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The Basics of How to Register a Small Business in South Africa
Regardless of whether you are a making profit or the size of your company, there are advantages to registering your business in South Africa. These include business name protection, tax incentives, financial assistance and business compliance.
We answer all your other frequently asked questions (FAQs) about registering a new business:
Where do I register my small business?
- You can register your company online on the Companies and Intellectual Property Commission (CIPC) website.
- You can also register your company via a bank, including Nedbank and First National Bank.
What is the CIPC and what does the law say?
The Companies and Intellectual Property Registration Office (CIPRO) was replaced by the Companies and Intellectual Property Commission (CIPC) in May 2011, together with the New Companies Act, the act changed the way business owners had to register their companies. The Act stipulates that no new close corporations (CC) can be registered, but those registered prior to 1 May could continue to operate as CCs.
All companies fall under specific categories with, each with specific requirements in terms of the documentation that is required. The Companies Act provides for two main categories of companies – non-profit and profit companies, with other types falling under these categories.
What types of companies can register with the CIPC?
You can choose to register your company as one of the following:
1. Non-profit companies: A company incorporated for public benefit or other object relating to one or more cultural or social activities, or communal or group interests.
2. Profit companies: A business/organisation whose primary goal is making money, this includes anything from retail stores to restaurants to insurance companies to real estate companies.
3. Personal liability companies: Company directors and past directors are jointly liable for any debts and liabilities arising during their periods in office. The company name ends with the word ‘incorporated'.
4. Public companies: A public company is one that has issued securities through an initial public offering (IPO) and is traded on at least one stock exchange. It has more than 50 shareholders and its shares are offered to the public.
5. Private companies: These are similar to what was previously known as close corporations. Some of the changes made to private companies include fewer disclosure and transparency requirements, no longer being limited to 50 shareholders, and with a board that must comprise at least one director. The name of a private company must end with the expression ‘Proprietary Limited' or ‘(Pty) Ltd'.
How long does it take to register a company?
According to the Online PTY Registration, a name reservation takes between seven to 21 days. A company certificate can be registered within three to five days afterward, depending on whether you have submitted your documents on time, and the workload of the registrar's office.
How many Directors are allowed in a company?
At least one director.
Can I register a company if I have been blacklisted?
Yes.
Can foreigners register a company in South Africa?
Yes. In order to do this, you need to provide a valid passport copy or RSA ID document and have a residential address in South Africa.
How much does it cost to register a business in South Africa?
A company registration may vary between R125 and R475 (R125 for a private company, R475 for a non-profit company registered without members). There are five types of companies that you can register. If you wish to run a franchise business, you would register a private company.
What is needed to register a company in SA?
The documents you will need to complete the registration are:
- Your name reservation confirmation letter;
- Your signed COR 15.1A form;
- A certified copy of your South African ID and/or;
- Completed Power of Attorney form – should you be acting as a representative or proxy.
Am I allowed to register a company without a company name?
Yes. According to the CIPC, in terms of the Companies Act, 2008, a company may be registered with or without a company name. A company that is registered without a reserved name will still get a registration number, this will automatically become the company's name.
CIPC says the company can transact with a trading (business) name or may apply to add a reserved name at a later stage. In this case, the company will need to first reserve a name and then apply for a name change.
How does the name reservation work?
The process: According to the CIPC, if your initial name reservation application is not approved, you will need to apply for new names. During each application process you may apply for up to four names during each application process.
The cost: Each name reservation application costs R50. A company registration may vary between R125 and R475 (R125 for a private company, R475 for a non-profit company registered without members).
Should I register my new small business for tax?
For every new business established, you are required to register with your local SARS office to obtain an income tax reference number. Registration must be done within 60 days after starting operations by completing an IT77 form, available at your local SARS office or from the SARS website.
Small businesses with a turnover of up to R1 million per annum will now be able to pay certain taxes (turnover tax, VATand employees' tax) twice instead of once a year, making the process more efficient for qualifying small business owners.
Turnover tax is a simplified tax system to make it easier for micro businesses to comply with their tax obligations. Turnover tax is worked out by applying a tax rate to the taxable turnover of a micro business. Depending on other factors such as turnover, payroll amounts, whether you are involved in imports and exports etc. you could also be liable to register for other taxes, duties, levies and contributions such as VAT, PAYE (Pay-as-you-earn) UIF contributions (unemployment insurance contributions).
Where can I apply for funding after registering my business?
According to the South African Government, you can apply for various types of funding which is available through the Industrial Development Corporation or the Department of Trade and Industry's Government Investment Incentives. Besides government funding, you can also apply for funding from the private sector.
What support is available to me after I have registered my business?
The Small Enterprise Development Agency (Seda) provides business development and support services for small enterprises. Seda will give you all the information you need to start a business, including how to write a business plan, and once you have a business, to grow it.
The above information is sourced by the Online PTY Registration, CIPC, South African Government website and Sars
