A business structure is one of the first things you should decide on as an entrepreneur, and in South Africa, the type of business structure depends on the type of business. Below are three different business structures you should consider.
- A sole proprietor – In this case, you can trade as yourself and be the sole owner of your operation. However, there are risks involved since there is no legal separation between you and your business
- A partnership – It is also possible to form a partnership with more than one partner, as long as you all contribute to the overall operation of the business. A partnership agreement will let you outline certain terms and financial details.
- A company – The creation of a corporation separates your personal liabilities from the business itself. Depending on the type of business you operate, this may be an excellent choice, as it protects your personal assets in the event of financial difficulties
Once you have decided on the structure, you must then register the, a company or close corporation operating in SA must be registered with the Companies and Intellectual Property Commission (CIPC). This requires selecting a business name, filling out the necessary forms, and paying the registration fee.
When registering, try and choose a name that reflects your brand and make sure that it isn’t already being used by another business. A name that is:
- easy to remember;
- easy to pronounce;
- won’t be mistaken with another;
- won’t be associated with a particular ethinic or social group…
can be beneficial to curb all projuduces and create a brand that is at the tip of everyone’s tounges. A Sima Agent may guide you through this step. Along with your name, you can intellectual properties such as designs, copyright, patents, and trademarks. A company structure’s SARS registration is automatically handled when it registers its business name with CIPC.
Various taxes must be registered in South Africa, including Value Added Tax (VAT), Pay As You Earn (PAYE) for employees, and Company Income Tax (CIT). if your turnover is, or is expected to be, more than R1 million per year then you must register for Value Added Tax (VAT). You can also do this online on the SARS website by submitting form VAT101.
You are required to register for Pay As You Earn (PAYE) if you have employees and any of your employees earn over R40 000 per year. Additionally, you will need to obtain a Skills Development Levy (SDL) if your payroll exceeds R500 000 per year. Work hours, leave, wages, and working conditions of these employees are all governed by South Africa’s labor laws, including the Basic Conditions of Employment Act, Labour Relations Act, and Employment Equity Act.
It is mandatory for businesses in South Africa to comply with health and safety regulations, including obtaining health and safety permits, conducting risk assessments, and implementing safety measures.A general liability policy, professional indemnity policy, and workers’ compensation policy are important insurance options for your business to protect it from potential risks and liabilities.
It may be necessary for your business to obtain permits or licenses from relevant state, or local government departments or regulatory bodies. For example, food service, liquor, transportation, and healthcare industries may require special permits or licenses that you need to operate legally.
South African companies are required to keep proper financial records, and to prepare annual financial statements in accordance with the Companies Act. Maintain proper bookkeeping from the start, accounting for all of your company’s revenue and costs. All commercial transactions and income should be easily traceable. Having a separate company bank account or credit card helps you to keep your firm’s funds distinct from your personal ones.