A Life in Tax: Why Mama Bisi Do Not Need to Become a Limited Liability Company. Every morning before sunrise, Mama Bisi opened her small shop in Ibadan where she sold household items and children’s essentials—baby food, diapers, sanitary pads, soap, exercise books, and snacks. Her shop had been registered as “Bisi Household Essentials”, a simple Business Name she created eight years ago.
One day, her friend who ran a cosmetics business said, “Bisi, you must change to Limited Liability Company o! I heard the government has about 50 new tax benefits starting next year, and only companies will enjoy them.”
The news worried her. More registration? More cost? More papers? She decided to call her tax advisor, Mr. Thompson.
“Sir, is it true I must become a company to enjoy these new tax exemptions?” she asked anxiously.
Mr. Thompson smiled. “Relax, Mama Bisi. Let me explain.” “Most of the tax exemptions were created for people like you.”
He told her that from 1 January 2026, the government introduced about 50 tax reliefs to help ordinary Nigerians and small businesses.
“Out of all 50,” he said, “about 80% are for individuals and Business Names, not companies.”
He listed some she already enjoyed without lifting a finger:
- No VAT on many items she sells—food, baby products, sanitary pads, educational materials, medicine.
- No VAT on her shop rent.
- No stamp duty on small transfers.
- Capital gains exemptions if she sells her personal items.
- Pension, NHF, NHIS, and life insurance reliefs available to individuals.
- Lower personal income tax for small earners.
- Rent relief of up to ₦500,000.
She blinked. “So all these are for me as I am?”
“All of them,” he replied. “That is why you don’t need to become a Limited Liability Company—except you want corporate-level incentives.”
Mr. Thompson explained gently that only a few incentives—like company tax holidays, startup exemptions, and some special corporate deductions—were for Limited Liability Companies.
“These are incentives for bigger businesses that want to attract investors, open branches, hire many workers, or operate in a more structured corporate environment,” he said.
“But for your type of business, everyday sales of household essentials—you already enjoy the exemptions meant for the masses.” “How your tax works is simple too.”
He continued, “As a Business Name, you don’t pay Company Income Tax. You pay Personal Income Tax based only on the profit from your shop.”
He wrote it down for her:
- Profit = Money you make – Money you spend on the business.
- Keep all the supporting documents(Invoices,receipts etc) for all your transactions.
- “So if you make ₦800,000 in a month but spend ₦600,000 on goods, transport, electricity, and shop rent, your profit is ₦200,000. That is the amount used to calculate your tax—not the full amount you collected.”
- “And if you were a partnership,” he added, “each partner would simply pay tax on their own share of the profit. Very easy.”
Mama Bisi sighed in relief.
The turning point
“So I don’t need to change my business name?” she asked. “No,” he said with a reassuring smile. “
You already benefit from almost all the key tax exemptions: VAT exemptions, stamp duty reliefs, rent relief, pension-related exemptions, capital gains exemptions, PAYE reductions, and more. Only a few corporate incentives require an upgrade, and unless your business wants to expand big, you are fine.”
She laughed. “Ah, thank God. I thought government had brought another problem.”
Mr. Thompson chuckled. “Sometimes, tax reforms bring relief—not stress.”
Moral of the Story
Small business owners and sole proprietors already enjoy most of the major tax exemptions under the new tax reforms. You only need to upgrade to Limited Liability Company (LLC)if you want corporate-level incentives for big expansion. Otherwise, your Business Name—including your profit and tax calculation—remains simple, affordable, and fully supported by most of the 50 tax reliefs.
Olatunji Abdulrazaq CNA,ACTI,ACIArb(UK)
Founder/CEO,Taxmobile.Online
