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The Basics of Registering a Company in South Africa

register a small business in south africa image

ǃke e꞉ ǀxarra ǁke – written in the Khoisan language of the ǀXam people, it means "diverse people unite". The goal is to harness the unity between thoughts and actions within each of us.

The South African government follows this quote very well by encouraging both locals and foreigners to start their businesses to support their families and fill the market gap.

However, there are a few legal procedures that need to be followed before you can start your own business.

Registering your company is the first step.

Whatever size or type of business you run, you should register your company. It offers many advantages.

We are going to cover everything you need to know about registering your business in South Africa, and what the benefits are of doing so.

This article at a glance

Tax incentives, business compliance, financial assistance, and business name protection are some of the benefits of registering a business. Registering a business can be confusing, and comes with a lot of questions. Especially when it’s your first time.

Can you run a business without registering?

Yes, it’s possible to run a business (or “besigheid” in Afrikaans) without registering. But, it’s important to remember that operating an unregistered business has certain risks attached.

  1. No legal protection from official registration
  2. Difficulty obtaining credit and loans from banks and other institutions

Registration can help you avoid any risks associated with your business. It provides you with legal protection and access to governmental services and benefits. Also, registering a business is essential for any financial obligations or tax filings that need to take place.

What type of business should be registered?

Businesses operating in South Africa need to be registered with the Companies and Intellectual Property Commission (CIPC) regardless of the size or nature of the business. This includes companies (sole proprietorships, partnerships, close corporations, and public companies), non-profit organisations (which must apply for Section 21 status), and trusts.

In some cases, businesses that generate income through activities such as trading in stocks or property rentals should also get registered.

What are the requirements?

Requirements for registering a business vary according to the type of company being registered. All companies need to have at least one director who is 16 years

old or older and resides in South Africa.

Registering a business in South Africa requires the following information to be provided:

  1. Details about the directors/founders
  2. Contact information for each director/founder
  3. A valid address closest to where the majority of the company’s operations take place
  4. Legal documents such as an ID copy of each director/founder or proof of residence/registration outside South Africa if applicable
  5. Form CM1 may be required by some entities (close corporations)

How to register a business in South Africa

You must follow a few steps to register a business in South Africa:

  1. Decide which type of entity best suits your needs:
  2. Partnership — limited or unlimited
  3. Sole proprietorship
  4. Company — public or local private
  5. Close corporation (option is not available for new companies)
  6. Business trust
  7. Branch or subsidiary of an external or foreign registered company
  8. Next, check whether the name you want is available using CIPC's Name Reservations System
  9. If it is available then you can proceed with filling out their company registration form on their website and submitting it along with all supporting documents.
  10. It usually takes 5-10 working days for CIPC to review and approve your application, after which you will receive your Certificate of Registration

How to register a company online in South Africa

The entire registration process can be done online through the CIPC website, Nedbank, FNB, or CIPC's BizPortal (only available for South African ID holders).

To register your business on the CIPC website, follow the given steps:

  1. Sign up for e-services. Or, log in with your credentials on the CIPC website
  2. Go to ‘Company registration'
  3. Click on ‘Register a new business'
  4. If you don’t have a reserved name, click on ‘Apply for a name' and fill out the required details
  5. Click on ‘Type of company' and choose the appropriate option. Complete the form as suggested on their website
  6. Add the director under ‘Manage director sector' and complete the form.
  7. Add an auditor and fill out the required info
  8. Click on the shopping cart. Go to the payment section and pay the registration fees
  9. As soon as your payment is successful, you’ll receive a confirmation message
  10. Your business is now successfully registered

What to do after registering a company in South Africa

Obtain any necessary licenses or permits according to the industry your business operates in

  1. Apply for a VAT number (if applicable)
  2. Set up business banking accounts
  3. Get insurance
  4. Register with SARS (South African Revenue Service)
  5. File annual returns as per the law

How much does it cost to register a company in South Africa?

The registration cost depends on various factors, such as your company’s number of founders, the type of industry you work in, and the number of your employees (if any).

In general, registration fees range from R125 to R475.

Total costs may range from R845 to R1,445 with other expenses, such as periodic returns or sectoral considerations.

Can foreigners register a company in South Africa?

Yes, foreigners are allowed to register companies in South Africa.

Foreign companies must meet the criteria set out under regulations governing foreign investment flows into the country, such as Black Economic Empowerment codes, and others.

SARS approval is necessary before making any transaction. Check with local authorities and CIPC to ensure that you meet the requirements.

Benefits of registering a business in South Africa

Establish trust with your clients

Customers trust registered businesses more than unregistered ones. It shows them that your business is not a scam and you will not run away with their money.

Tax benefits

Registering a business protects you from unnecessary taxes that you might have to pay as an individual. For example, Sarah runs a bakery business. She earns R330,000 annually. Since her business is registered, she doesn’t have to pay any taxes. However, if the earned income is more than R1 million, then she has to pay 28% in taxes.

Easier to get funding

Registered businesses are taken more seriously than unregistered businesses. This will likely increase your chances of attracting investors.

Protect your business identity

The biggest advantage of having a registered business is that it safeguards your business identity. Using a trademark will protect your business name and logo. You won’t have to worry about your business name being stolen or used by others.

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