****NB this article is very long, simple because i could CUT the procedures that one need to follow when registering a business ... so please dont complain about it being long, i already know that and there is absolutely nothi i can do to help you******
This is for all the bloggers who have businesses in their minds that they need to implement, I believe this information will help you to get that castle that you have been building in the air to the ground where everybody will see, access, have their needs met and your dream to come true.
I have done the research on the steps that need to be followed for one to register their business in South Africa and start living their dreams. I haven’t heard enough time on my hands lately because of the other commitments and thus I didn’t go to people who have already made it in the business world but I believe the information that I did find from the internet will as helpful.
Here is the summary of the procedures that need to be followed:
--- Decide on the type of business entity that you wish to form – a CC or a private Company. The difference between the two being;
Close Corporation Company
- A close corporation is like a company, only less expensive and less complicated to run. You can go to a lawyers or an accountant and ask them to register your business as a close corporation or, as it is often called, a CC. The people who own and manage the close corporation are called members. There are no directors or shareholders or a chairperson of the board, like a company has. A close corporation cannot have more than 10 members.
The law sees a close corporation as separate from its members. This means that unlike a sole trader and a partnership, the assets and debts of the business belong to the close corporation, and the assets and debts of the members have nothing to do with the CC.
Company
Companies have to obey all the rules of the Companies Act, which is a long and complicated law.
If more than 10 people want to start a business together, they cannot form a CC. They will have to go to a lawyer to form a partnership or a company
A company has shareholders and directors. Shareholders can be people or other companies. Shareholders put the money into the business and are the owners of the business. Directors are the managers of the business. Sometimes the owners and the managers are the same people and sometimes they are different people. The law sees a company as separate from its shareholders and directors. This means that like a CC, the assets and debts of the business belong to the company and the assets and debts of the shareholders and directors have nothing to do with the Company.
This summarizes the procedures and costs associated with setting up a business in South Africa.
Think about your enterprise’s name and think about at least 2 other alternatives. Undertake a name search on CIPRO’s website to ensure that your preferred name has not been reserved by another enterprise. (www.cipro.co.za)
Registration Requirements:
Procedure 1: Prepare and certify documentation
Time to complete: 7 days
Cost to complete: ZAR 250 - 500
It is not possible to file the required documents without engaging a legal professional unless one is the subscriber to the memorandum of association so you must have your legal representative. According to Section 63(3) of the Companies Act, only a subscriber to the memorandum of association or a duly authorized attorney (or the attorney’s clerk) may file formation documentation. The attorney or a similar agent must verify the client’s particulars according to the Financial Intelligence Centre Act of 2001. The average filing fee is ZAR 500 but varies from agent to agent. ` Fees vary, depending on whether the promoter used standard articles of association (Table B) in Schedule 1 of the Companies Act or a lawyer’s fully drafted document.
Procedure 2. Pay fees
Time to complete:1 day
Cost to complete: no charge
The fee for the name reservation can be paid at the Companies and Intellectual Property Registration Office (CIPRO) cash office, by credit card, or by direct deposit into the CIPRO bank account. The agent must ensure that his or her CIPRO account has a credit balance; otherwise, the electronic name reservation cannot be processed because the account is immediately debited on submission of the ZAR 50 fee for the name reservation application.
Procedure 3. Reserve a company name with the Registrar of Companies
Time to complete: 3 days (electronic lodgments - The lodgment of a name reservation application in person at Cipro’s office may take longer.)
Cost to complete: ZAR 50
The company name can be reserved electronically via the Internet. Otherwise, the promoter must go to the Registrar of Companies office and pay the prescribed fee. The official at the CIPRO offices will submit the application electronically on the person’s (company or individual) behalf. The name reservation application is processed only if the agent has a credit balance on his or her account. CIPRO officials assign a tracking number to the electronic name reservation and process it in that order. The filing takes 5 minutes, the approval/rejection process takes about 3–5 days depending on the availability of the Web site and the number of applications received and any backlog. In-person filing of a name reservation application at the CIPRO offices may take longer Once CIPRO has approved a company name, the reservation is valid for two months, in which the company should be incorporated. A company can extend the name reservation for another two months by filing another name reservation application and paying an additional fee of ZAR 50 for that application.
Procedure 4. Lodges formation documentation with Cipro in Pretoria, Gauteng Province, South Africa for registration
Time to complete: 7 days
Cost to complete: ZAR 350 (administrative fee) + 0.5% of capital + ZAR 60 (certificate to commence business)
Under Section 172 of the Companies Act, a certificate to commence business is required before a company can legally trade or raise finance. Form CM46, the certificate to commence business, is submitted with the structure documentation. This document cannot be applied for if the name has not been reserved, the Registrar will incorporate the company only if all of the following required documentation is submitted simultaneously:
- A copy of CIPRO’s letter approving the name reservation.
- One original set of the certificate of incorporation and the memorandum and articles of association, together with the required signature pages. The memorandum of association must reflect the filing fees payable, calculated at a flat rate of ZAR 350 plus ZAR 5 for every ZAR 1,000 of the company’s authorized share capital or part thereof, or plus R5 for each 1,000 shares or part thereof if company has shares of no par value. The minimum fee payable on company formation is ZAR 415.
- A notarially certified copy of the memorandum of association and an original must be lodged with CIPRO in accordance with Section 63(1) of the Companies Act. The certificate of incorporation (Form CM1) must be lodged with the memorandum of association, along with the notarial copy. These documents must be bound, together with the certificate of incorporation (the certificate of incorporation being the first page, the notary’s certification page next, and the complete set of memorandum and articles of association last). Each page of the memorandum and articles of association must contain the notary’s seal.
- Powers of attorney, one from each subscriber (original).
- Form CM22, Notice of registered office and postal address (in duplicate).
- Form CM29, Information pertaining to a company secretary.
- Form CM31, Consent to the appointment of the auditor (in duplicate). Note that every South African company must appoint a South African auditor.
- Forms CM27, Consent to the appointment (one for each director).
- Form CM46, Certificate to commence business.
- Form CM47, Statement by each director attesting adequate company capital for company business purpose and activities). The procedure takes 4–10 days.
The Registrar attends to the recording of the registration by assigning a registration number to the company and releases the notarially certified set of the memorandum and articles of association, the certificate of incorporation, the certificate to commence business, and one copy of Form CM22 and Form CM31. In addition to these forms, a CM47 must also be completed by the company directors and filed with CIPRO.
Procedure 5. Open a bank account
Time to complete: 1 day
Cost to complete: no charge
To set up an account, the bank requires certified copies of the company’s structure documentation .
Procedure 6. Register with the office of the local receiver of revenue (SARS) for income tax, VAT, and employee withholding tax (PAYE and SITE).
Time to complete: 12 days
Cost to complete: no charge
Businesses with annual taxable income of more than ZAR 300,000 must register for VAT with Form EMP101. This takes about 10 working days. CIPRO and the South African Revenue Service are linked electronically. Once a company is incorporated, the relevant South African Revenue Service office is advised, and an income tax number is assigned to the entity. The company must also register as an employer using Form EMP101, for all withholding taxes applicable to the taxpayer, including:
- The pay-as-you-earn employee tax (PAYE) or SITE (inclusive of employee tax).
- Unemployment Insurance Fund (UIF).
- Skills Development Levy (SDL).
The employer is compelled to register as a taxpayer according to Paragraph 15 of the Fourth Schedule to the Income Tax Act. If an employee earns less than ZAR 60,000, SITE withholding is payable, but if the employee earns more than ZAR 60,000, PAYE is payable. No separate registration is required for SITE. For VAT applications, SARS assesses the viability of the business as part of the registration process. The company must appoint a public officer, according to the terms of Section 101 of the Income Tax Act, and advise the relevant SARS office of that person’s full name and residential and postal address. This person must be a resident of South Africa.
Whether you're running a sole proprietorship, a close corporation or a private company, you have to be registered with the South African Revenue Services (SARS), either as an individual or as a company. If you've registered a company with CIPRO, you'll automatically be registered as a tax payer with SARS. Sole proprietors need to register as provisional tax payers directly, and this can be done at any SARS office or online(www.sars.gov.za).
Procedure 7: Register with the Department of Labor for Unemployment Insurance.
Time to complete: 7 days, simultaneous with Procedure 6
Cost to complete: no charge
All employers must register their employees for unemployment insurance, which can be done on Form UF8 at any SARS office, or online at http://www.sars.gov.za/. They should also obtain copies of Form UI-19, which is required to register new employees when they join the company.
You will receive a copy of Form U133 to confirm your registration. Thereafter, UIF payments must be made monthly, either directly to the UIF or together with PAYE and the Skills Development Levy (if applicable).
Procedure 8: Register with the Compensation Fund of South Africa according to the Compensation for Occupational Injuries and Diseases Act.
Time to complete: 3 to 5 days, simultaneous with Procedure 6
Cost to complete: no charge
All companies - and sole proprietorships that have one or more full-time employees - need to register with the Department of Labour. This is mandatory in terms of the Compensation for Occupational Injuries and Diseases Act (COIDA).
The Act replaced the previous Workmen's Compensation Act in 1993, and provides for employees who are injured or killed at work, or who contract a disease directly as a result of their work. It also protects employers from personal liability in these instances.
Registration forms can be obtained from the Department of Labour’s Web site (www.labour.gov.za). Businesses do not have to wait for the approval of registration to start operations. The registration fee is calculated according to a rating of the company’s type of business. Payment can be made by cheque or direct deposit into the department’s bank account. The relevant form is a W.As.2, and written notification will be sent once the completed application has been examined.
**NB** for those who will go liquor and arms delears root
Register with the Regional Service Council
With the exception of specialised enterprises, such as liquor stores and arms dealers, businesses no longer require a licence to trade in South Africa. They are, however, currently required to register with the Regional Services Council (RSC) in the area in which they operate. Once registered, the business is charged services levies based on its total bill for salaries and wages, as well as on gross sales. Returns and payments must be lodged on a monthly or annual basis as determined by the RSC.
To register with your local RSC:
• complete and submit Form RSC1 at the offices of your local Regional Service Council. These vary from council to council, so can't be made available for download online.
• you will receive confirmation of registration within approximately one month on a Form RSC2. This form will contain a reference number which should be quoted in all dealings with the RSC.
• subject to prescribed payment terms, the RSC will send you a services account on Form RSC4 either monthly or annually.
Remember that, if you own a legally registered company, you have to pay the RSC levy, even if you don't employ any full-time staff. Also don't forget that late payments attract penalties and interest charges.
Hope this will help and all the best in registering your business.