Starting a business
South Africa is a country brimming with much opportunity. The recent political changes have allowed for a previously unparalleled level of entrepreneurship. If you are an expert in a specific field, South Africa could be a great investment destination for you.
The following section describes the various different steps in starting up a business in South Africa, giving the cost in South African rands (ZAR) and the estimated time that each step will take. While one can complete all these steps alone, it is always easier and in most cases better to use a company or service to be sure of timely outcomes. Should you have a question about any stage in the process, feel free to contact ImmigrationSouthAfrica.org on the Email contact form on the right. About 60% – 80% of new businesses fail in the first three years, however the rewards can be great for success.
The most important steps to take are the following, and below is more detail on each step.
- Register your unique company name with the Registrar of Companies
- Register company founding documentation with the Companies and Intellectual Property Registration Office (CIPRO) in Pretoria
- Open a bank account
- Register with the office of the local South African Revenue Service (SARS) for income tax, VAT, and employee withholding tax (PAYE and SITE)
- Register with the Department of Labor for purposes of the Unemployment Insurance Fund (UIF)
- Register with the Commissioner for the Compensation for Occupational Injuries and Diseases
Remember: If you are an expert in a specific field, South Africa could be a great investment destination for you.
Registration of company name
This will take approximately three working days, if done electronically, and will cost ZAR50. Actually taking the matter in person to the CIPRO office will take longer than three days. Once you have registered the company name, you have up to three months to form your company under that name.
CIPRO will not process your application if you fail to pay the required fee.
Submission of founding documentation to CIPRO
This takes about a week, and costs ZAR350, excluding the business certificate, which costs a further ZAR60.
In South Africa, the so-called certificate to commence business is legally required before you can start trading or apply for finance. In order to legally form the company, the following documents have to be submitted:
- A copy of the letter issued by CIPRO stating that the company name has been reserved
- A signed set of the incorporation documents, namely the certificate of incorporation, Memorandum and Articles of Association, and the associated pages signed by the relevant parties. The memorandum of association must show the start-up fees paid. The exact fee payable is calculated on the basis of the share value of the company, and therefore varies from company to company.
- Form CM31, which deals with the appointment of a company auditor, which is compulsory under South African law
- Forms CM27, which deals with the appointment of directors in the company
- Form CM46, which is the certificate to commence business
- Several other administrative forms
The Registrar of Companies will process the application and publish the Memorandum and Articles of Association, the certificate to commence business, and the certificate of incorporation. The Memorandum is extremely important, and is used to open a bank account and apply for finance.
Opening a bank account
This will take relatively little time – and you can read more about how to open a bank account on our site. Banks in South Africa will want to see the founding documents of the company, and you will probably also need to make an opening deposit into the bank account. Each bank in South Africa has its own fee structure, so shop around and make sure that you get the best deal for your business. Take note that banks tend to be sticky about paperwork, so if there is something missing from your company papers you will probably not be able to open an account at any bank.
Registration with SARS
You need to register with the local receiver of revenue (SARS) for the purposes of Value Added Tax (VAT, it is the South African equivalent of Government Sales Tax), income tax, and employee tax (SITE and PAYE). Registration with SARS is free, but it can take up to two weeks to complete. Click through to our tax services page on our website.
You only need to register for VAT purposes if your business generates a taxable income of more than ZAR1 000 000. This registration is done in conjunction with CIPRO, and you will receive a VAT registration number, which should be shown on the invoices and receipts of your business.
If you are going to employ people, you need to register as an employer, for the purposes of PAYE (Pay As You Earn – employee tax), SITE (another kind of employee tax), SDL (Skills Development Levy, a government initiative) and UIF (Unemployment Insurance Fund). SITE tax is payable on the initial ZAR60,000 of the employee’s salary, after which PAYE is payable on the remainder, if there is a remainder.
When registering for VAT purposes, SARS will assess the viability of the company. A public officer must then be appointed by the company, and SARS must be notified of this appointment. The appointed officer has to be a resident of South Africa.
Registration with the Department of Labour for UIF purposes
This will take about a week, and can be done at the same time as registration with SARS. There is no cost involved. Once your application has been approved, you will be issued with a reference number.
Registration with the Commissioner (in accordance with the Compensation for Occupational Injuries and Diseases Act)
This takes about two weeks, and there is no cost involved. It is done in order to safeguard your workers against medical expense. The levy that you pay is used to cover injuries and disease contracted at their place of work.
The relevant paperwork can be obtained on the website of the Department of Labour. It is not necessary to have this approval before you start operating your business.
Have a look at these links for full information on starting your business in South Africa.