What is a Business Entity Report
Business Entity Report otherwise known as “Annual return” is a compulsory statutory requirement for every registered business entity or organization.
Whether you are running an enterprise, Limited liability Company, or incorporated trustee, you are required to file annual returns every year with the Corporate Affairs Commission (CAC).
The law requires every company or registered corporate entity to file returns annually in the prescribed form provided not later than 18 months after incorporation (i.e after registration with the CAC in Nigeria).
The essence of this exercise is to keep the records of the company up to date and to ensure that the company is a going concern i.e. not to be liquidated in a foreseeable future time.
Changes in the company’s status such as address, share capital, directors, auditor etc. within the year in review as well as the financial activities of the company are some of the information contained in the annual returns form.
Where the CAC has reasonable cause to believe that a company is not in operation, the law empowers the Commission to strike off the name of such company from the register of companies after following due process of inquiry as to the status of the company.
In reality, not every company the Commission considers dormant is actually dormant but the commission relies on one major criterion for this exercise which is the failure to file annual returns.
It is compulsory to note that Annual return is also required to be filed to the Relevant Tax Authority (RTA).
According to the law, a new company is expected to file a return to the RTA within 18 (eighteen) months of commencement or 6 (six) months after the first account is prepared whichever comes first.
While existing business should file return within 6 (six) months after his financial year end.
Benefits of Business Entity Report
- It helps to keep the company or entity’s name on the register at CAC. Occasionally, the CAC carries out a de-listing exercise and the failure to file annual returns is a signal that the company may not be in operation. As such it could be de-listed from the register.
- Filing Annual return is also necessary for tax purpose.
- It saves time especially in case of an urgent need to obtain a document or process any other application at the CAC. Where annual returns are outstanding, the CAC will not process any application by a registered entity unless the annual returns have been filed up to date and penalties, if any, paid up.
- Up-to-date annual return filing is usually a criterion for most contract bids in public or private establishments.
- Filing annual returns when due will prevent businesses from payment of penalties that apply for late filing of annual returns.
Read also Nigeria Business entity report
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