change my business commencement date after registration
A: No.
Q: What if the company is foreign-owned?
A: The same rule for business commencement date will apply
Conclusion
In conclusion, choosing the current date of commencement of business during CAC registration will save you from paying the commission penalty fees that would have kept your registration queried forever.
If you are still using old dates as commencement during CAC registration, I hope this guide has enlightened you.
