Navigating your way through the usual company registration processes can be a daunting task for inexperienced entrepreneurs or small business owners, however, regardless of your profit or size, there are advantages to registering your business in South Africa. These include business name protection, tax deductions, financial assistance and increasing your staff capacity. Once you register your company, it will then be registered automatically as a taxpayer.
Here are the basic registration procedures new businesses will need to process:
The Companies and Intellectual Property Registration Office (CIPRO) was replaced by the Companies and Intellectual Property Commission (CIPC) in May 2011, together with the New Companies Act, the act changed the way business owners had to register their companies. The Act stipulates that no new close corporations (CC) can be registered, but those registered prior to 1 May could continue to operate as CCs.
All companies fall under specific categories with, each with specific requirements in terms of the documentation that is required. The Companies Act provides for two main categories of companies – non-profit and profit companies, with other types falling under these categories.
Non-profit companies: A company incorporated for public benefit or other object relating to one or more cultural or social activities, or communal or group interests.
Profit companies: A business/organisation whose primary goal is making money, this includes anything from retail stores to restaurants to insurance companies to real estate companies.
Personal liability companies: Company directors and past directors are jointly liable for any debts and liabilities arising during their periods in office. The company name ends with the word ‘incorporated’.
Public companies: A public company is one that has issued securities through an initial public offering (IPO) and is traded on at least one stock exchange. It has more than 50 shareholders and its shares are offered to the public.
Private companies: These are similar to what was previously known as close corporations. Some of the changes made to private companies include fewer disclosure and transparency requirements, no longer being limited to 50 shareholders, and with a board that must comprise at least one director. The name of a private company must end with the expression ‘Proprietary Limited’ or ‘(Pty) Ltd’.
For every new business established, you are required to register with your local SARS office to obtain an income tax reference number. Registration must be done within 60 days after starting operations by completing an IT77 form, available at your local SARS office or from the SARS website.
Small businesses with a turnover of up to R1 million per annum will now be able to pay certain taxes (turnover tax, VAT and employees’ tax) twice instead of once a year, making the process more efficient for qualifying small business owners.
Turnover tax is a simplified tax system to make it easier for micro businesses to comply with their tax obligations. Turnover tax is worked out by applying a tax rate to the taxable turnover of a micro business. Depending on other factors such as turnover, payroll amounts, whether you are involved in imports and exports etc. you could also be liable to register for other taxes, duties, levies and contributions such as VAT, PAYE (Pay-as-you-earn) UIF contributions (unemployment insurance contributions).