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How to register a business idea in South Africa?

the view of South Africa with building and places to register your business idea
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Is your business still in the ideation stage, and you’re wondering how to register a business idea in South Africa? We got your back in this article. This article will share the details on how to start your own company in South Africa.

Growing a business idea in the South African economy is very rewarding. The country is the second-largest economy in Africa, and establishing your business in the country, will increase your market.

South African economy supports entrepreneurs to start up business ideas that will later become successful.

RELATED: HOW TO START A PRIVATE INVESTMENT COMPANY IN SOUTH AFRICA?

The truth is, many people dream of opening a business in South Africa due to its economy.

However, some of these dreams never come to reality. Those failures are due to the belief that it’s expensive and complicated to register a business in South Africa.

If you’ve been thinking along those lines, we’ll show you why you shouldn’t. Hence, this article will erase such negative beliefs and enlighten you on how to register your business.

What is needed to start a business in South Africa?

The first thing you need to start a business in South Africa is a great idea. Different people generate their business ideas through different means.

Some people may get their business ideas from their personal experiences and knowledge. Others got their ideas from their role models and mentors.

We also have the ones that got their business ideas from combining some existing solutions around them.

But having a business idea is not necessarily the only prerequisite to start a business in South Africa. There are other factors you require in creating and running a successful business idea.

You must understand what you need and how to go about your business idea before registering the idea. So, before you register your business, identify the type of business you will run. The 3 categories of business include:

  • Sole proprietorship: This is a business category that a single person can control.
  • Partnership: It has two or more persons running this type of business.
  • Private Limited Company: This category requires directors and shareholders for its operations. It is a legal entity.

According to The Companies Act (2008) of South African law, companies are categorized as either profit or non-profit companies.

How to register a business in South Africa?

Where the business you plan to register is a small-medium enterprise (SME), you shouldn’t register it as a company. Therefore the right registration for any SME is as a partnership or as a sole proprietorship.

So no matter the registration form you choose, the government expects an income tax reference number for the business within 60days. The taxing is on all the partners in the business according to their shares of ownership.

Registration of sole proprietorship in South Africa

When you decide to operate your business all by yourself, a sole proprietor is the right business registration for you. A sole proprietor is a non-legal entity.

However, when there’s a financial case, there’ll be a liquidation of the owner’s personal property to clear the debts. You will complete the registration of a sole proprietorship under the following;

South African Revenue Service (SARS):

The registering of your business under SARS makes it taxable. SARS works out the final tax, which a sole proprietor pays based on his income and business revenue.

Companies and Intellectual Property Commission (CIPC):

As part of the requirement for your business registration, you will need a business name to use.

The name may either be real or fictitious. This becomes your trading name which you’ll file with CIPC in the area you site the business.

Registration of company in South Africa

Companies are legal business entities that are common in South Africa.

Its distinguishing factor from other businesses is that a company operates separately from the shareholders of the business. The directors of a company control the operations of the businesses.

Every private company must register with CIPC before it can start businesses in South Africa. You will complete the registration of a company by doing the following;

Get the necessary documentation

To facilitate your company registration and start business operations, you must present the necessary documents.

According to CIPC, some of these documents for registering a company in South Africa include;

  • Passports/Identification documents of the directors and/or the incorporators.
  • Identification documents of any applicant where the directors are not involved in the registration processes
  • Where there is a former filing of incorporation, provide a valid name reservation.
  • Power of attorney
  • Documents of identification for the power of attorney

So, this time it takes to complete all registration processes in South Africa for companies is 25 days.

Company name reservation

It is mandatory for you to first decide on a name for your company that has not been used. The next step is to secure the name for your business.

To get the company name for the identification of your business, you’ll do a filing in the Memorandum of Incorporation. There are 3 ways you can register a name for your businesses:

  • The use of your name for the company then file later for the companies name registration;
  • Reserving the company’s name and start up the incorporation process afterward.
  • Registering a company with an enterprise number and file for a name later after modification.

If you’re considering name reservation, first make a name check with CIPC to ascertain that the name or trademark is free. This means that no other company or business is using such a name.

This name search has no charge once you’ve registered on the CIPC main portal. The registration on their portal gives you access to their online services.

Your name reservation takes 3 days from the application date, pending its approval.

When the approval comes, the reserved name has a validity period of six months.

South African Revenue Services (SARS) registration

The remittance of tax by all businesses is a legal mandate in South Africa. Before you can start business operations with a private company, you must complete the incorporation by the CIPC.

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This implies that there will be an automatic registration of your business with SARS.

For other businesses by a partnership or sole proprietorship, they’re to register with SARS within 60days that they start business operations.

Companies and Intellectual Property Commission (CIPC) registration

Registering your businesses in South Africa is made simple and convenient. You have the option to either register online or at any designated points in the country.

For the online services, your registration should be as a customer, and you’ll receive a CIPC customer code.

This gives you access to the CIPC e-services portal. The CIPC has many terminals in South Africa, including First National Bank (FNB).

Procedure for CIPC online registration:

  • Go to the CIPC website.
  • Move on to the online transaction.
  • Click on e-services. This directs you to the main portal
  • With your password and your security code, login.
  • Click on register a new company.
  • Type in your ID number as your company’s incorporator or director.
  • There will be a field for you to either input or edit the directors’ details.
  • Confirm the data by clicking Save.
  • Input more personal information for the incorporators/directors.
  • After confirming the data, click on Save.
  • Move to the bottom page and click on Continue.
  • Input other details for the company, such as the website, email, postal/physical address, and authorized shares.
  • Select any of the options you have for your company’s name reservation.
  • With the option you’ve chosen, complete the details for the formalizing of your company.
  • After verifying every field, click on Lodge company.
  • There will be a pop-up of a confirmation notification when all the fields have the correct information.
  • You’ll also receive an email requesting the supporting documents from you.
  • Then print out the form from the email for the directors/incorporators to sign.
  • Send the signed form and all the supporting documents through email to eServicesCoReg@cipc.co.za

Once you’ve secured your CIPC online account, you’ll need to pay in some cash into it.

This will facilitate the charges for both the name reservation and the CIPC registering of your company.

You will need the following documents to complete the process in person with CIPC:

  • Copies of registration form fully signed
  • Owner/directors certified contact addresses
  • Owner ID or passport
  • Physical address
  • Email address
  • Bank information

Business Advice South Africa

Besides having great business ideas and passion, you’ll need some good business advice in South Africa to drive your ideas.

Seeing that you may not be the first person with such a business idea, you’ll need to distinguish your business.

Here is some business advice that will help you to start a business in South Africa:

Be specific and plan your business.

There is a great gap between having a business idea and planning your idea to mature into a fruitful business.

Remember, you can’t be everything to everyone, and you can’t engage in all things. You must be specific in what you do.

Hence, with your business idea, define your skills and how to grow them through what you’ll be offering. Pick on a particular market niche and stick to it.

Prepare for your finances.

For you to conveniently start a business and make it solid, you need adequate finances. You need money to register the business with the approved authorities. Also, you need the capital for the running of the business.

RELATED: DO YOU NEED AN ACCOUNTANT FOR A SMALL BUSINESS?

This means that you must have all the information on both the registration and the start-up funds. When you eventually start, you may need to devise some strategies to boost and get more customer base.

Pick an irresistible niche.

While it’s good to follow your heart and grow your business idea, ensure the idea is what people need. Businesses are very competitive in South Africa due to the country’s booming economy.

As such, you’ll need to create a difference with an irresistible business package. If your business doesn’t offer solutions to needs, it will never last for long. Build a business that satisfies your clients and solves their problems.

Inculcate a learning habit.

We’re in a world where change is constant. Growing a business idea is never a spontaneous action. It takes a constant process of change which you will influence daily.

So, get yourself constantly equipped with modern information and processes, and it will create a positive impact. With the use of the internet, you can enroll in some e-learning that’ll help you to improve your business.

Cost of starting a business in South Africa

The cost you’ll need to start a business in South Africa depends on the type of business idea you have. First of all, the cost of registering your company with its name reservation is R175.

There are lots of businesses that you can start with a little amount of money. Though to some persons, R1000 may be so little; this amount can help you to start a business in South Africa.

Therefore, if you’re looking for external funding to start a business in South Africa, you can apply to Industrial Development Corporation. This organization is helping to fund businesses of different types.

Once you’ve concluded the registering of your business, irrespective of the business type, you can apply for the fund.

You can also get some funding for your business in South Africa from the Government Investment Incentives. Just like the former funding organization, you must have a registered business to become eligible for the fund.

Conclusion

The South African economy is fully enriched and conducive for many entrepreneurs to strive. You can start a business in South Africa without any complications.

Also, you can easily register a business in South Africa either online or in person using our guidelines. All you need is to decide the business category suites your business ideas.

Ensure to also open an account for your business and fulfill the other requirements to get your business running.

When you choose to register your business as a limited company, it can either be a private company or a public company. Since it’s a new business, it’s better to go with private company registration.

Hence, with enough finance to cover all your registration charges and open the business, you’re good to go. Also, remember that when you register a business in South Africa, you’ve been able to secure its trademark.