Since the end of apartheid, the Republic of South Africa has finally opened up to the world! After 20 years of a slow yet steady economic growth, South Africa has taken its place in the international business industry and ranked 43rd in the whole world for “Ease of Doing Business” in the year 2014 by the World Bank.
As of now, the country continues to offer great opportunities for entrepreneurs in a variety of industry. South Africa may be a challenging business environment, however, it also offers plenty of success and opportunities for the starting entrepreneurs.
So, if you are planning to start your own business in the African country, here are some tips and steps you need to follow when registering a business in South Africa.
Determine the Structure
The legal structure that your new business assumes can affect the way it handles taxes. Financial and legal obligations. The legal entities available in the county include public company, non-profit, trust and close corporation.
The 3 most common business structure are:
A company run by a director with at least 50 shareholders, a private company is among the most popular form of new business in the country. This type of business offers extra protection of separate business and personal liabilities.
This is an entity that is controlled by 2 – 20 owners, who split profits in proportion to interests. Partners are personally responsible for any business liabilities unless they are a part of a “limited liability” agreement.
This is a type of business structure with a single owner who controls every aspect of the business. With no separation of business and personal assets, the owner is responsible for all liabilities and tax payments.
Reserve a Name of Your Business
Prior to registering with CIPC or Companies and Intellectual Property Commission, you must also come up and register a company name. You can choose to register your chosen business name as a part of the company incorporation process or just register your full name first and the company’s name at a later date.
In registering your company’s name, it is important that you come up with a unique business name to be approved.
Register at CIPC
You need to make a formal registration of your new business in person at self-service terminals, in one of CIPC service centers in Cape Town, Pretoria, and Johannesburg or at an authorized bank branch.
In order to complete a CIPC registration, you need to prepare the following requirements:
- Your personal identification documentation like passports
- The contact information of all business directors and owners
- Company information such as physical address, email and financial details
After the first document submission, CIPC will request for certified copies of the director or owners’ ID documents as well as signed copies of the registration forms.
Open a Bank Account
New businesses will need to have their own bank account in the country. In order to open an account, you will need to provide proof of residence in South Africa, original company documents, and proof of identification.
Even though opening a bank account is pretty simple, providing proof of residence for foreign companies can be a problem so make sure that you meet the requirements ahead of time.
Furthermore, depending on the type of business that you are setting up, further documentation and information may also be required.
Register for Social Security and Tax
The social security schemes of South Africa include the COID or the Compensation of Occupational Injuries and Diseases and UIF or Unemployment Insurance Fund. COID dorms can be downloaded and submitted to the COID office while UIF registration can take place by email.
To register for PAYE, income tax, and other taxes, you will need to go to a SARS branch with all the necessary documents including a bank statement and your registration certificate.
For businesses with a turnover of over 1 million are required to register for VAT by appointment at any SARS branch. SARS will require a completed VAT 101 form, registration documents and certified copies of identification and financial documents.