It is possible that you may need to register your business in order to legally do business, regardless of whether you are operating a side hustle, beginning a new firm, or contemplating taking your current small business to the next level.
The Information That You Ought to Know About the Procedure
The beginning of a new company venture can be filled with a lot of excitement: you are developing your brand, establishing lofty objectives, locating your position in the market, concluding deals, regaining control of your destiny, and possibly even producing new employment opportunities. On the other hand, the mountains of paperwork and bureaucracy that accompany it are not nearly as fascinating.
In the early phases of your company, you will need to select whether or not to file it with the government and what kind of business you will list it under if you do.
To begin, please respond to the following questions:
- Do you intend to run the firm by yourself and keep it on a very modest scale?
- Do you feel comfortable with the idea of not keeping your assets and your business finances separate?
- Are you interested in finding the easiest approach to creating a business with the fewest administrative and financial procedures possible?
- If you responded “yes” to any of these questions, a sole proprietorship is probably the most suitable business structure for you.
You do not need to register your business as a separate legal entity in order to begin conducting business if you are a sole trader (or ever). You also won’t have to make any additional tax filings or open a distinct bank account for your company if you don’t want to (it will be included in your income tax return).
What Are the Restrictions?
There are restrictions placed on the manner in which you can operate. Formalizing (which means registering) your company is necessary if you want your company to expand if you want to land some large clients, especially if you plan to collaborate with government agencies, if you need to request funding, or if you want to bring on partners.
Instructions on How to Register Your Company
The first thing you need to do is decide what kind of entity you’re going to be registering. If you don’t want to run your business as a sole owner, your alternatives are either a personal liability company, a privately held company, a corporation that is not for profit, or a listed company.
In a nutshell, the differences can be summed up as follows:
A Proprietorship, Sometimes Known as a Private Corporation (Pty Ltd)
This is the most prevalent kind of legal entity for companies that are considered to be small. It can be utilized by businesses that have anything from one to fifty owners, shareholders, or directors. The minimum number required is one. If you choose to structure your firm as a private company, any debts incurred by the business will be the responsibility of the company, not of you as the proprietor (protecting your assets should the business fail).
You may profit from the reduced tax rates that are provided to registered firms, despite the fact that the admin and set-up expenses can be greater (there is a yearly registration fee, and you are required to provide yearly financial statements) if you register your business.
A Non-profit Organization
A minimum number of three directors is required to register a firm as a non-profit organization. It requires a significant amount of administrative labor to set up and should be done for the benefit of the general public or to work toward a goal that is related to cultural, social, or group interests.
Companies that are open to the public typically list their shares on a market such as the JSE. They must have at least 3 directors, but there is no cap on the number of stockholders that can participate in the company. Companies that are open to the public are required to have their finances audited, as well as select a company secretary and have annual general meetings.
In most cases, experts such as lawyers, surgeons, civil engineers, or accountants will be the ones to register a business of this kind. All directors, both current and former, are jointly responsible for paying any debts or liabilities that accrue during their terms in office. If you are in this kind of field, it is a good idea to check with the appropriate legislation or registration authorities to determine what kind of business registration is required. This may be done by consulting with the applicable authority.
You are able to begin the process with the Companies and Intellectual Property Commission as soon as you have determined the appropriate legal structure for your company (CIPC). The great news is that creating a private corporation can now be completed entirely online, eliminating the need for any papers to be submitted. You will first need to go to the website of the CIPC and register as a client there. After that, you may use the same login details to join the BizPortal platform.
Keep These Pieces of Information Handy
- Suggested name (if you plan to register your business name at the same time)
- The nature of the enterprise (only private and non-profit companies can be registered online)
- Information about the Directors (ID number, marriage details, physical address, contact number, shareholding)
Payable by electronic funds transfer (EFT) or credit card, the fee to register a private company is R175 if the company name is also registered, or R125 if the company name is not registered. Your company will be automatically registered for tax with SARS if your company registration is successful, and you will receive your certificates through email.
If your company registration is unsuccessful, your firm will not be registered for tax. During this process, you also have the option of enrolling your workers in the Unemployment Insurance Fund (UIF) and making an application for a B-BBEE certification (free for companies with an annual turnover below R10 million).
Only citizens of South Africa are permitted to use the BizPortal, however citizens of other countries are welcome to make use of the New e-Services on the CIPC webpage.