Are you wondering how to register a new small business here in South Africa?
Small business has an incredibly large role in the global economy. The World Bank notes that small-to-medium enterprises represent about 90% of businesses and more than 50% of employment worldwide, making up around 40% of the gross domestic product of emerging economies. Considering the turmoil of the past three years and the significance of SMEs to the global economy, it’s no surprise that many small businesses are starting up. But should they be registering? Here’s why we think so and how this can happen.
What are the types of businesses that can be registered?
In South Africa, there are four types of businesses that you can register. The last one doesn’t necessarily relate to small businesses, but it’s good understand the different business categories.
1. Sole proprietorship
For many small businesses, a sole proprietorship is the first choice as it’s for entrepreneurs who are starting a business alone, without partners or co-founders. This is often a good place for any small business to start with the potential to grow and become more complex over time.
If you’re going into business with one or more people, then you’ll possibly want to register the business as a partnership. This comes with the advantages of having a supportive team, as long as you’re partnering with like-minded individuals when it comes to the core business value.
3. Proprietary Limited (Pty Ltd)
If you want to start a company but don’t want to risk losing everything as a private citizen if it doesn’t work out, then you will need to set up the company as a separate legal entity from you personally.
4. Public Company
As stated, you won’t be registering a small business as a public company as these trade shares on the stock exchange as a way to indicate the value of the business. Anyone can buy stocks and effectively become an equity owner in the business.
What documents do you need to register a business?
As with any administrative duties, you’re going to need to get all your documents prepared ahead of time. But the good news is that this is a once-off requirement and well worth the time spent. For registering a small business in South Africa, the documents you need include:
- Notice of Incorporation – This includes the type of company, incorporation date, financial year-end, company name, director numbers and registered address.
- Memorandum of Incorporation – This includes the founder’s details, the amount of share capital, and the number of directors.
- Administrative documents are available from the CIPC website.
- Certified copies of your ID and those of your initial directors and incorporators.
- When you’re absorbing another business, you need a power of attorney as a representative.
- The valid reservation document for the business name if you’ve already reserved one.
- Fees for the registration, with the cost of registering a business, are between R125 and R475.
Where do I register a business in South Africa?
Once you have your documents in place, registering your small business is a really simple procedure. There are three main methods of doing this in South Africa.
1. Companies and Intellectual Property Commission (CIPC)
Simply visit the CIPC website to register your business. You will have to file your annual returns to retain the rights to your company.
A subset of the CIPC is BizPortal, a website allowing you to register your company with or without a name. Make sure you check the CIPC database’s name registry before choosing a name.
Another easy way to register a small business is through South African banks. Some of the leading banks, including Absa, FNB and Nedbank, have actually partnered with the CIPC to combine business registration with the opening of a business account.
We didn’t include this in the ‘main three’ as registration still effectively happens through one of the previously mentioned channels, but you can hire a third-party company to register your business on your behalf. They usually offer package deals that help with permits, taxes and more.
What are the benefits of registering a business?
While you don’t have to register your small business, you might find that there are perks to making the organisation that much more official. These could include:
- Creating trust: Clients are more likely to do business with you if you’re a registered entity, as there is some form of oversight and backing.
- Business banking: This allows you to separate finances for a much easier accounting and tax process.
- Loan application: If you need a loan at some point, you will need to be a registered business to get it from a reputable financial lender.
Why must I register for tax?
Another consideration once you’ve registered a new business is connecting with the South African Revenue Service (SARS) and registering for tax. Remaining tax compliant is a vital part of running any business, and it starts by keeping track of your business accounts. This can either be done manually, or you can invest in financial accounting software that will make this a whole lot easier. Depending on your business type, you can be liable for a variety of tax options such as:
- Value Added Tax (VAT): Indirect tax on the consumption of goods and services.
- Pay As You Earn (PAYE): Employee tax is deducted from their salary as advance income tax payments.
- Customs: Duties or taxes on imported products.
- Excise duties and levies: This is for high-volume daily consumable products or luxury items.
- Skills Development Levy (SDL): Employers pay this to develop employee skills.
- Unemployment Insurance Fund (UIF): Employees pay this for short-term relief if they’re unemployed.
Once you’ve registered your business, it’s worth investing in small business software that will facilitate operational and administrative duties. This makes the daily running of your business incredibly hassle-free and ensures you remain compliant with all legislation.
Starting a business in South Africa is a significant step towards becoming part of a vibrant global economy. To ensure your venture’s success:
- Decide on the Business Type: Whether it’s a sole proprietorship, partnership, proprietary limited, or public company, choose what aligns with your vision and growth plans.
- Complete Registration: Register your company with the Companies and Intellectual Property Commission (CIPC). Online options like the CIPC website and BizPortal streamline this process. Banks in South Africa also offer combined registration and account opening services.
- Stay Tax Compliant: Registering for tax with the South African Revenue Service (SARS) is a must. Depending on your business’s nature, you might need to consider VAT, PAYE, customs duties, and other tax obligations.
- Use the Right Tools: Leveraging tools like Omni Accounts can simplify your accounting, ensuring compliance and efficient financial management.
Embarking on this business journey need not be daunting. With the right steps and tools, you can set your venture up for success in South Africa’s thriving market.
Use Omni Accounts Software For Your New Small Business
Launching a small business in South Africa is a milestone filled with opportunities. As you navigate through the registration process, having a reliable accounting system is crucial. Omni Accounts offers tailored accounting packages, known as Omni Bundles, to cater to various business needs.
For newly registered small businesses, the Omni Trader Bundle is a fitting choice, designed for small VAT Registered businesses with basic stock control functionalities. As your venture grows, Omni Accounts allows for easy upgrading to higher bundles like Omni Business or Omni Business Pro, offering expanded ERP functionalities and advanced accounting controls.
Utilising Omni Accounts isn’t merely about bookkeeping; it’s about equipping your business with real-time financial insights, streamlined budget management, and a user-friendly platform that simplifies financial processes. The software’s adaptability ensures a snug fit with your business model, supporting your financial management needs as your business evolves.
Take a step towards robust financial management for your newly registered business. Explore the Omni Bundles and find the perfect match for your accounting needs. With Omni Accounts, you’re not just getting an accounting solution; you’re investing in a tool that supports your business’s financial health and long-term success.
Frequently Asked Questions (FAQs)
How long does it take to register a new small business in South Africa?
The registration process can take anywhere from a few days to a few weeks, depending on the type of company you are registering with and how quickly you provide the necessary documents.
What documents do I need to register a new small business in South Africa?
The documents you need will depend on the type of company you are registering. Generally, you will need a certified copy of your ID, proof of address, and a business name.
Can I register a small business online in South Africa?
Yes, you can register your small business online through the CIPC website.
Do I need to register for VAT when registering a new small business in South Africa?
If your business has an annual turnover of more than R1 million, you will need to register for VAT with SARS.
What are the benefits of using Omni Accounts for small business accounting software?
Omni Accounts is an affordable and easy-to-use accounting software solution that can help you manage your finances, track your expenses, and stay compliant with SARS requirements. It also offers support and training to help you get the most out of the software.