How to start a business in South Africa

How to start a business in South Africa?  Although this may seem like a silly question, there are so many people who want to get started but the don’t know where to begin. In fact many years ago I was one of those people.

So where do you start if you want to start a business?

You must have a business plan. This can weigh heavy on your mind because you may not know how to write one or even where to start. The place to start is to identify what you want to do – identify it in your head first. Talking about it to others is good also, you’d be surprised by the things you can learn from others – even as they tell you that your idea is silly and has been done before.

Once you know what you want to do, whether you have on paper or not, you can proceed to registering your company with with the Companies and Intellectual Property Commission (CIPC).

In terms of the Companies Act, 2008, a company may be registered with or without a company name. When a company is registered without a reserved name, its registration number automatically becomes the company name. This is the quickest way to register a company” this is according to CIPC.

Such a company may transact with a trading (business) name, or may apply to add a reserved name at a later stage. In this case, the company will need to first reserve a name and then apply for a name change, which constitutes a change to its Memorandum of Incorporation (MOI) (refer to  Maintain a Business).

If your initial name reservation application is not approved, you will need to apply for new names. You may apply for between 1 and 4 names during each application process. Each name reservation application costs R50. A company registration may vary between R125 and R475 (R125 for a private company, R475 for a non-profit company registered without members). – obviously you are starting a business because  you want to earn money I assume, so your company will be a “private company” which cost R125.

There are five types of companies that you can register.  If you wish to run a franchise business, you would register a private company.  If you wish to register a church, you would register a non-profit company.  A private school could be registered as a private company or non-profit company, depending on its objectives.  An association of professionals such as lawyers, doctors, civil engineers etc, may be registered as a personal liability company. 

Profit companies may be incorporated under different types of companies under the Companies Act.

Once you company is registered and you have your papers from CIPC, you can head over to your favourite bank to open a business account. If you have not started trading, you will have to contribute monthly towards your business account so that it remains open. This amount won’t be a lot, some banks ask for R500 to open an account but you can withdraw that money right away then it is about R50 to R200 to keep the account open depending on the bank, type of account and account activity.

Now that you have your company registration and bank account, you can now register for tax with the South African Revenue Service (SARS) and get your tax clearance certificate which is valid for a period of 12 months (1 year).

At this point you should be able to trade formally with very little trouble, bureaucracy and red tape never ends – not in business. So you will be required to register for VAT, with the department of labour and so on and so on – depending on the nature of your business.

The ultimate key to success of your business is patience and perseverance. Chances are you will not succeed in the first or second or even third year. Gauge your growth, build on it and keep going.




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