Corporate Accounts: Building Trust and Credibility with Your Clients

Hello and welcome to the show. Today I'm out and about, so expect to hear some noise in the background. Today we're going to be looking at a listener question. And this question is, should you open a corporate account? And this is a question that I got from a listener of the show. Her name is Felicia. So Felicia, this is the answer. I know I already answered you in the WhatsApp messages, but still I want to come over here and share some of the stuff that we spoke about so that other people can learn from this interaction as well.

Oh, sorry, one moment. OK, sorry about that. I had to attend to something real quick. So today's question, should you be opening a corporate account? A question from Felicia, Her concern behind the question was whether it affects your business credibility, you know, whether some people rate you too high or rate you too low, whether you have an account. And unfortunately The thing is, yes, some people in Nigeria are going to rate you somehow if you're doing business as a self-employed person or yeah, if you're doing business as a self-employed person, if all you have is just a registered business name and you do not have a proper corporate entity,

that's a company that is limited. What are they called again? Limited liability company, yes. So if you don't have a limited liability company, you're operating as a sole proprietor, operating as self-employed person, operating as business name, yes, there are some people that are going to rate you low as they'll look at you, they'll look down on you. So unfortunately it's one of those things. But as we talk about this thing more, you find out that there are other reasons why you should consider opening a business account.

And so this whole thing of whether it affects your credibility, it's just one factor to consider. OK. Another thing that we looked at was whether not having a corporate account makes it difficult to close some deals. And yes, sometimes it is going to make it more difficult to close some deals because there are some companies that it is a legal requirement that they can only pay contractors or vendors or whoever who have LLCS, who have companies, limited liability companies who have registered with Corporate Affairs Commission and who have tax, what's it called?

Tax, tax TIN, yes, TIN tax identification number and who have made remittances, you know, to the government and blah, blah, blah. So yes, there are some of those businesses that before they pay you, you know, before they sign the deal, they will say why? I show us your CAC registration is OK CAC registration is here. Show us your bank account is OK. This is bank account. Show us your TIN number. So this is TIN number, show us your tax, tax clearance for 2024.

You know, it's OK, this is tax clearance. So there are some people that you have to go through this hassle or else they cannot pay you. And it's a, it's a, it's more of a legal requirement. So if they deal with somebody else who doesn't meet all these things and they will be breaking the law. So if you're doing business with international NGOs, you're doing business with British Council, DFID, USAID, although I don't know if USAID is still in business, you know, 'cause since Trump came in and put the Kabush on everything, just, you know,

guy, just scatter everything. So I don't know if USAID is still running things in Niger. So, but if you're trying to deal with Okaden is also a Jika Japan International Cooperative Agency, it'd be something like that JICA. So if you're doing business with any all of those bodies, them, them, yes, you do need all those things. Go and register with CAC. What else? Go and register with CAC. Go and register with the inline Revenue Service.

Get your team, make sure you do your tax clearance, your everything. If you're doing business with ministries, you're doing business with government, Paris details, you won't need all of that. So yes, they are in some of those instances. Some people are required by law only to deal with people who have registered a business entity and who have a corporate account. Then there are other businesses who just do that as a matter of general policy, that we're only going to do business with companies that have a corporate account and that are registered.

So it's just one of those things. It's not anything that is within your control, but really, are these the main reasons why you should open a business account or a corporate account and register a limited liability company? If you're trying to do it to sell better, then the answer is no. Because the distinguishing factor when it comes to selling your business or selling your services and the distinguishing factor that will show your credibility should all be built around you, should all be built around your selling framework,

your ability to understand value, your ability to demonstrate value. That should be the distinguishing factor because if you're relying on this whole thing of you have a limited company that is a limited liability company, you have corporate account and everything. The thing is all of that only comes up at payment stage at the end. So you have to be confident in yourself at the beginning. So take me for instance, I'm here making this podcast.

I'm talking to you. A whole bunch of you are going to reach out to me and you have no idea whether I have a company that is registered or not. If I have a company that has registered, you do not know the name. And to be honest, it's not until we get to the time of payment that you now know that oh OK, this guy has a, a limited liability company and you know the, the business name is separate from the guys name. So these things only come up our payment anyway.

So do not make these things to be the main thing that is making you show up confidently to the table to come and now talk to somebody and negotiate and stuff like that. So you have to be the distinguishing factor. So that doesn't. So it's not the main reason why I should open a a business account. Now this whole thing of easier payments and broadening the pool of people that you're going to be able to do business with, you know, yeah, that might be a good reason, but it's not the only reason.

Because to be honest, for years when I was doing work with some NGOs, I found out all my payments through other people's companies. By the way, this is not recommended. One of the reasons I did that is because this is international NGOs, they have this net 30 policy. And I just didn't like this whole thing that, you know, have don't work for you January 1st, you're not going to pay me until, you know, January 29th or something like that.

So what I used to do was I had partnerships with certain event planners that look, any business that is coming through these people that are going to pay me, I'm going to put your company on all the paperwork. So they'll pay the money to you. When the thing comes remove, how will I put it? So they're going to pay all the money through to you. You give me 80 or 90% of the payment value. And then when the time, when the time for payment comes clear,

you know, you take the whole money. In other words, this is what I was doing. I go and do business for OK, let me use GCA, for instance, even though I never did business with GCA, that's a Japan International Cooperative something something I'll be development organ, I can't remember, but the Japanese version of of USAID. So let's say I go and do business with Jika. This is what I used to do in the old days, though. I'm not saying you must do this,

but I'm just trying to show you how I used to get around to this whole payment thing. I want to meet a wedding planner and say, look, I'm providing photography to these people and we have agreed that they're going to pay me 100K. They normally pay 30 days. They require people to have registration, corporate account, this, this and that and that. And look, me, I don't have any of this. So this is the deal. I'll put your name on the paperwork after I do the job.

Even though the money is supposed to be 100K. You just give me, you pay me 80 K directly as soon as I finish this job, then at the end of 30 days, the company is going to pay you the full 100K. So you have now profited 20K for just using me to allow your company to funnel through the payments, you know, So is that OK with you? And some people don't mind that kind of setup. In fact, there was one guy I used to do with steady and that's actually how I started doing work with the British Council because after a while I

had done enough work with them and was a matter of look, we've been dealing with you for such a long time, so just come and regularize this thing. And you know, that is how I actually set up my first business account was so that I could now get payments with international NGOs and you know, all these sorts of stuff. But I'm just saying that in the beginning, even when I didn't have that, it didn't stop me. I'll still go ahead to secure the job.

But then I agree with somebody like, look, it is you I'm using for payment. They will pay you. But The thing is, I don't want to wait 30 days. So just give me 80 K or give me 70 K when they pay you, you keep the balance OF20K, you keep the balance of 30K. And you know, we're good. And some people don't mind that kind of arrangement at all. So maybe you might wonder, is all this ethical or unethical? You know, I'll leave that for those of us who business lawyers to decide or to educate us.

But what I'm trying to say is that if you're looking at being able to sell better, no, that's not the only reason why I should set up a business account. If you're looking at the whole thing of easier payments, no, that's not the only reason to set up a corporate account. So in my own opinion, the best reason, the absolute best reason to set up a corporate account, a business account is for separation of accounts and to avoid Co mingling.

Commingling just means I have money, I throw it in one account, my business has money, we throw it in another account, my wife has money, we throw it in the same account. At the end of the day, we're looking at the account and we don't know which money is my own, which money is my wife's own, which money is the business own. This thing can get very, very messy and is one of the reasons why some businesses die because you're commingling.

You don't know what belongs to the business, what should go back to the business, you know, things like that. It makes separating things very, very hard. So for me, that is the best reason to have a corporate account, so that commingling will not become an issue, so that when is my money, it will go into my account. If it's my wife's money, he enters into my account no problem. But one that is business money will go straight to the business account so that we'll avoid one of the big causes of businesses,

which is that people commingle. You can't separate things and then the business Staffs at the end of the day. Then another reason why you should have your corporate account is for accountability purposes. As everything is entering and all the pinging is going there on the business statement. Abby is a business statement on the bank statement, yes, everything will be there. That Chukwudi transferred, this, buyer transferred, that Celestina transferred this On this date, you know everything will be there.

You'll be able to track your inflows and your outflows and that way with that accountability, you're going to be able to track your business growth. So after I got my corporate account and then when I started working with my accountant, I don't have one anymore. But the first accountant, when I started working with him, yeah, all I had to do was just print out all these bank statements, you know, send to him. Then let's see what else.

All the other receipts, you know, you pay for photo book, you pay for frames, you pay for this, pay for that, send him all the receipts. He was able to use all of that to be able to create a picture of OK for this year. This is how much money that came into the business. This is how much that we spent. This is how much that is profits, you know, stuff like that. So yes, I would say these are the best reasons to open a corporate account.

Number one, avoid Co mingling. Separate the accounts. Let's not mix everything so your business will not suffer because it's not receiving the money that it should. Then #2 accountability. Let's be able to track business growth. Let things be clear and #3 tax liability, yes. So your tax liability is also going to be to be clear. You'll now be able to know, OK, how much do I owe the government? It is easier to work through all these sorts of things if you do not Co mingle your account.

And for my dealing with my accountant is also one of the things that made things easier. So back when I used to run everything through my Keystone account, you know, as in my own personal issues, I used to run it through Keystone account, my family issues actually running through my keystore account, business money actually running through my keystore account. So he used to give my accountants a serious headache, serious nightmares trying to separate everything.

But once we set up the corporate account and then I started tracking everything, now everything was a whole lot easier. We now knew clearly how much we owed. And then by the time we showed up to inline Revenue Service, the, you know, trust the idiots now, they'll come for us. They'll come for a pound of pound of flesh. And I said, oh, OK, no problem. You have given us clear accounts. But what about the year this and the year this and the year that?

No clear account for that. And now some of us penalty work. And then I had to pay. I think back then I paid like 60,000 naira in penalties. But what I'm, what I'm just trying to say is that to make sure everything is nice and clear, you don't want into trouble with inline Revenue Service or whoever it is that is trying to tax you, you know, whether municipal council or whatever. It just makes more sense to have a corporate account so that everything is clear.

So that's my own opinion. Should you open a corporate account? I'm going to leave that to you. Is it going to affect your credibility? Yes, with some people, some people will look down on you like a small friend because you don't have a registered company and you don't have a separate bank account. But any leave those people, that's not your problem. Just focus on what the main issues are. Do you need that corporate account to close some deals with NGOs and para State House and government ministries?

You know, yes. So go ahead and get that sorted. But the main reason is not so that you can sell better. You should be distinguishing factor and you should be confident when you come to the table in you, in your product and in your selling process. That is what should give you the confidence. So you can say well, because people don't even know all the LLC and corporate accounting until we get to the payment stage then.

So the best reason why you should have a corporate account and why I'd recommend the corporate account is don't do Co mingling. It will lead to the business to die because they're choking the business. The business won't get the money it needs because it's Co mingling. Then accountability will be hard. Then when it now comes to dealing with tax issues, your accountant is going to have a nightmare trying to figure this thing out.

So that's all for today. Thank you very much for listening to the show. If you'd love to connect with me because you have a question, a similar question, a different question, or because you want a business audit, you want a strategy session, then the number to call me on or to WhatsApp me on or to send an SMS on is 08064662140. The country code is +234. For those of you who are not Nigerian, remember that's my WhatsApp number as well.

Then I also connect with me on LinkedIn. The name to look for is Tavishma IED. Then I also have a YouTube channel the same name, Tavishma IED. All the videos are up there, including the old tick tocks and the everything. So there's over like 1070 up on YouTube right now. So thank you very much for your time and attention. I'll catch you guys at the next episode.