The South African unemployment rate is increasing in in alarming rate and more and more individuals are in desperate need to earn an income. Starting a business is by no means an easy task and requires a lot of work. The required documentation and legal requirements to start a business can be overwhelming and somewhat daunting.
It can be difficult to know the right steps to take. But that’s ok. Starting your own venture is all about trial and error. Registering a business in South Africa is essential for small business owners for the following reasons:
- The company receives official CIPC certification
- Gain credibility and trust
- Protect your intellectual property
- Attracts investors
- Become eligible for governmental assistance
There are steps you can take to kickstart the development of your business in the cost effective way:
Step 1: Register with Companies & Intellectual Property Commission (CIPC)
Register Via CIPC
CIPC registers Companies and Co-operatives. Businesses that wish to transact with government and the formal sector, or that wish to access certain types of government support, are generally required to be registered with the CIPC. For these businesses, there may also be tax benefits to registration, as registered businesses have a lower tax rate than individuals. Even though you may not be registered with the CIPC, you will still have to be registered with the South African Revenue Services and will still be liable for tax if your turnover exceeds the prescribed threshold.
Registering a business is simple and inexpensive if you follow the steps outlined on the CIPC website, the first step is to get registered as a CIPC customer. However, it brings with it certain responsibilities, irrespective of whether the business is trading or not. For example, you will need to file an annual return and pay an annual fee.
In terms of the Companies Act, 2008, a for profit company (e.g. private company) may be registered with or without a company name while a not for profit company must have a name. When a company is registered without a reserved name, its registration number automatically becomes the company name with (South Africa) as the suffix. This is the quickest way to register a company.
If your initial name reservation application is not approved, you will need to apply for new name
s. You may apply for between 1 and 4 names during each application process. Each name reservation application costs R50 and since it is regarded as a filing fee and not an administrative fee, it is not refundable. It is advised that a free Trade Mark search and browser search to confirm the use of your proposed name before submitting such as part of your name reservation application.
Your name reservation application is only registered or reserved upon written confirmation from CIPC in the form of a CoR9.4. The name reservation is valid for 6 months during which period you must have used it on a company or co-operative registration or a change to a company or close corporation name. A reserved name will continue to be valid for a period of 6 months from the date of approval but it can be extended on application together with the prescribed fee of R30, by the person who submitted the name reservation for a period of 60 business days at a time.
There are five types of companies that you can register. If you wish to run a franchise business, you would register a private company. If you wish to register a church, you would register a non-profit company. A private school could be registered as a private company or non-profit company, depending on its objectives. An association of professionals such as lawyers, doctors, civil engineers etc., may be registered as a personal liability company. For personal liability companies, it is recommended that you consult the relevant regulatory or registration authority of such profession to confirm the type of company registration required
A company registration may vary between R125 and R475 (R125 for a private company, R475 for a non-profit company registered without members).
Apply for Broad-Based Black Economic Empowerment (B-BBEE) Certificate
Exempted Micro Enterprises (Private Companies / Close Corporations) with a turnover of no more than R10 million can register for a B-BBEE certificate at no cost.
- CIPC B-BBEE certificates are free of charge.
- CIPC only provides B-BBEE certificates to Exempted Micro Enterprises; turnover of no more than R10 million.
- A certificate is only valid for a year and cannot be renewed. Once expired a new application must be filed.
- Only directors/members of entities are allowed to apply for B-BBEE certificates, no intermediaries or third parties. You are not allowed to apply for a B-BBEE certificate on behalf of someone, doing so is a criminal offence, and could lead to legal proceedings.
- Providing incorrect shareholder information is a criminal offence, it could lead to legal proceedings.
- Once an application has been submitted it cannot be amended later. Read instructions carefully. Changes will only be recorded when applying for a new B-BBEE certificate after the current one expires.
- Entities that have at least one foreign director/member do not qualify for CIPC B-BBEE certificates.
- All directors/members contact details must be up to date as a unique OTP (One-Time PIN) will be sent to each before an application can be concluded. Functionality to update director/member contact details is available on the CIPC eServices website.
- Directors with more than 10 entities linked to their ID numbers will not be able to apply for CIPC B-BBEE certificates
Step 2: Register Via BizPortal
BizPortal is a platform developed by the Companies and Intellectual Property Commission (CIPC) to offer company registration and related services in a simple seamless digital way which is completely paperless. It was developed in response to the quest of improving the ease of doing business in South Africa, specifically, starting a business.
BizPortal Registration Process Flow:
Step 3: Register with South African Revenue Services (SARS)
Entrepreneurs who want to start a business need to be aware of the tax obligations of running a business whether it is in the form of a legal entity or in a personal capacity. It is also important to note the various options with regard to reducing some of the administrative requirements to make tax compliance easier as well as the different tax incentives and rates that may apply in certain instances.
The following legal entities are required to register at CIPC and as a taxpayer for corporate income tax purposes:
- Listed Public Companies
- Unlisted Public Companies
- Private Companies
- Non-profit Companies
- State Owned Companies
- Collective Investment Schemes
You can also call the SARS Contact Centre on 0800 00 SARS (7277) for more information or assistance with a specific query.
Step 4: Open a Business Bank Account
Now that you have registered your company with SARS and CIPC, the next step is to choose the best bank for your needs. There are various banking institutions in South Africa that provide business banking services and solutions.
Benefits of opening a business bank account:
- Build a business banking relationship
- Multiple access
- Accepting credit card payments
- Improve the image of your business
- Managing transactions
- You want to deal with corporate or government contracts
To register your business bank account, the following documents will be required varying from one institution to another:
- Your identification document
- Proof of entity operating address
- Entity registration documents
You can apply for a business bank account from the following institutions:
Now that your business is registered and ready for commercial trading, depending on the nature of your business you may need to look into the following optional further steps:
- Web Domain and Hosting Registration
- Central Supplier Database (CSD) Registration ( for businesses who can provide goods and services to Government)
- Register or Join Forums and Business Associations related to your industry.
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