How to Register a Business in South Africa
In this guide, I will be sharing with you the comprehensive steps to register a business in South Africa. Before you can legally operate a business in South Africa, you need to ensure it’s registered.
South Africa has the second-largest economy on the African continent. It is also ranked 39 on the ease of doing business global ranking by the World Bank and International Finance Corporation (IFC). While the business environment is regarded as challenging by some entrepreneurs, others are taking advantage of the opportunities.
You also need to understand the basic rules and regulations of each provincial administrative procedures before starting a business in South Africa. They’re some administrative procedures, legal rules and statutory requirements that you need to know before you start a business in South Africa.
Starting a Business in South Africa
The South African government has been encouraging citizens and foreigners to create businesses in order to reduce unemployment. However, you can’t start a business without knowing what you’re going into.
Before you even think of registering your company, you must have known what type of business and services that you’ll be offering. Below are some groups of business.
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 its shares to the public 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 to Register a Business in South Africa
Having said that, below is the step by step guide on how to register a business in South Africa.
Importantly, if you want to register a small business in the form of a small-medium enterprise (SME) or a startup, you’ll not have to register the entity like a company. In most cases, an SME can either be a sole proprietorship or a partnership.
However, you need to fulfil some tax obligations regardless of whether you’ll be operating the business on a personal capacity.
Unlike a company, small businesses are not legal entities. As such, you are not required to register it with the Companies and Intellectual Property Commission (CIPC).
After starting your business operations, you are required by law to register for an income tax reference number from the exchequer within 60 days. The government will tax partners in the business depending on the share of ownership. To legalize your small business, apply for the right business permits and licenses from your local authority.
How to Register a Sole Proprietorship in South Africa
A sole proprietorship is a form of business controlled by an individual. As earlier mentioned, you don’t need to register a sole proprietorship, however, you need to fulfil the standard legal and tax requirements.
To register for your tax return, you can do that with South Africa Revenue Service (SARS). SARS combined individual income with the business revenues to determine what the sole trader pays as taxes.
An entrepreneur will have the choice to register the business using either a fictitious name or his/her name. The false name will act as a trading name, and hence, one is required to file for the business name with the Companies and Intellectual Property Commission (CIPC) in the location where the business is based.
How to Register a Company in South Africa
Companies are established as legal entities in South Africa. One unique feature of a company is that it is a separate entity from the shareholders who own the business. Companies are run by directors.
To own a private company in South Africa, you need to register with the CIPC. However, before you do that, you need to know the requirements and processes involved.
1. Requirements to Register a Company in South Africa
You’ll need proper documentation to register a company in South Africa. Some of the documents required by the CIPC to register a company in South Africa include filled copies of a Notice of Incorporation and Memorandum of Incorporation. One can download them on the commissions’ website.
Other personal documents or requisites that you have to furnish are:
- Identification documents (ID) or passports of the incorporators and the directors
- Identification copy of the applicant if none of the directors is making the registration application.
- Power of attorney to sign all the related documents on behalf of the incorporator if he/she is a juristic person
- Certified ID copy to identify a power of an attorney for the previous action
- Valid name reservation in case of a prior filing of incorporation
Note that it will take almost 25 days to have fully registered companies in South Africa from the time of application. However, it will take you a day if you decide to register the company without a reserved name.
2. Reserve a Company Name
Your business must have an identity. As such, you need to file for a company name that will identify your business in the Memorandum of Incorporation.
There are actually three options to register a name
- Register a company using your name
- File for registration of the name later
- Reserve the name and then initiate the company incorporation process later.
Before you even reserve a name, you need to carry out a name search with the CIPC to ensure that no other company bears the trademark or name.
CIPC does not charge business owners to search patented information as long as they have registered on the main portal to access CIPC online services. The last option is using the enterprise number to register the company with the view to filing for a name at a later stage through a name amendment.
CIPC charges R75 for the manual registration of the company’s name and R50 if you file electronically on the portal. From the date of application, it will take three days to reserve the name until its approval. Once approved, the name reservation will be valid for six months.
3. Register with the South African Revenue Services (SARS)
You need to register your company with the South African Revenue Services (SARS) in other to fulfil the legal obligation to remit taxes.
In some cases, a private company will be registered with the taxpayer automatically if the incorporation of the company is done through the CIPC. Otherwise, for other types of businesses registered by sole proprietors or partners, they have to register with SARS within 60 days of starting their business operations.
4. How to Register with Companies and Intellectual Property Commission (CIPC)
One unique thing about this process is that you can do it online or in-person at the designated terminals. The CIPC self-service terminals are located in Pretoria, Johannesburg, Pretoria, Cape Town, or at an authorized bank like First National Bank (FNB).
Have with you the following document or information ready for the registration:
- Certified contact details for the directors and owners
- Owners’ Identification details or passport
- Non- South African applicants need passport copy as proof.
- Details of physical location, email, and bank information
- Signed copies of the registration forms
To access the commission’s online services, you will need to register as a customer to transact any business on the e-services portal. Once registered, you will be given a new CIPC customer code.
Thereafter, you’ll need to deposit some money into the account. All the deductions pertaining to the CIPC company registration and name reservations will be done through your registered account.
How to Register Online with CIPC
If you are registering online with CIPC you must first of all register as a customer on the official CIPC website. You can follow the procedures below to start your business registration in South Africa.
- Visit the CIPC official website: http://www.cipc.co.za/za/
- Hover to the ‘on-line transacting’ and select ‘e-services‘.
- You will be redirected to the main portal.
- Use your password and security code to login into the service portal.
- Once logged in, select ‘register a new company‘.
- In the required field, enter the identification number of the company’s incorporator and director (s).
- You will be prompted to capture or edit the details of the directors. Click ‘save’ to confirm the information.
- Include additional personal details of the directors and incorporators including contacts, postal address, etc.
- Confirm the information and click, ‘save‘.
- Head to the bottom of the page and select, ‘continue‘.
- On the fields provided, include details relating to the company inclusive of authorized shares, email, website, physical and postal address.
- The next step will require you to select a name reservation option depending on the method you had selected earlier. You can choose between the following 3 options: ‘applying for a new name as part of the process’, ‘use a name that has already been approved’ or ‘register the company using the enterprise number’.
- Depending on the option you selected to formalize the company, indicate all the details required.
- Verify all the information included and select, ‘lodge company‘.
- If you have included the correct details on all the required fields, a confirmation notification will pop up. Within a short while, an email will be sent prompting you to provide the supporting documents.
- Print the emailed form and have it signed by the directors and incorporators as indicted.
- Attach the supporting documents (listed earlier) with the signed form and send to the email- [email protected]
Cost of Registering a Business in South Africa
What is the cost of registering a business in South Africa?
The total cost of registering a business in South Africa is R175. You’ll need to pay R125 for company registration without a name registration or R175 for company registration with a name reservation into the CIPC bank account. At the time of registering a company, you need to be 18 years or older.