Last updated on October 28th, 2022 at 12:00 pm
Here in South Africa, the legal requirements of a business are quite simple when compared to other countries in the world.
The most important point that you have to remember is that it is your responsibility to ensure that you are in compliance with any legislation. In order to do so, you must know what legislation applies to your business and what actions might cause you significant repercussions.
Table of Contents
1). CIPC Registration
All companies are required to register their business with The Companies and Intellectual Property Commission (CIPC).
The CIPC is an agency of the Department of Trade and Industry in South Africa, assisting with the registration of companies and intellectual property rights. They have specialties in trademarks, patents, designs, and copyright.
There are different types of business structures, and the one you choose will attract different legal requirements:
- Sole Proprietor – You may choose to open a sole trader company or set it up as part of an existing organization. The benefits include not needing to hire a lot of staff, but you will need to ensure that all the tax returns are done correctly and you meet regulatory requirements.
- Partnership – When you start a company and are running it or co-owning it with others, you might need to set up a partnership agreement. What is expected of each party in the business, how shares will be distributed, who makes the decisions, and so on.
- Company or Pty LTD – Many people choose to create a legal entity for their small business. This is ideal for creating a separate liability from the owner and allowing them to remain protected in the event of debt or default.
2). Protecting Your Intellectual Property (IP)
IP covers a range of things and is administered by the CIPC. And all these include things like Trademarks, Patents, Designs, and Copyright.
3). Tax
It’s best to speak to your tax practitioner about the requirements for registering your business with South African Revenue Services (SARS) as well as other regulatory and statutory requirements. You’ll need to register your business with SARS.
When you register your company with the CIPC, it registers automatically with the SARS. You can find a guide on all tax compliance regulations here.
Generally, if your turnover is – or is likely to be – R1 million a year or more, you need to register as a VAT (Value Added Tax) vendor. This is done by completing and submitting a VAT101 form, which is available at any SARS office.
Close Corporations must submit the following documentation with their VAT101 forms:
- The VAT127 Form, must be accompanied by a business plan
- A copy of Form CK1
- Certified copies of the identity documents of the member or members
- A canceled business cheque
- A copy of a letter issued by the company’s accounting officer accepting his or her appointment
- A list of business contacts, if available
4). For Your Employees
If you’re going to be employing full-time staff, here is what to pay attention to:
- The Department of Labour requires that your employees are registered in compliance with COIDA to safeguard their health and safety rights while at work.
- The Unemployment Insurance Fund (UIF) is a government program in South Africa that covers staff when they are on maternity leave or off work due to prolonged illness. UIF benefits can be applied via the uFiling software that’s free for all members of the public.
- Pay As You Earn (PAYE) is required for staff members earning over R40 000 annually.
- A Skills Development Levy (SDL) is required if your annual payroll exceeds R500 000.
Here’s how to register in terms of COIDA:
- Complete and submit the WAs2 Form at the office of the Compensation Commissioner
- Once your registration has been completed, you will be sent the following additional forms to complete from time to time:
- WAs8, which must be filed within 30 days of your financial year-end, and which must balance with your COIDA account
- WAs6a, which details the assessment of the Commissioner for premiums payable, less any amounts that may have been paid in advance
- WG30, WAs2, and WAc1(E), which are claims forms that must be kept in a safe place for use if and when necessary
You can find more information here.
5). Costs
The estimated costs of incorporating a limited liability company are ZAR 6400 (exclusive of value-added tax (VAT) and disbursements). This comprises between ZAR 710 and ZAR 1 020 to reserve a name, and a further ZAR 2 400 (exclusive of VAT and disbursements) to lodge and register the relevant company secretarial documents with the CIPC.
