Small Business Registration In South Africa

What is a Small Business?

Small businesses are types of corporations, partnerships, or sole proprietorships that have a small number of employees and/or less annual revenue than a regular-sized business or corporation.

Small Business Registration In South Africa

Once you’ve determined which type of business you will be registering, you can begin the process.

To register your company, you’ll need the following documents:

  • Notice of Incorporation
  • Memorandum of Incorporation
  • Plus a few supporting documents.
Notice of Incorporation

This document needs to contain the following:

  • Type of company
  • Incorporation date
  • Financial year-end
  • Registered address (where your head office is based)
  • Number of directors
  • Company name
  • Whether the company name serves as the registration number
  • The reserved name and reservation number
  • A list of four names to be checked by the Commission.
Memorandum of Incorporation

This document needs to contain the following:

  • Details of founders
  • Number of directors or alternate directors in the business
  • How much share capital exists
Supporting documents

You’ll also need the usual admin papers when registering your business, along with the CoR 14.1, CoR 15.1A for a normal private company, or CoR 15.1B for a customized private company. These can be downloaded from the CIPC website here.

Other documents you’ll need are:

  • Certified copies of your ID and all indicated initial directors and incorporators.
  • If you’re absorbing a business into your business, you’ll need a power of attorney as a representative to incorporate the new business and sign all the documents.
  • If you’ve already reserved a business name before submitting your incorporation documents, you’ll need to submit a valid name reservation document.
Fees and timelines

Depending on the type of business, registration can cost you anything between R125 and R475. You can register your business within 24 hours if you aren’t reserving a name first.

Register online

You can use the CIPC website to register your company online. Once you’ve registered as a CIPC customer, you now have access to their transactional portal. Register your business through the Companies – New Companies tab.

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

The CIPC charges R125 for the registration of a company and a fee of R50 for reserving a name using the online system (R75 for manual application).

How do I make sure I get the company name I want?

  • Selecting a name. During the business registration process, you can either select the name for your business during the process or you can register without a name, and the CIPC will generate a name for you to use as a placeholder.
  • Choose a few options. You can’t use a name that another business has already registered, so submit a few names at the same time.
  • Costs. You can apply for up to four names during the application process, but each name will cost you around R50.
Business name versus trading name

You may have heard the term ‘trading as’, which means the business is using its ‘trade name’ instead of its legal business name.

What’s the difference?

A trading name is often more customer-friendly. It doesn’t need to have Pty Ltd after it, or other legal endings. For example, McDonald’s is a trade name. The global fast-food giant’s real legal business name is McDonald’s Corporation, which doesn’t have quite the same ring to it.

But, if you’re planning to operate under a different name from your legal business name, you’ll need to register your trade name as well.

Using defensive names

  • Protect your name. You can also register a ‘defensive name’ to stop it from being used by another business.
  • Be prepared. This is normally a good idea if you’ve chosen the name of your company, but aren’t yet ready to launch.
  • There’s a time limit. You can register your name as a ‘defensive name’ and keep it safe until you’re ready to launch. This only lasts for two years. If you still aren’t ready to launch, you’ll need to re-register your defensive name.

When do I need to register with SARS?

  • Get a tax reference number. As soon as you launch your business, you need to register your company with SARS to get an income tax reference number. If your business is too small you won’t pay tax, but you must still be registered.
  • You have about 3 months to get sorted. You need to do this within 60 business days of starting your business, whether you’re registering your company with CIPC or not.
  • Register with SARS. You can register to be a taxpayer with SARS by completing an IT77 form at your nearest SARS branch. Keep in mind that if you have employees or are importing/exporting goods you could also be liable for other taxes, duties, levies, and contributions such as:
    • Value Added Tax (VAT): This is an indirect tax on the consumption of goods and services. Vendors charge VAT on the supply of goods and services and imported goods.
    • Pay As You Earn (PAYE): This is an employee tax that is deducted from their salary or wages and is treated as advance payments of income tax.
    • Customs: If you are importing products they will need to pass through customs, you may also have to pay duties or taxes on the products.
    • Excise duties and levies: You’ll need to pay excise duties and levies on high-volume daily consumable products, as well as some non-essential or luxury items.
    • Skills Development Levy (SDL): This is a levy that employers must pay to encourage learning and development in South Africa. The funds are used to develop and improve the skills of their employees.
    • Unemployment Insurance Fund (UIF): This fund is for all employees. How it works is, that you’ll put money aside from your employees’ salaries so if they ever find themselves unemployed, they can receive short-term relief from the fund.