This article contains information on how to register your Business or Company in South Africa in 2023.
South Africa is one of the leading economies when it comes to the ease of doing business. This didn’t come as a surprise for the second-largest economy in Africa. We can attribute this feat to her conducive market that attracts businessmen and women all over the world. It is one of the best African destinations for business purposes. No matter how sweet and honey-filled her economic environment might be, due process has to be followed before a business or company can enter her conducive market and the first giant step is “Business registration.”
There is no land without biding laws and these laws must be abided by both citizens and non-citizen. So, therefore, to start a business outlet in South Africa, there are rules, legal procedures and statutory obligations that must be adhered to before a business or company can be considered valid and fit to enter her booming economy.
It is no news that a business starts with a conception- where you determine the nature of your business or services you aim to render, your objectives, vision and mission statement. These must be determined before you consider a business registration.
TYPES OF BUSINESS
There are three groups of businesses:
- Sole proprietorship
- Partnership
- Private Company.
Note*: The Companies Act, 2008, states that there are two categories of companies under the jurisdiction of the South African law; profit and non-profit companies. A company is recognized as a legal entity in the same act.
TYPES OF COMPANIES YOU CAN REGISTER
- Franchise business, you would register a private company.
- A church, you would register a non-profit company.
- A private school could be registered as a private company or non-profit company, depending on its objectives.
- An association of professionals such as lawyers, doctors, civil engineers etc, may be registered as a personal liability company.
- Unlike a company, small businesses are not legal entities. As such, you are not required to register it with the Companies and Intellectual Property Commission (CIPC).
Though the primary purpose of CIPC is to register companies and co-operatives, like it was mentioned earlier, all businesses and sole-proprietors don’t need to formalize by registering with CIPC. Informal businesses which may not benefit from the benefits CIPC registration brings are not obliged to register while it is a necessity for businesses that want to transact with government and the formal sector, or that want to obtain certain types of government support. These businesses may also receive tax benefits, registered businesses have a lower tax rate than individuals. Even though you may not be registered with the CIPC as a sole proprietorship, you will still have to be registered with the South African Revenue Services and will still be subject to tax payment if your turnover surpasses the designated threshold. Whether your business is trading or not, it is required that you file an annual return and pay an annual fee irrespective of whether your business is trading or not.
CIPC
CIPC stands for Companies and Intellectual Property Commission (CIPC) is an agency of the Department of Trade and Industry in South Africa. The CIPC is responsible for the following functions:
- Registration of Companies, Co-operatives and Intellectual Property Rights (trademarks, patents, designs and copyright) and the maintenance thereof
- To disclose Information on its business registers
- To promote education and awareness of Company and Intellectual Property Law
- To promote compliance with relevant legislation
- Efficiently and effectively enforce relevant legislation
- Monitor compliance with, and contraventions of financial reporting standards, and make recommendations thereto to Financial Reporting Standards Council (FRSC)
- Licensing of Business rescue practitioners
- Report, research and advise the Minister on matters of national policy relating to company and intellectual property law.
CAN A COMPANY BE REGISTERED WITHOUT A COMPANY NAME?
In terms of the Companies Act, 2008, a company may be registered with or without a company name. When a company is registered without a reserved name, its registration number automatically becomes the company name. This is the quickest way to register a company.
Such a company may transact with a trading (business) name or may apply to add a reserved name at a later stage. In this case, the company will need to first reserve a name and then apply for a name change, which constitutes a change to its Memorandum of Incorporation (MOI) (refer to Maintain a Business).
If your initial name reservation application is not approved, you will need to apply for new names. You may apply for between 1 and 4 names during each application process. Each name reservation application costs R50. A company registration may vary between R125 and R475 (R125 for a private company, R475 for a non-profit company registered without members).
RESERVATION OF A COMPANY NAME
Reserving a company name You will need to file for a company name that will identify your business in the Memorandum of Incorporation. There are three options to register a name- either by registering a company first using your name and file for registration of the name later or reserve the name and then initiate the company incorporation process later.
Before you even reserve a name, you need to carry out a name search with the CIPC to ensure that no other company bears the trademark or name. CIPC does not charge business owners to search for patented information as long as they have registered on the main portal to access CIPC online services. The last option is using the enterprise number to register the company with the view to filing for a name at a later stage through a name amendment. CIPC charges R75 for the manual registration of the company name and R50 if you file electronically on the portal. From the date of application, it will take three days to reserve the name until its approval. Once approved, the name reservation will be valid for six months.
SARS REGISTRATION
After starting your business operations, you are required by law to register for an income tax reference number from the exchequer within 60 days. The government will tax partners in the business depending on the share of ownership. To legalize your small business, apply for the right business permits and licenses from your local authority.
A private company will be registered with the taxpayer automatically if the incorporation of the company is done through the CIPC. Otherwise, for other types of businesses registered by sole proprietors or partners, they have to register with SARS within 60 days of starting their business operations.
SOLE PROPRIETORSHIP
A sole proprietor registers and operates a business on his/her own. Considering that a sole proprietorship is not a legal entity, registration is not necessary apart from the standard legal and tax requirements. On the other hand, you will be required to register the business with the South Africa Revenue Service (SARS) for purposes of tax returns.
It should be known that, if such kind of a non-legal entity is alleged in a legal or financial case, the owner’s personal property can be seized or liquidated to pay debts or other pending liabilities.
SARS combined individual income with business revenues to determine what the sole trader pays as taxes. An entrepreneur will have the choice to register the business using either a fictitious name or his/her name. The false name will act as a trading name, and hence, one is required to file for the business name with the Companies and Intellectual Property Commission (CIPC) in the location where the business is based.
COMPANY REGISTRATION
Business registration in South Africa simple and cheap. So far you have followed the due process as directed by CIPC.
Company registration South Africa with the CIPC is mandatory for anyone wishing to register a private company.
REQUIRED DOCUMENTS FOR REGISTRATION
- Filled Copies of a Notice of Incorporation and Memorandum of Incorporation- This can be downloaded on the Commission’s website.
- ID or passport of the applicant.
- Power of attorney to sign all the related document.
- Certify ID to identify the power of an attorney for the previous action
- Valid name reservation in case of a prior filing of incorporation.
CIPC REGISTRATION
Business registration in South Africa comes in two effective ways. You can either complete your registration online or in-person at the designated terminals. The CIPC self-service terminals are located in Pretoria, Johannesburg, Pretoria, Cape Town, or at an authorized bank like First National Bank (FNB). The whole registration cost is R175 inclusive of the charges to reserve a business name.
ONLINE REGISTRATION
If you choose to register your company online with CIPC, you must first be registered as a customer on their main website. Visit the CIPC main website at cipc.co.za.
Have with you the following document or information ready for the registration: Certified contact details for the directors and owners Owners’ Identification details or passport Details of physical location, email, and bank information Signed copies of the registration forms.
Click on the following:
- ‘on-line transacting’ and select ‘e-services’.
- You will be redirected to the main portal.
- Use your password and security code to log in to the service portal. Once logged in, select ‘register a new company’.
- In the required field, enter the identification number of the company’s incorporator and director (s).
- You will be prompted to capture or edit the details of the directors.
- Click ‘Save’ to confirm the information. Include additional personal details of the directors and incorporators including contacts, postal address, etc.
- Confirm the information and click, ‘save’. Head to the bottom of the page and select, ‘continue’. On the fields provided, including details relating to the company inclusive of authorized shares, email, website, physical and postal address.
- The next step will require you to select a name reservation option depending on the method you had selected earlier. You can choose between the following 3 options:
- applying for a new name as part of the process;
- use a name that has already been approved;
- Register the company using the enterprise number.
- Depending on the option you selected to formalize the company, indicate all the details required.
- Verify all the information included and select, ‘lodge company’. If you have included the correct details on all the required fields, a confirmation notification will pop up.
- Within a short while, an email will be sent prompting you to provide the supporting documents.
- Print the emailed form and have it signed by the directors and incorporators as indicted. Attach the supporting documents (listed earlier) with the signed form and send to the email- eServicesCoReg@cipc.co.za
Once registered, you will be given a new CIPC customer code. The next step after securing the virtual CIPC account is to deposit some money into the account. It is from the account that all deductions about the CIPC Company registration and name reservations are carried.
BUSINESS REGISTRATION TIME FRAME
It takes almost 25 days to have fully registered companies in South Africa from the time of application. However, it will take you a day if you decide to register the company without a reserved name.
Registering with Companies and Intellectual Property Commission (CIPC)
DEFENSIVE NAME
A defensive name may be registered for a period of two years and may be renewed for a further two years. The applicant must provide proof to the Commission that he/she has a direct and material interest in the protection of the name.
It must be noted and taken into cognizance that a defensive name can be transferred to another person or company. It can also be used or utilized to serve as a company name before its two year expiry period.
Application for a defensive name registration must be lodged manually.
STEPS TO REGISTER A DEFENSIVE NAME
To view information on how to register as a customer, at http://www.cipc.co.za/index.php/register-your-business/register-customer/ If you are already registered as a customer, and know your customer code and password, proceed to step 2.
- Deposit R250 into the CIPC bank account.
- View and complete form.
Include evidence of a direct and material interest in the name, e.g.
- Full particulars of the period of use of the name
- Particulars of sales and advertisements and labels used and
- A statement that as a result of the use of the name it has become well-known and that the general public will probably assume that all goods or services bearing the name, or all services rendered under that name, derived from the applicant.
- Sign the forms, attach certified copies of the Identity Documents of the applicant
Scan and email to namereservationsandregistrations@cipc.co.za;
SERVICE TURNAROUND TIME
- 15 working days from the date of tracking.
- Queries relating to transactions already lodged should only be submitted once the Service Turnaround Time has lapsed.
- You can track the progress of your document by clicking on “Track my transactions” on the home page. Click on “Additional Services”, select “Customers” and then select “Document Status”. To check the tracking number, go to “Customer Transactions” under “Customers”.
Transfer of a Defensive Name
Transfer of a defensive name must be accompanied by satisfactory evidence that the transferee has a direct material interest in the name.
It must be noted and taken into cognizance that a defensive name can be transferred to another person or company. It can also be used or utilized to serve as a company name before its two year expiry period.
Application for a defensive name registration must be lodged manually.
THIRD-PARTY SERVICES
Who may register?
Any interested third (3rd) party, regardless of whether these are individuals or enterprises in either the public or private sector, who wants to assist CIPC customers with CIPC transactions. The potential 3rd party must be familiar with all the CIPC services that they want to assist customers with. The following must be noted:
- 3rd Parties are not agents of CIPC
- 3rd parties may be discontinued at any time
- 3rd parties may be criminally prosecuted should the system be abused in any way
Services Rendered
- Private company registration
- Company director amendments
- Close corporations member amendments
- Annual returns
- Name reservation
- Auditor changes
- Company and Close Corporation address changes
- Company and Close corporation financial year-end changes
- Authorized company share changes
- Certificates
- Paid and free disclosures
- Memorandum of Incorporation documents
- Approved names
- Person disclosure
- Enterprise enquiry
- Customer transactions- declining balance
- Balance enquiry
- Transaction status enquiry
