The Business Setup and Registration Process in Compliance with SA Laws

Posted by Elaine Viljoen on 26 January 2018.

Elaine Viljoen

CA(SA), CTA, Hons BCompt, Adv Diploma Banking, BCom (Cum laude), IALMBA Graduate Student, Business School Netherlands

The Tax Shop Head Office

More about Elaine Viljoen

Elaine obtained qualifications from various academic institutions and currently studies towards the International MBA at the Business School Netherlands. She qualified as a Chartered Accountant (SA) in 1988 and is a member of the South African Institute of Chartered Accountants. After completion of her articles with KPMG, she lectured in the fields of accounting and auditing at various universities. Thereafter, she occupied high profile positions in the banking sector, including appointments as Group Chief Accountant at Standard Bank, General manager in the enterprise risk management, treasury and finance divisions at ABSA and Chief Financial Officer at ABN Amro Bank South Africa. She served on various executive committees, including audit and risk committees and as representative of the Middle-East and Africa region on the Steering Committee Information and Operations for ABN Amro Bank. Since 2008 she has provided business consulting services to various financial institutions in South Africa and acted as a specialist advisor in the nuclear energy sector.
Though it is possible to register the business at CIPC without assistance from tax practitioners and accountants, it is certainly not recommended.
Knowing exactly which documentation is required, how to draft the Memorandum of Incorporation, which business entity to select, how to reserve a business name and how to search for verifying availability of a business name, form part of the expertise that accountants offer. Instead of making mistakes during the registration process, which can lead to the situation of delaying or the registration being rejected, it is best to get professional help right from the start.
The introduction of the New Companies Act, 2008, has complicated the process further with new rules and regulations regarding the business entity type, name reservation and legal implications. Below is a basic breakdown of what is needed as part of a business registration process in the country.
Register with CIPC
If you plan on setting up a business in South Africa, such as a private company, you must first register it with CIPC as a legal entity and reserve a business name – where relevant.
Register the Business Entity with SARS
Irrespective of what type of business entity you register, it must also be registered with the South African Revenue Services (SARS) – for normal tax, provisional tax and as an employer (for PAYE, UIF and SDL) when employing staff. When registering with CIPC, the business becomes a tax payer and will be registered with SARS.  If you are a partner or a sole proprietor, you will need to register as a provisional tax payer and this must be done separately with SARS.
You may not operate the business entity without an income tax number and the tax registration must be done within 60 days from commencement of business. Our tax practitioners are here to assist with the entire business registration process.
Register for VAT if Relevant
If you realistically estimate that the business turnover for the financial year will be R1 million or more, you are required to register for Value Added Tax at SARS. If not, then you don’t need to, but may also not charge VAT and may not claim VAT back from SARS. Monthly VAT calculations and submissions must be made to SARS if registered for VAT.
PAYE, SDL & UIF Registrations
If you have one or more employees with any of them earning over the threshold amount in an employment year, you need to register your business for contributions of Pay As You Earn, also known as PAYE tax. You will need to make the PAYE deductions, reflect such on the employee payslips, submit the information and make payments to SARS.
In addition, if the payroll is in excess of the threshold amount a month as stipulated by SARS, you will also need to register for SDL, which refers to Skills Development Levy. You will have to make calculations, submit the information and make the relevant payments monthly to SARS.  Our professional accountants will gladly assist you with this and tools such as our cloud based payroll software to make life easier.
Note that Unemployment Fund (UIF) registration must be done and contributions of your business entity and that of the employees must be reflected on their salary advices. You must submit the required forms make the necessary payments to the UIF.
Register as Employer
Irrespective of how many employees the business entity has, you must register it with the Department of Labour to ensure protection for the business entity and the employees in terms of injuries or disease at the workplace as the result of the tasks performed by the employees. This is in compliance with the statutory requirements of the Occupational Injuries and Diseases Act.  An annual Return of Earnings submission needs to be made upon which your business will be levied.
From the above information, it becomes clear that the business registration process doesn’t stop at registering of the entity at CIPC and, to avoid non-compliance with statutory requirements, it is thus recommended that you get professional tax and accounting assistance when planning to open and operate a business in South Africa.  Let the Tax Shop Professional Accountants assist you with all the compliance requirements so that you can focus on growing your business.