Registering a company in South Africa
You’ve made the exciting decision to start a business, but you have questions about registering a company in South Africa. We will try to answer those questions and guide you to one of our plans that will suit your needs.
What type of registration do you need?
- Under the Companies and Intellectual Property Commission (CIPC), there are two categories under which you can register your company: non-profit and profit companies.
- A non-profit company (NPC) is a company that is incorporated and run for the benefit of the public and requires an NPC registration. The income from an NPC is not distributed to the company’s members, directors, or officers.
- Profit Companies are businesses that operate with the goal of creating profit for it’s member’s, directors, and officers. A for-profit company can be formed as one of four sub-categories: Private Companies (PTY), Public Companies, State-Owned Companies also know as a State Owned Enterprise (SOE), and Personal Liability Companies (Incorporated). Most new small, medium, and even large businesses will register as a PTY Private Company.
What is Tax Registration in South Africa?
In South Africa, there are various types of taxes: some direct, some indirect. For example, VAT, payroll, customs, etc. The main form of tax is income tax (personal and business income tax). Income tax is levied on all income and profit received by a taxpayer, which includes individuals, companies, and trusts. Currently, all companies registered via the CIPC automatically receive an income tax reference number together with their COR documents. In order to register with SARS, a business must first register for income tax.
What is Tax Clearance in South Africa?
Tax clearance is issued upon request of the tax payer, and is a certificate that confirms that all returns are submitted and all moneys due have been paid. Various third parties, such as banks, credit institutions, government departments, suppliers, etc may require that a business’s tax affairs are in order before they consider doing business with them.
What is PAYE in South Africa?
Employees tax (PAYE – pay as you earn) is the tax that employers must deduct from the employment income of employees, such as salaries, wages and bonuses, and is paid to SARS monthly.
What is UIF in South Africa?
UIF (Unemployment Insurance Fund) is a compulsory deduction. Employers must pay the UIF 2% percent of the value of each worker’s pay per month. The employer and the worker each contribute 1%. Contributions are paid monthly, to the Unemployment Insurance Fund, or SARS.
What is SDL in South Africa?
SDL (Skills Development Levy) is paid monthly to SARS. It is a levy imposed to encourage learning and development in South Africa and is determined by an employer’s salary bill. The funds are used to develop and improve the skills of employees. Employers may register voluntarily, but registration becomes compulsory once a business’s payroll bill exceeds R500,000.00 over a 12 month period.
What is COID in South Africa?
COID (Compensation for Occupational Injuries and Diseases). All business’s employing one or more workers are required by law to register with the Compensation Fund. The Compensation Fund provides compensation for injuries and diseases sustained by employees during the course of their employment.
Once registered, a business may be required to prove that it is in good standing with the Compensation Fund. A letter of Good Standing is a certificate issued by the Compensation Fund confirming that the Fund will assist your company in paying for any work related injuries or harm to your employees, because your payments to the Fund are up to date.
How to register a Sole Proprietorship in South Africa?
You do not register a sole proprietorship with CIPC in South Africa.
A sole proprietorship is when an individual (the sole proprietor/ owner) operates and owns a business. The business does not exist without the owner and the business is NOT a separate legal entity.
Therefore, you don’t register a sole proprietorship with the CIPC.
The income and expenses of a sole proprietorship is declared on the personal income tax return of the sole proprietor.
The main advantages of a sole proprietorship is that it is easy to establish, has minimal legal requirements and it is also easy to dismantle.
One of the main disadvantages of a sole proprietorship is that the sole proprietor has unlimited liability and therefore increased risk, as creditors may attach any assets (fixed property and any other personal assets of the proprietor), whether it was used for purposes of the sole proprietorship or not, to recover the debts of the sole proprietorship.
Documents required to register a company?
Depending on the type of company you choose to register, you will be required to provide numerous documents including but not limited to, copies of identity documents, contact details, addresses, etc. If you are registering for VAT, you will need to submit bank details.