Buying a guesthouse
When people come to South Africa in order to start their own business, one of the options that they may take is to buy a guesthouse. They then run the guesthouse as their business. Although this may sound simple enough, there are various factors to be taken into consideration, and this article outlines some of the most important ones.
The first and most obvious step is to obtain a South African business permit. Regarding the permit, the following issues should be taken note of.
You need to register your company formally in South Africa before you can apply for a business permit. Although this may sound illogical, company registration is relatively simple in South Africa, and can be done with the assistance of an immigration consultant.
When making your application for a business permit, you need to provided a business plan along with your application. The plan must show various things, such as the nature of the proposed business, staffing requirements, capital invested, and market research. The South African Department of Home Affairs pays attention to this plan and will use it in assessing your application, not only when you apply for the first time, but also when you apply for an extension to the permit several years later.
When applying for permanent residence, you should also submit the business plan.
Purchasing the guesthouse
Many people do not only run their guesthouse as a business, but also reside on the premises. For this reason, you should do thorough research into your purchase and possibly also enlist the help of a property consultant.
Something to keep in mind is that in South Africa, the usual procedure when selling a property is for the seller to make use of an agent, who is required to obtain the best selling price. So, negotiation skills are important. When you make an offer for a property, you will complete an “offer to purchase” document, which is legally binding. When making your offer, you should therefore pay attention to factors such as the municipal zoning of the premises and existing bookings.
When researching the location of your prospective purchase you should take into account factors such as the municipal zoning of the area, how many tourists and potential guests visit the area, and what the general business prospects are like there.
Obtaining finance for a property in South Africa means dealing with a bank or home loan (mortgage) company. Once again, a solid business plan will be important in such dealings.
Other financial matters
Other financial matters related to the establishment or purchase of a guesthouse include registering for taxes such as PAYE and VAT, accountancy issues, and tax returns (annually). You should also have proper insurance, covering both your guests and yourself. Take time to research these issues.
Finding the right property
There is a large property market in South Africa, and choosing the right property can be challenging. Therefore, it sometimes helps to approach an estate agent. Sometimes, long-standing agents receive mandates to sell properties that are not advertised elsewhere.
Making an offer to purchase
When making a formal offer for a property it is useful to emlist the help of an agent. The agent should be able to advise you on an appropriate price, based on the history of property sales in the area and how long the property has been on the market.
Once the offer to purchase has been signed, it becomes legally binding. It is very helpful to have an agent assisting you in this process, as they will be able to guide you through the legalities of the process, and may also rope in an attorney (solicitor) to iron out any untoward eventualities. Trying to do this on your own could be terribly frustrating.
The term “zoning” refers to the use of the property that has been authorised by the local government authority. A guesthouse needs to be zoned as such by the local municipality. It is illegal to operate a business contrary to zoning regulations, and if you do so your business can be shut down. Therefore, you should take some time to make the relevant inquiries. Make sure that the property your are buying is properly zoned for the purposes of your intended business operation.
As an economy with a world-class financial services infrastructure, South Africa offers a large number of investment opportunities. Take time to investigate the options that are most suited to your particular situation.
See the banking page elsewhere on this site for more information on opening a bank account in South Africa.
Licensing of guesthouses and B&B establishments
There are certain regulations governing the operation of these establishments in South Africa. Make sure that you are acquainted with the relevant details.
ImmigrationSouthAfrica.org is an authority on immigration to South Africa.
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Apart from immigration permits, anything from finance and tax, property and investment, all the way to travel and moving services – you will find it here on the leading site: ImmigrationSouthAfrica.org.