Doing business in South Africa
Starting a business in South Africa would be one of the wisest decisions any investors would take as regarding where to invest in Africa.
The country has been earmarked as one of the top and best investment destinations in Africa. The country also stands among the top 3 biggest GDP countries in Africa and is the first and only country in Africa to host the World Cup football competition.
These and many more are a few of the salient reasons why the country has remained a favorite among business owners looking to expand into other countries. Asides the country’s economy being very strong, the nation also has a population of 55.91 million people and a per capita income of over 6000$ as of 2018.
To start up a company in the country is neither complicated nor cumbersome, as a matter of fact; the process would be a breeze for any honest businessman willing to venture into business in South Africa. If you’re planning to start a company in South Africa, here are a few things you should know…
Types of business structures in Southern Africa
1) Sole Proprietorship: This is the one man business as it is often called. It is a business in which one person owns and operates the business. There are no co-owners in this business. The sole proprietorship is the most common business in the South Africa.
2) Close Corporation: This business structure used to exist in South Africa. Although this business structure has been discontinued after a business act in 2011 abolished it due to certain reasons.
3) Private company: The private limited liability company is also a form of business structure prevalent in Southern Africa. This business structure gives you a professional outlook and is also not a difficult business to register and start up in South Africa. This type of company is unable to sell securities to the public and would have to source funds through private investors.
4) Public Companies: This is a company able to sell securities to the public or also able to sell shares to the public in order to raise capital. It is a company traded on at least one stock exchange unlike the private company.
4) Joint Partnership: This is a business venture undertaken by two or more people in order to make profit. It is also a common business structure. It is the direct opposite of the sole proprietorship.
5) Non- profit organizations: A nonprofit organization is started up with the aim of serving the public. The owners are usually not after profit.
How to register your company in South Africa.
So you have decided to set up a company or business in South Africa, The requirements below should be fulfilled religiously, to avoid the authorities clamping down on you for running an illegal business. Below are the steps you would take:
1) Book and register your company name at the registrar of company office in any city of your choice in South Africa. Your company name has to be unique; a generic company name may have already been registered.
2) Go to the Companies and Intellectual Property Registration (CIPRO) Office and submit your company’s documents. The CIPRO office is located in Pretoria. Before going, make sure you have all the required documents ready and also be prepared to fill some forms giving details about your new business.
3) Go to any South African bank of your choice and set up a bank account for your company, this would be required before further registration. The bank account has to be a corporate one and some document like company registration certificate maybe required. You would also make an initial deposit to keep the account running.
4) Visit the office of the South African Revenue Service (SARS) and register for income tax, value added tax and employee withholding tax. Before you register for this, also make sure your company revenue is up to the taxable income of 1000 rands.
5) Register for unemployment insurance fund at the department of Labor South Africa. This insurance fund provides for the employees in your company who may be laid off along the line due to one reason or the other.
6) Visit the office of the commissioner for the compensation for occupational injuries and disease and register your company there as well.
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Registration Process for Companies in South Africa
The process of starting up your company in South Africa as listed above has been explained briefly in this section, this is to enable you understand the process better, including total requirements, cost of registration and duration of registration. Also take note of the fact that some of the process listed below can be carried out simultaneously to save time and money. Read very carefully and make sure the required documents are ready before embarking on your registration journey.
1) The name registration costs about ZAR50 and would take 3 days if done digitally. However, going to the office to do registration would take longer. After registrations, you are given 90 days to startup your company under the registered name or forfeit it.
2) Submitting Documents to CIPRO: This process takes 7 days or a week to complete and would cost about ZAR350. After submitting the required documents, you will be issued a certificate to commence business, this certificate costs ZAR60. The documents you would be required to submit to the CIPRO includes
- A letter showing your company name has been registered.
- Certificate of incorporation
- Memorandum and article of association
You will also be required to fill the following forms
- Company director’s appointment form
- Company auditor’s appointment form
- Administrative forms
3) To Register with SARS: To register with the South African revenue services would cost you nothing, however it takes 14 days to complete registration. This registration is usually done simultaneously with the CIPRO registration. After registration, you will receive a VAT number which will be displayed on your business invoices and receipts.
4) Registration with the department of Labor: This registration takes 7 days and is also free of charge. After registration you will be given a reference number.
5) Registering with the office of the commissioner for occupational injuries and disease act: this registration is free of charge and takes 14 days to complete. It serves as employee health insurance. However, a levy is paid intermittently and serves as a premium.
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