Four steps to registering your new business

Blog-posts_23-March
Written by: Johann Barnard

Starting a new business can be a notoriously frustrating process if you venture out without the necessary preparation, or without prior knowledge of what and with which organisation you need to register.

David Masterton, a director of  auditing firm Nolands that specialises in the small and medium business sector, offers some helpful advice on what to do and the time it may take to do so.

1. Company name
The first step to setting up your business is to decide on and register a company name. This is done with the Company and Intellectual Property Commission (CIPC) and can be completed online once you have registered a profile on its website.

You need to provide  a few preferred company names in case your chosen name is already in use by another company.

This process can take between one and  five days to complete.

2. Company formation
In line with the Companies Act CIPC requires that any new business produce a Memorandum of Incorporation. This document outlines the rules agreed by the shareholders for the management and maintenance of the business and is a pretty standard document.

The following details are required for this document:

a) Directors’ details, including contact information
b) Shareholder details, including percentages, and contact details
c) Business details, including nature of the business and contact details
d) Public officer details – which is the person designated as being responsible for receiving important legal and tax documents on behalf of the business. This individual has to be a South African tax resident.
e) All shareholders and the public officer need to sign this document

This may take between six to eight weeks, although this is heavily dependent on the CIPC workload and back-office efficiencies.

3. SARS registration
Apart from CIPC, the next most important organisation you need to register with is the SA Revenue Service (SARS).

The first registration is for your Income Tax Number. This has to be done in person by the public officer at the local SARS office.

Thereafter, if you will be employing staff or taking a salary you need to register for Pay as You Earn (PAYE) tax – which is to be deducted monthly from staff salaries. And, of course, for Value Added tax (VAT).

Any business that has income or expenditure exceeding R1 million over 12 months is required to register for VAT. Smaller businesses can do so voluntarily if their income exceeds R50 000 a year.

This process can take up to 21 days to complete.

4. Other taxes
Other important tax registrations are Unemployment Insurance Fund (UIF), which is a nominal tax paid based on employee’s salary, and Workmen’s Compensation – both of which are handled by the Department of Labour.

One last tax registration, with SARS, is for the Skills Development Levy that is paid and can be drawn against for staff training and upskilling through the relevant Sector Education and Training Authorities (SETA).

Budget at least 21 days to complete these registrations.