Step By Step Guide To Registering A Company In South Africa
While you can launch your startup legally in South Africa without registering, it is also essential to lay a foundation for the growth and success of your business. To achieve this, you must take registration as a necessity since it comes with overall benefits.
The South African government allows investors to register their companies and businesses as non-profit or profit-making companies. However, companies are authorized to register with the Companies and Intellectual Property Commission (CIPC) to operate legally.
The South African companies and intellectual property commission looks at a company as a legal entity with the capacity and powers to act independently. The commission registers companies, co-operatives and businesses. However, not all companies in South Africa are registered formally with the commission. Some operate illegally, but companies that would like to conduct transactions with the government and the formal sector or have government support must register with the commission.
Some benefits come along with business registration. These include; tax benefits whereby registered businesses get a lower tax rate than individuals, opening business banking accounts, applying for loans and building trust via legitimacy. While your business may not be registered with the commission, you will be required to register with the South African revenue services for tax purposes, significantly if your turnover surpasses the set threshold.
According to the South African companies act 2008, a profit company such as a private company can operate freely with or without a reserved name. Still, a not-for-profit company must have a name. For-profit companies registered without reserved names use registration numbers as the company name as the suffix (South Africa). A company may apply for the name later.
The South African companies act permits investors to register different forms of companies depending on the business that one wants to operate, some of the business forms that you can legally register include;
Partnership; a partnership is formed when two or more people come together to run a business or operate as a joint venture.
Proprietary limited company; this is a private entity separate from the owner.
Sole proprietorship; is a business type that a single individual runs without any partners and co-founders. There isn’t mandatory registration for these kinds of businesses. However, the standard legal and tax requirements are required, so your must register your business with South African Revenue Services (SARS) for tax return purposes.
Public company; this is an entity that trades its shares on the stock exchange. Meaning that anyone can become an equity owner in the business by buying stocks, and the value of the share measures the company's value.
How To Register A Business In South Africa
Registering a business in South Africa is easy so long as you have determined the type of business you want to operate. Before you start registering a company in South Africa, you need to know the required documents. The requirements and documents vary depending on the type of business you are set out to run, but the general requirements include;
1. Notice of incorporation;
The notice contains the company type, financial year-end, incorporation date, registered postal office address, number of directors, company name. To get a company name in registration, you can choose a name for your business during the registration process or register without a name. Then CIPC generates a name for you to use tentatively as a placeholder. The commission requires you to submit a few names for search, and each name costs roughly R50.
2. Memorandum of incorporation;
The MOI must contain information regarding the details of founders, number of directors and the amount of share capital that exists.
Other supporting documents include;
Admin papers to register your business with CoR 14.1, CoR15.1A for a regular private company or CoR15.1B for a customized private company. These can be downloaded from the CIPC’s website.
Certified copies of your ID and indicated initial directors and incorporators.
Power of attorney to incorporate the new business and sign all the documents (this has to act as a representative if you are absorbing a company into your business)
Valid reservation name document
A 3-month latest bank statement
The South African Revenue Services documents include; the income tax reference number. This must be accessed by filling out form IT77, and this can be accessed from the SARS office or their website.
NB; registration of a business in South Africa costs R125 to R475, and your business is ready to start running after 24 hours if you are done with the named reservation already.
Online Business Registration In South Africa
To register your company online, you have to use the website of CIPC. You have to first enroll as a CIPC customer to have access to their transactional portal, where you can successfully register your company through the new companies tab.
Online registration takes place through the CIPC portal known as the Bizportal. Online registration costs approximately R125, while company name reservation costs R50 though it’s optional.
Note; Bizportal is a platform developed by the Companies and Intellectual property Commission (CIPC) to provide south African citizens with company registration and related services in a simple, seamless digital way that is paperless.
Related : The Best CRM In South Africa
Through the Bizportal, you can register a company, company name, tax registration number, domain name registration, B-BBEE certificate, compensation fund registration, unemployment insurance fund registration and business bank account.
The process of online business registration is as follows;
Sign up or log in to the Commission website as a 1-grid customer using your credentials.
Then click on online transacting/New E-services. Fill in your user name or email and password and then click login.
Click on company registration and the register a new company
Click on apply for a name if you are yet to apply for a name reservation. And then select name reservation option. Get a suitable company name and domain to reserve. While a company may be registered with or without a name with the registration number acting as the company, it is very important to have a reserved company name. The name reservation can be done through the CIPC website or the Bizportal website.
If you have applied for the name, click on the type of the company you want to register and then click on the drop down menu to fill in the enterprise name. Select the relevant name reservation and click next.
The process of Name reservation is as follows;
To reserve a company name, log into the CIPC services portal with your registered login details and ensure that you have a valid email address. Then click on the name reservation icon and then the proposed name. Continue to enter the proposed names, usually 1-4 names. Approved names are given a green tick meaning that they are available for use, while the rejected names are given a Red Cross, meaning that they aren’t available for use or already in use. Then go ahead to lodge a name reservation for the name chosen, and you will receive an SMS notification to confirm your name reservation and a tracking number.
Related : Joint Inbox Software For South Africa
Print the emailed form and have it signed. Then, attach the other required documentation and email them to eServicesCoReg@cipc.co.za.
Feed-in the required enterprise information and then click Next. The details include; year-end financial enterprise and financial information, email enterprise, contact number, and authorized shares.
Enter the enterprise location details, for instance, business, postal and location address.
Under manage director, click on add to enter the director information, for instance, the ID number, full names, date of birth, surname, date of issuing of the ID document. Once every director is verified, you will get a confirmation, either an SMS or email and then click OK. Next, fill in the details for each director, including; their phone numbers, email and director type status, and then go to next. Next, fill in the directors' location details, such as the residential and postal address, and then click Next. The directors' information will show, and then click add to include; another director. Repeat the process until it’s complete for all the directors, and then click Next.
Click to add an auditor, feed in their details and then click next to continue. Add the auditor and then complete the practice number of the auditor before clicking next.
Click on the shopping cart to display all the unpaid items and select items to pay for. Fill in the required details and then proceed to pay. The total amount to pay will be displayed and then click proceed to payment.
A message will come up seeking payment confirmation, and then click OK. Registering businesses in South Africa costs vary from R125 (private company) to R475 (non-profit company). This depends on the type of company.
Business types/ forms that can be registered on the Bizportal include;
Profit companies (private companies limited)
Through the Bizportal, you can register;
Number of directors
Number of shares
Residential address of the directors
Residential address of the business
Number of employees
Bank account registration
If you wonder where to register your company in South Africa, you can contact the CIPC to do a direct and physical registration at their offices. In addition, you can do an online registration; get a bank to help you with registration, government institutions and SARS office.
Note; foreigners who wish to start and establish businesses in South Africa must have a valid business permit.