A Guide to Business Licences in South Africa

To fully comply with the law your business needs to be in possession of all the necessary business licences or permits or registrations required before trading in South Africa. As many small business owners soon find out after launching their ventures, business compliance does not end when you register your business with the CIPC.

The certifications that your business needs depends on your industry or sector, services or products you sell, your location, and the type of business you are operating.

It’s important to note that it is the business owners’ responsibility to research what licences or permits they need for their business. It is also their responsibility to approach the relevant authority and obtain the necessary registration.

In South Africa, business or trade licence requirements are governed by the National Business Act (Business Act 71 of 1991) and are a requirement for businesses across the country.

The Act states that no person may carry on certain service-related businesses unless they hold a licence issued to it by the council, local authority or municipality where the business premises are situated and from which the business activity is operated.

Ultimately, the purpose of licences and permits, including building regulations, public safety and health requirements, is to protect the health and safety of consumers as well as the environment that the business operates in.

Certain businesses need a licence to operate in South Africa and may not begin trading before the licences are issued.

You will need to apply for a licence if one operates a business which–

• makes or sells perishable foods (restaurants, baker, butcher, café keeper, fishmonger or fish fryer, food manufacture, fruit, vegetables and plant dealer, general dealer, milk shop, miller, accommodation establishment);
• provides health services, including a gym, health club or spa where sauna, massage and related spa treatments are offered;
• plays music to employees, the public or guests;
• provides entertainment-related activities, such as snooker, billiards or slot machines, is a nightclub or disco or shows movies;
• trades or hawks foodstuffs and related products in a municipal area; or
• sells alcohol.

Food can have significant impacts on the health of the public. In light of this, the food service industry has certain standards that businesses need to adhere to.

The Businesses Act requires that a person starting a business with the purpose of selling or supplying any foodstuff in the form of meals for consumption, on or off the business premises, or any perishable foodstuff, is required to hold a business licence.

Additional, regulations that businesses in the food service sector have to comply with are being in possession of health and safety permits, licences for the selling of liquor and tobacco, as well as zoning permits to operate in certain locations.

Related: Licensing And Permits For The Food Industry

Examples of establishments that this applies to are restaurants, hotels and B&Bs, as well as catering and vending companies. It also includes any establishment that sells or supplies meals, takeaways or perishable foodstuffs such as food trucks.

Related: A Guide to Launching a Food Truck Business

In South Africa, business licences are also required if you are selling, supplying or renting food or beverages to restaurants, takeout locations, shops, spas, fast food outlets, supermarkets, grocers, or wholesalers.

Exceptions to this requirement are restaurants which are carried on by an educational institution and school tuck shops.

Furthermore, hawkers or informal traders selling perishable goods such as fruits and vegetables or cooked food need to apply to the municipality for a hawkers trade licence. It takes a maximum of two weeks from the date of application to issue a hawkers trading licence. This is renewable annually and is linked to a particular area.

Guides to food service businesses:

• How to Start a Catering Business
• A Guide to Launching a Bakery Business
• A Guide to Launching a Shisanyama Business
• How to Start a Kota Business
• How to Get Into Vegetable Farming
• How to Run a Poultry Business

Procedures for applying for a trade licence are set out under the local municipal by-laws that applies to the areas where the business is located.

The business licence application process is handled by the local municipality. They can provide you with information on the licensing process and how health and safety regulations apply to your chosen business.

Note that there is a once-off application fee you will have to pay.

Supporting documentation

The application needs to include the following necessary supporting documentation, including copies of:

Identity Documents

A certified copy of the business owner’s ID. A certified copy of all directors and partners, including that of the manager or person in charge.

Company Memorandum

Memorandum of Incorporation (MOI) is a document that sets out the rights, duties and responsibilities of shareholders, directors and others within and in relation to a company and by which a company is incorporated under the Act (or by which a pre-existing company was structured and governed).

This is only a requirement if your business is a close corporation (CC).

Liquor Licence

Liquor licences allow an individual or business to manufacture or sell alcoholic beverages. All liquor licences must be renewed annually.

Certificate of Acceptability

To legally sell any foodstuff in South Africa, except unprocessed agricultural products, you must apply for a Certificate of Acceptability from the local authority, which would typically be your municipality.

SARS Tax Certificate

A tax clearance certificate is a declaration from SARS to a third party that the specific individual or entity is 100% compliant with regards to all tax affairs.

Zoning Certificate

A zoning certificate is a declaration that you are permitted to start and run a certain business in a particular area or premises.

NewPlan Town Planning gives the following explanation of zoning certificates.

“A zoning certificate of a property typically confirms the land use zoning category of a subject property and also indicates certain development restrictions such as coverage, height, floor area ratio, density, parking requirements, etc.

“Additionally, if the zoning of the property is not in line with the land use being exercised, the land use is regarded as being “illegal” and the Municipality may serve a contravention notice to the owner of the property.”

Common land-use or zoning categories, according to SA Facts, include:

• Residential zones: Such as single residential dwellings, group housing schemes or blocks of flats.
• Open space zones: These include public open spaces, parks, sports fields, cemeteries or private open spaces.
• Business and commercial zones: Such as shops or office blocks.
• Industrial zones: Factories, motor repair garages or warehouses.
• Government zones: Areas reserved for government buildings.
• Agricultural zones: Farms.
• Special use zones: For example petrol stations.

Other Regulations You Might Have to Apply for Are:

• SAPS Clearance Certificate (for health and entertainment licence)
• Film & Publications Board clearance (adult film business operations)

Inspections

The application is forwarded to five departments to check that the requirements are met for:

• Environmental health
• Noise and air pollution control
• Public safety
• Urban planning
• Building control

The Licensing Department usually requires reports from the town planning, health and fire departments for zoning and type of business activity, health and fire regulations.

1. Premises

You may need to submit a plan of the proposed business premises if you intend building, or for any alterations required for existing business premises.

The application requires a basic plan of your premises, specifying what the specific areas will be used for. This plan also needs to include positions of equipment.

2. Town planning

Your first point of contact for a zoning certificate is your Local Municipality’s Town Planning Department. They will look at the zoning and then at the proposed activity and will investigate whether the proposed activity may be permitted within the zoning.

To help with this, business owners should enlist the help of a town planner.

“Town Planners’ tasks include the development of long- and short-term plans for land use, growth, maintenance and renewal. They also monitor relevant legislation and ensure that all projects comply with the regulations and rules.

“They will also make recommendations regarding zoning regulations to address social, economic, and environmental and health problems.”

3. Health Department

The department ensures that hygienic and clean conditions are maintained; to prevent any nuisance, any offensive condition, any condition which may be harmful or dangerous, water pollution and primary health. They maintain the strict requirements of the Health Act, which applies especially if the business is involved in the preparation of food.

4. Fire Department

Ensures that the premises are in no way a fire hazard, and comply with all the safety regulations. It is the building owner’s responsibility to ensure that all fire protection measures indicated on the approved fire plan are kept up to date prior to initiating the Inspection Request.

Licence Approvals

Once all five departments have returned a recommendation for approval, only then your business licence or trading permit will be issued.

However, it’s important to remember that a business licence or application cannot be transferred with a change of ownership. The licence can also be withdrawn or suspended if there is a failure to comply with an endorsement.

Renewals

The licence when granted remains valid until such time as ownership changes or the activity specified on the licence alters.

A fresh application for a business licence is required under the following circumstances:

• New owner or legal entity i.e. CC or Company.
• Change in premises.
• Change in activities on the premises, where a licence for such an activity is required.

It is a criminal offence to operate without a business licence in South Africa, and can result in fines and imprisonment.

In addition to fines and imprisonment, when a licence is taken away or where a business is found to be operating without the required licence, that business will be ordered by the local authorities and/or police to stop offering the infringing and unlicensed product or service. The police may even close the entire business down. This will result in loss of business, income and the ultimate closure of the business.