How To Start A Software Company in Nigeria

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How To Start A Software Company in Nigeria

Nigeria is currently one of the most prolific economies in Africa. There are several factors which have contributed to Nigeria’s economy, among which some of the most important are the skilled workforce and several industries, such as the financial, the gaming and information technology ones. Speaking about the Nigerian IT industry, it offers several options to those interested in starting a business here. One of the most interesting options is creating a software company in Nigeria.

If you want to open a software business in this country, our Nigerian lawyers can explain the legislation applicable in this domain.

What types of activities can a Nigerian software company undertake?

The creation of software is not the only activity a Nigerian company can carry out. Even if it is the most important one, it should be noted that as part of the IT industry, a Nigerian company operating in this field can offer a wider range of services.

The current software sector in Nigeria is seeking for those able to set up a company which can offer:

  • –          software development;
  • –          web design creation;
  • –          quality assurance;
  • –          database management;
  • –          system administration.

Engineering is also a very important part of the Nigerian software sector.

Our lawyers in Nigeria can offer information on the licenses required to create a software business here.

Starting the software company in Nigeria

Opening a Nigerian software company depends on the qualifications of the business owner or the amount one is willing to invest.

It should be note that Nigeria is currently one of the most sought expat destinations in Africa, therefore most of the specialists in the IT field come from other African countries. They usually work in a Nigerian company before deciding to venture on their own, therefore experience is very important when creating a software company. Those who have worked as software engineers in Nigeria can open their own companies in the industry or they can find partners to associate with. Either way, the company registration procedure is a must. However, Nigeria offers many tax benefits and assistance programs to those who open IT companies

Step-by-Step Guide to Starting a Software Company (Legally)

 

STEP 0: TALK TO A LAWYER

If you can afford it, the best way to start your company is to have a lawyer guide you through the process.

STEP 1: FIGURE OUT THE TEAM

Who are your team members? Will they get equity (stock)? Will they be paid on contract? Will they be employees? (Most people try to avoid the latter if possible.)

The first step is to understand who’s on your team and how you’ll be working together. Often there’s a contract programmer who is considered to be on the team but doesn’t want equity (they want cash). Understand what everyone will contribute and what they’ll get.

STEP 2: MORE THAN ONE FOUNDER?

You may or may not want a shareholders’ agreement (it can be quite expensive and time-consuming to create). You may or may not want a vesting arrangement with the founders/employees.

STEP 3: INCORPORATE

Incorporating is almost always the right move for a tech startup. Among the many reasons to do this are that there are better tax credits for incorporated businesses (e.g. SR&ED).

If you’re just starting off then a sole proprietorship or partnership might be a more appropriate vehicle for your software business.

STEP 4: SHAREHOLDERS’ AND DIRECTORS’ RESOLUTIONS

These are the formal steps necessary to turn a freshly incorporated company into your company (re: this is how you issue the initial shares).

Self-incorporators can miss this essential step. Filing through Corporations Canada is not the end of the process!

STEP 5: INDEPENDENT CONTRACTOR AGREEMENTS

Many businesses have contract programmers. It’s essential to make sure that you own the IP that they’re producing (don’t rely on your contractor’s agreement [that they downloaded off the Internet]).

STEP 6: ASSIGN IP TO COMPANY

Make sure all of the IP (software code, graphics, etc.) is assigned to the company. Investors will want to see the stack of paperwork that shows that you own all your own code. Often there’s pre-incorporation IP that needs to be moved into the company.

STEP 7: ACCOUNTING

An accountant can save you a lot of money and you should consider getting one. They can probably also help with tax credits.

STEP 8: MAKE SOMETHING

Getting the legal steps right is great but if you don’t make something people want to use then you don’t have a business.