Operating a business means abiding by the rules and regulations which govern it. Regulations and laws can be general, but some are sector/industry-specific. Some businesses need special permits to operate in a specified area. These permits are called trade licences.
A trade/business license is a permit which allows you to set up a business in a specified area. The licence ensures that your enterprise and the business premises meet all the regulations of build safety, public safety and health requirements.
As a business owner, it’s important that you have all the correct licences and permits to operate your business. Without these licences, you may face a range of heavy fines which can lead to your business not operating successfully.
In this article, we look at what a trade license in South Africa is and how to ensure you are on the right path.
Why Do You Need a Business License in South Africa?
In South Africa, permits and regulations are set under specific Acts. When it comes to licensing, the piece of legislation that governs it is the Business Act of 1991. The Business Act requires that certain types of businesses have a trade licence before they begin operating.
The Business Acts also states the following:
- An administrator may by notice in the Official Gazette choose a local authority or appoint any person or body as a licensing authority for a specific area.
- No person may conduct any business in any area of the licensing authority unless they are the holder of an applicable licence, or they have a hawker’s licence.
- The licensing authority may issue a licence unless the business premises do not meet all requirements relating to town planning or the safety or health of the public.
- The licensing authority may issue a licence unless any equipment, storage space, working surface, structure, vehicle or any other article used for or in preparation, handling or sale of foodstuffs does not meet requirements.
A licensing authority may grant the application on condition that the business premises shall comply with requirements before the license is issued.
Licensing authority may at any moment withdraw or suspend a license if the business premises do not meet requirements, the licence holder fails to produce their licence to the authority and any foodstuff does not meet compliance requirements.
Any person who does not comply with regulations may be liable to a fine of no more than R 1 000 or imprisonment not exceeding three months. An additional fine of not more than R 10 for every day on which the offence continues.
Note: The Business Act also makes provision for applicants to make appeals to denied applications or when the licensing authority takes more than 21 days to approve an application.
Which Businesses Need a Trade Licence?
If you have a new business, you might not be required to have a business license. However, some businesses, especially food businesses need to have a trade license. According to the Business Act, the businesses that need a trade license are:
- Food businesses
- Adult shops
- Cinemas
- Nightclubs
- Arcades
- Pool rooms
- Hawkers
- Any enterprise with three or more vending or slot machines.
- Spas, saunas, health clinics and public baths.
- Massage parlours, laser and ultraviolet treatment centres.
If your business falls under any of these categories, you need to ensure you have your trade licenses so that your business stays compliant, and you aren’t fined.
Applying for a Trade License
To apply for a trade license you need to send your application to the relevant local authority. This would be your local municipality office. When submitting your application for a new business license, you need the following:
- A certified copy of your ID or documentation from the Department of Home Affairs.
- Registration documents from the Companies and Intellectual Property Commission (CIPC).
- Copy of the lease agreement (only for home-based enterprises).
- Copy of the liquor licence (if applicable).
- Copy of the gambling authority (if applicable).
- Copy of the proof of address.
- Menu in the case of a restaurant.
- Certificate of acceptability (issued by Municipal Health Services Section).
- A fire clearance certificate.
Renewing Your Trade License
As a business owner, you need to renew your trade license after 12 months of receiving it. To renew your trade license, you need the following:
- Copy of the previous trade license.
- Copy of your ID or documents from the Department of Home Affairs.
- Copy of liquor licence if needed.
- Copy of menu if needed.
- Copy of gambling authority if needed.
- Copy of compliance letter for fire safety.
- Copy of certificate of acceptability for food premises letter.
- Copy of latest lease or title deed (for home enterprises).
- Business registration documents from the CIPC.
Ensure that you have all these documents ready before the time to renew comes up. This will help make the renewing process easier and ensure that you have all the correct information so that your application to renew is not denied.
Remember, this may seem like ‘boring’ stuff to do but you need to do it. You don’t want to ignore it and end up being fined or worse, having your business closed down.
For more information on business licenses, visit the SME South Africa website.
