Five easy steps to start your small business in South Africa
Step 1:
Registering your business with the Companies and Intellectual Property Commission (CIPC).
You must first choose the organizational structure for your company. Are you going to form a company, a partnership, or a single proprietorship?
The Sole Proprietorship:
A simple business structure for a single trader is a sole proprietorship. This does not need to be registered with CIPC, but it must be registered with SARS in order to file tax returns in South Africa.
The Partnership:
This type of organization can include two to twenty partners who each contribute to the firm and sign a partnership agreement. While SARS registration is required for tax returns, CIPC registration is not required for this.
The Company or Pty Ltd:
A company or Pty Ltd is a separate legal entity from the owner or owners. This is a very common choice because it safeguards an owner’s personal property in case things don’t work out too well.
Step 2:
Registering your business with SARS
The benefit of registering with CIPC is that when you create a company, SARS will immediately register your firm. However, it is crucial that you register with SARS if you don’t register your firm with CIPC. It is essential to consult a tax expert who can walk you through the process.
Step 3:
Protecting your intellectual property
Your “great ideas” (intellectual property) should typically be secured to prevent copycats imitating your ideas.
Trademarks, patents, designs, and copyright are all examples of intellectual property owned by your business. CIPC is in charge of all of them.
Step 4:
Basic and legal requirements for employees
You must make sure that your full-time employees are registered and in accordance with the following:
- Compensation for Occupational Injuries and Diseases Act 130 of 1993, for their health and safety rights while they are working;
- Unemployment Insurance Fund (UIF), which covers your staff during long-term illness, maternity leave and more;
- Skills Development Levy (SDL), when you expect your payroll to exceed R500 000 annually; and
- Pay As You Earn (PAYE), if your employee earns over R40 000 annually.
Step 5:
Legally Speaking
You might not be aware of all the by-laws and rules that have an impact on the kind of business you can establish. For this reason, we always advise discussing with a lawyer or someone else who works in the legal field.
However, there is no need to worry because every business must begin somewhere. With that, I wish you success and hope that all of your business objectives are met.
Check out these sites for information on how to open your own business: