Looking forward to set up a business in South Africa? Find all that you need to know about relating conditions and procedures in this article.
To date, South Africa is globally known as an African giant. Indeed, being the most developed country in the continent, South African evolves rapidly, thus providing several investment opportunities. Moreover, the Rainbow Country is deemed to be a gateway towards Central Africa as well as the Indian Ocean. This is particularly one of the reasons why the South African government tends to encourage national and foreign investment
Several incentives have been implemented with regard to financing development projects, creating jobs, facilitating exports, investment support, subsides, etc. The government also greatly encourages the setting up of small and medium enterprises and micro enterprises.
Types of companies
There are four types of companies in South Africa:
- the private limited liability company
- the public limited company
- the private company
- the partnership.
In the case of the private limited liability company and the public limited company, there is no limited as to the capital required. The private company and the partnership, for their part, do not require a minimum capital.
The private limited liability company requires at least one associate. Each partner's liabilities are limited to the amount contributed.
The public limited company also requires at least one associate but with no limit. Each partner's liabilities are limited to the nominal value of shares they own.
The private company involves a single partner with unlimited liabilities.
Finally, the partnership involves 2 to 20 persons, each active partner having unlimited liabilities while each passive partner's liabilities being limited to the amount contributed.
In general, setting up a business in South Africa can take 3 to 5 weeks, provided you comply with all relating conditions and formalities. These are further explained below.
Registration at the CIPC
First of all, you are require to register your company at the Companies and Intellectual Property Commission (CIPC), either online, or at its branches in Pretoria, Johannesburg or Cape Town, on a some banks. Note that registration by mail is also possible. You will have to provide your personal data, including your address and phone number, date of birth, identity card number or passport, as well as information pertaining to the company such as its head office address, financial year, shares, etc. Fees of R 125 apply for registration and R 50 for booking the company name.
Opening a bank account
Thereafter, you will have to open a bank account in the name of the company at any bank of your choice. Note that conditions are likely to vary from one bank to another. In all cases, you are required to produce identity details of each of the company's representatives, as well as original copies of registration at the CIPC.
Registration at the SARS
The CIPC and the SARS are virtually linked to one another. Thus, upon registration at the CIPC, your company's basic information is automatically communicated to the SARS. You then have to drop by in person so as to register your company for corporate tax by producing your identity card, the company's CIPC registration document, as well as a bank statement. You will also have to fill the EMP 101e for your employees' tax registration, unemployment insurance and training tax (PAYE, UIF and SDL respectively).
Companies with an annual turnover of more than R 1 million have to register for value added tax (VAT) by filling the VAT 101 form. These procedures can take between one to three weeks.
Registration at the UIF
All employees working for more than 24 hours in a company have to be registered at the UIF. You are thus required to register your company at the UIF via the UI-8 form, either at the UIF office in Pretoria, or at labor offices or by mail. Moreover, you must fill a UI-19 form every time you hire a full time employee. Once procedures have been completed, you will receive the UI-33 form, which is a confirmation letter, by mail.
Registration at the Compensation Commission
Registration at the Compensation Commission relates to the compensation law providing for occupational accidents and diseases. Registration forms are available at the Department of Labor. You will have to drop by in person to fill relating formalities. Procedures can take up to 30 days following assessment based on several criteria, namely exposure to danger, etc.
Registration at the UIF and the Compensation Commission have to take place simultaneously.
Good to know:
As formalities relating to the setting up of a company can be quite complicated, the government of South Africa has set up several organizations to help investors and entrepreneurs in the country. For more information, please refer to the government's website.
Department of Labour www.labour.gov.za
Small Enterprise Development Agency (SEDA) www.seda.org.za
Government of South Africa – Formalities per sector www.gov.za
Government Investment Incentives www.investmentincentives.co.za
Industrial Development Corporation www.idc.co.za