CAC says your business can still land in trouble if you ignore this one thing

• CAC says paying tax does not replace filing annual returns.

• Annual returns are mandatory for companies, business names and incorporated trustees.

• Failure to file can attract penalties and may eventually lead to deregistration.

• Business owners can submit annual returns through the CAC's online portal.

If you've been thinking that paying your taxes means you've automatically sorted every government compliance requirement for your business, the Corporate Affairs Commission (CAC) has news for you.

According to the commission, paying tax and filing annual returns are two completely different things, and doing one does not excuse you from the other.

The clarification came in a video shared on the CAC's official X account on Thursday, where the commission reminded Nigerians that many business owners still confuse annual returns with tax payments.

In the video, CAC said, "Annual returns is not tax, know the difference!"

The commission explained that annual returns are documents filed with the CAC to keep the commission updated about a registered business or organisation. It is also how businesses confirm they are still operating and should remain on the commission's register.

Unlike tax, annual returns are generally expected even if the business made no money or was inactive during the period being reported.

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The requirement is not only for limited liability companies.

It also applies to:

• Registered business names

• Companies

• Incorporated trustees, including churches, mosques, NGOs, foundations, cultural associations and similar organisations.

Taxes are payments made to the government based on a business's income or activities, while annual returns are compliance filings submitted to the CAC to update the status of the business.

In simple terms, paying your tax does not automatically tell the CAC that your business is still active.

Ignoring annual returns can become an expensive mistake.

Businesses that fail to file may face penalties and other compliance problems. If the default continues for a long period, the CAC says the business could even be removed from its register in line with the law.

For many businesses, that could create problems when trying to access loans, bid for contracts, open corporate bank accounts or carry out other official transactions that require an active CAC status.

The filing process is done through the CAC's online portal.

Depending on the type of registration, business owners may be required to:

• Update their business information.

• Provide details such as turnover and net assets where applicable.

• Upload financial statements or audited accounts if required.

• Select the relevant financial year before submitting the return.

The exact requirements may differ depending on whether the entity is a company, business name or incorporated trustee.

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For many Nigerian entrepreneurs, it's easy to assume that once taxes have been paid, every compliance box has been ticked. But that's not how it works.

The CAC is reminding business owners that annual returns and tax payments are separate legal obligations. Keeping annual returns up to date helps businesses remain compliant, avoid unnecessary fines and reduce the risk of deregistration.

So before you proudly say, "I have paid all my tax," it might be worth checking whether your annual returns are also up to date.