How to register your business

Following on from Moneybags article on women starting their own businesses, Moneybags journalist Jessica Anne Wood looks at the process that entrepreneurs need to go through in order to register their business.

The Companies and Intellectual Property Commission (CIPC) is responsible for the registration of companies, co-operatives and intellectual property rights (including trademarks, patents, designs and copyright) in South Africa. The CIPC is part of the Department of Trade and Industry.

Not all companies need to register with CIPC, however, regardless of whether you are registered with it or not, you will still be liable for tax and will have to be registered with the South African Revenue Services (SARS).

Registering your business

For business that wish to transact in the formal sector or with government, they will need to be registered with CIPC.

“For these businesses, there may also be tax benefits to registration, as registered businesses have a lower tax rate than individuals,” says the CIPC.

To begin the process of registering a business with CIPC, you need to register as a customer. From there, the CIPC will take you through the various stages of applying for a reserved name and getting a registration number for your business.

“However, it brings with it certain responsibilities, irrespective of whether the business is trading. For example, you will need to file an annual return and pay an annual fee,” explains CIPC.

Cost of registering your company

According to the Companies Act of 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,” explains the CIPC.

The cost of registering a company can vary between R125 and R475. The cost of company registration for a private company is R125. The cost for a non-profit company registered without members is R475.

Companies that register without a reserved name may transact using a trading or business name, or can apply to add a reserved name to the company 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),” reveals the CIPC.

When applying for name reservation, you may apply for between one and four names during each application process. If your initial name reservation is declined, you can apply for new names. Each name reservation application costs R50.

What you register as will depend on the type of company that you are planning to operate. Among these types of companies are:

  1. Private company
  2. Non-profit company
  3. Personal liability company

“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,” explains CIPC.

For more information on registering a business or company, click here.

Registering a business at SARS

SARS explains that in order register your business for tax, you must first register with CIPC and obtain a registration number. Once you have this registration number the company will automatically be registered as a taxpayer.

“A company which does not hear from SARS after registering with CIPC, must contact their nearest SARS office.

“If a company is not yet registered with SARS, they will, for security reasons, need to do their first-time registration at a SARS branch,” reveals SARS.

“Depending on other factors such as turnover, payroll amounts, whether involved in imports and exports etc., a taxpayer could also be liable to register for other taxes, duties, levies and contributions such as Value Added Tax (VAT), Pay-As-YouEarn (PAYE), Customs, Excise, Skills Development Levy (SDL) and Unemployment Insurance Fund (UIF) contributions,” adds SARS.

For more information on registering for your business with SARS, click here.