How to Register a Business in South Africa?
Starting a business without proper business registration is commonplace in South Africa. While this is within the confines of the law, it limits you from landing big clients. On the flip side, the benefits of registering a business in South Africa are plenty. They include tax incentives, protection of your business name, business compliance, and financial assistance. Your clients are also likely to take you seriously when you have a registered business. Therefore, if you want to expand your small business in South Africa, it is prudent for you to register your business. Read along to learn how to register a business in South Africa.
How to register a business in South Africa
Businesses in South Africa are registered with the Companies and Intellectual Property Commission (CIPC). However, before you approach CIPC for business registration, you need to perform several tasks. First, you have to determine the type of business you’d wish to register depending on the number of people you’d grant control over the business and the number of founders of the business. With this in mind, you can register any one of these four businesses in South Africa.
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This is when two or more professionals or business people join hands or partner and register a business together to leverage their business strengths for the good of their partnership. For instance, a digital marketing expert can partner with a seasoned software developer to create a successful e-commerce platform.
This is when an individual starts a solo venture without co-founders or partners. Often, most businesses begin as a sole-proprietorship and morph into a big company with complex business systems.
Unlike a partnership and sole proprietorship, a public company is a business entity whose shares are traded on the stock exchange. Anyone interested in your business can own a part of the business by buying shares of your public company.
Proprietary Limited company (Pty Ltd)
A Pty Ltd is a business set up that is legally separate from its founders. Essentially, you can set up a Pty Ltd and run it by yourself. In the unfortunate event that things don’t go your way, you can walk away from the businesses without shouldering any liability owed by your business.
Necessary Documents for Business Registration
After determining the type of business you should register, you need to initiate the business registration process. You have to put together a few documents to register a company in South Africa. These documents are:
Memorandum of Incorporation
This document should contain:
– Information of business founders
– The total amount of existing share capital
– Number of alternate directors or directors within the company
Notice of Incorporation
This document should contain:
– Type of business/company
– The incorporation date of the business/company
– Financial year-end
– Registered address (the company headquarters)
– Number of directors
– Company name
– Define if the company name doubles as the business registration number
– Reservation number and reserved name
– Four names for examination by the commission
Supporting documents are the last set of papers you need to register your company. Under this category, you will need:
– Standard admin papers
– CoR 14.1, CoR 15.1A when registering an ordinary private company
– CoR 15.1B when registering a customized private company
– Ratified copies of all incorporators and director’s identification card (ID)
– In the event that you are absorbing a company into your organization, you have to include a power of attorney to act as a representative to sign relevant documents and merge the businesses.
– A legitimate name reservation certificate/document (in case you’ve already reserved your business name)
Online Business Registration
Once you have all the documents ready, you need to:
– Visit the CIPC website
– Register as a CIPC client to access CIPC services
– In CIPC’s transactional portal, find the New Companies within the Companies tab
– Finally, register your company under the New Companies section
You can also register your business through the biz portal. This platform allows you to register your company in 24 hours for R175.
What You Should Know Before Registering a Business in South Africa
While registering a business gives you access to more benefits than trading in the informal sector, it carries responsibilities that you have to attend to whether you make a profit or not. For instance, you have to file your tax returns periodically, as stipulated by the law. Therefore, you have to register with the SARS and get a tax number. After which, you have to comply with all the SARS tax regulations that apply to you. However, you do not need to apply for VAT immediately. Instead, you can optionally register for VAT if your company makes more than R50000 in a year or 12 months. Nonetheless, it is mandatory for any business with an R1000000 income to apply for VAT in a year or 12 months.
There are different categories of companies as stipulated in the Companies Act, 2008. Visit the CIPC website under the “registering your company” section and follow the laid down procedure.