Start-up business – Things You need to know

How to start-up a business in South Africa is absolutely up to you and is very simple. People start to question their future. Especially with the recent looting in SA. Most people are thinking of starting their own businesses.

Frequently asked questions (FAQs) about start-up business in SA.

Going to business not knowing the ins and outs costs a lot of money. You need to do a research before you can do start-up business. Go to Google and search how to start up a small business? Starting up a small business in South Africa comes with responsibilities. You need to search how to register a company? And you need to renew your company certificate every after 12 months. This is filing the CIPC Annual Returns. Your company will be on the de-registration process in you don’t file your returns. Then, the CIPC would finally de-register your business if you still don’t pay the outstanding returns. This is not good, because you will be disqualified. And that means you will never register any business in South Africa.

You also need to file the SARS annual returns every after 12 months. And please note that, you have to file the CIPC returns first. Then, you can file the SARS’ returns. And SARS can fine you if you do not file your returns.

Why do I need to register my start-up business?

There are several reasons why you should register your business in SA. Registering your company protects your assets. This protects your personal assets against the company’s liabilities. And this can happen in case of lawsuits. That means your start-up company is the separate entity.

READ: Company Registration in South Africa

The second reason is to gain trust from your potential clients. That’s because most people don’t trust unregistered businesses.

And no one can claim your business name when you have legally registered it. Unlike when you are unregistered.

And it is easy to get bank loans when you have company registration documents. That’s because funders don’t trust unregistered businesses. So they do not fund them.

Where do I register my start-up business?

You can register your company on the Companies and Intellectual Property Commission (CIPC). And you can also register on the Bizportal website. Some of the banks do company registrations as well. So, you can also register at Nedbank and First National Bank (FNB).

There are also individuals and businesses that do company registration services. But you must be careful and choose the ones with good reviews.

Types of Businesses in South Africa

There are five types of companies that you can register in South Africa. 

Here is the clear definitions of the types of companies:

1. Profit Companies: It is a company which aims to generate profit through its operations.

  • You would register a private company if you wish to own a franchise business. 
  • And then you would register a non-profit company if you wish to register a church. 
  • And you can register a private school as a private company.
  • Or you can also register it as a non-profit company. And this depends on its objectives. 
  • You can register an association of professionals such as lawyers, doctors, civil engineers as a personal liability company. But you need to first consult the relevant regulatory. Or registration authority of such profession to confirm the type of company registration required.

2. Non-profit company: A company incorporated for public benefit or other object relating to one or more cultural or social activities, or communal or group interests.

3. Personal liability company: Company directors and past directors are jointly liable for any debts and liabilities arising during their periods in office. And the company name ends with the word ‘incorporated’.

4. Public companies: A public company is a company that has issued securities through an initial public offering (IPO). And it trades them on at least one stock exchange. It consists 50 or more shareholders and its shares are available to the public..

5. Private company: Is any company that ends with ‘Proprietary Limited’ or ‘(Pty) Ltd’. And it has one (1) to 10 directors.

How much does it cost to register a company?

A company registration may vary between R125 and R475. Where R125 is for a private company, and R475 is for a non-profit company without members. It is R175 with a reserved company name, and that means a company name reservation is R50

You can register a profit company (private company) with or without a company name. But a not for profit company (non profit company) must have a name when you register it.

When you register a company without a reserved name, its registration number automatically becomes the company name. And it ends with (South Africa) as the suffix. That is the quickest way to register a company. And you can register it within few minutes.

Then you can apply to change a company name at a later stage. But you need to apply for a name reservation first at a cost of R50. You need to supply between 1 and 4 names. When not successful, then you will re-apply at an extra R50 for another new names.

How many people do you need to register a company?

You need at least one person to register a company in South Africa. A private company needs 1 – 20 directors.

How long does it take to register a company in South Africa?

It usually takes less than 10 minutes or 1 working day.

Can foreigners register a company in South Africa?

Yes, but you need to provide a valid passport copy or RSA ID document and have a residential address in South Africa.

Should I register my new company for tax?

Yes, and the CIPC is now working with SARS to make things much easier for entrepreneurs. That means all new companies get the company documents with an income tax reference number from SARS when they register.

Then small businesses with a turnover of R87, 300 or more qualify to pay turnover tax. And they also pay employees’ tax according to their threshold. And then small businesses with a turnover of R1 million or more per annum qualify to pay VAT. But you can voluntarily apply for a VAT if your turnover is R50,000 or more.

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