The verdict in three sentences
The sole proprietorship is perfect to start: low cost, light accounting, up and running in 24-48 hours, but your liability is unlimited on your personal assets. The limited company (Ltd) costs more to set up and run, but it limits liability to your shares and reassures big accounts, banks and institutions. The right call depends on your revenue, your client profile and the risk level of your contracts.
Structure comparison for web freelancers
| Structure | Liability | Tax | Setup cost | Accounting |
|---|---|---|---|---|
| Sole proprietor | Unlimited (personal assets) | Personal income tax | 10 000–20 000 NGN | Light |
| Limited company (single) | Limited to shares | Company income tax | 40 000–50 000 NGN | Full |
| Limited company (multi) | Limited to shares | Company income tax | 45 000–60 000 NGN | Full |
The sole proprietor pays personal income tax (PAYE-style), often under simplified regimes for low turnover. The Ltd pays company income tax but allows optimisation through director's pay and profit deferral. Watch the VAT threshold: once turnover crosses it (25 000 000 NGN in Nigeria as a 2026 order of magnitude), VAT registration becomes mandatory.
Contributions, thresholds and costs to anticipate
| Item | Sole proprietor | Limited company |
|---|---|---|
| Social contributions | Simplified | Director + staff |
| Annual accountant | Optional (150 000–400 000 NGN) | Recommended (400 000–800 000 NGN) |
| Asset protection | None | Yes, clean separation |
| Access to bank credit | Limited | Easier |
| Tender credibility | Low to medium | High |
A freelancer billing up to 5 to 6 million NGN a year often wins as a sole proprietor: fewer fixed costs, lighter accounting. Beyond that, or once contracts carry risk (delays, disputes, heavy projects), the Ltd protects what you have built.
Become a Kolonell referral partner
Whatever your structure, you meet clients who need a website or platform without wanting to build it yourself. The Kolonell referral (apporteur d'affaires) programme pays you for the introduction, with no obligation to deliver.
| Referred project type | Sale commission | Recurring |
|---|---|---|
| Showcase website | 15 % | + 5 % on maintenance |
| E-commerce | 12 % | — |
| Marketplace | 10 % | — |
| Institutional | 8 % | — |
An institutional project at 8 000 000 NGN earns you 640 000 NGN (8 %). On smaller projects, the showcase at 15 % remains the most generous rate by percentage, plus 5 % recurring on maintenance: income that lasts.
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Mini case study
Ngozi, a freelance UX designer in Lagos, bills 3 500 000 NGN a year. She stays a sole proprietor: light accounting, personal income tax, an estimated 250 000 NGN a year saved versus a limited company. In parallel, she refers to Kolonell a banking institutional project at 8 000 000 NGN (640 000 NGN at 8 %) and a showcase site at 500 000 NGN (75 000 NGN at 15 %). Result: 715 000 NGN in referral income the same year, without changing structure or writing code.
FAQ
When should I move from sole proprietor to a company?
Usually when turnover passes 5 to 6 million NGN a year, or once your contracts carry significant financial risk. The Ltd then protects your assets.
Does a sole proprietorship protect my personal assets?
No. As a sole proprietor, liability is unlimited: your personal assets can be pursued for debts or disputes. A limited company shields them.
What tax applies to a web freelancer?
The sole proprietor pays personal income tax, often simplified. The company pays company income tax, with optimisation room via director's pay. Mind the VAT threshold once you scale.
Can I be a referral partner whatever my structure?
Yes. Whether sole proprietor or company, you can earn Kolonell commissions. A business account simply makes payment smoother.
Let's talk about your project. We help you pick the right structure and switch on referral income. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
