Business governance: Getting started as an entrepreneur

Content provided by a guest contributor.

Entrepreneurship is more than simply “opening up a small business.” It is rather a progression through which individuals recognise opportunities, distribute resources, and generate value. This creation of value is often through the identification of unmet needs, wants and/or opportunities for change identified in our society. Entrepreneurs view “problems” as “opportunities”.

Entrepreneurial success, however, is not onlydetermined by the ability to foresee these opportunities in the marketplace, initiate (or take advantage of) change, and create value through solutions. That said, one also has to have the right tools and business governance structures to create a successful business moving forward.

You have the finest idea, you know how effective your business plan will be, and you have an intense desire to make some money. However, does your heart skip a beat or do your palms start to sweat at the thought of legal compliance and administrative foundations for your new business venture? Use this checklist to make sure you start your entrepreneurial journey and approach business governance the best way possible.

Company Name

Your first step is to identify and register a company name. Pick a name that people will remember, that highlights and hints at what you do, and reflects your company’s corporate personality. Part of this process involves checking whether your chosen name is available (or if there are possible conflicts) with the Companies Intellectual Property Commission (CIPC)

Business Entity Classification

You need to decide how you want to classify your business entity, bearing in mind that different business entities have different legal requirements and tax implications. In the past, close corporations were the entity of choice for budding entrepreneurs. However, the Companies Act 71 of 2008 phased out close corporations as a business entity. Since then, no new business entities have been and/or are allowed to register as close corporations. Entrepreneurs now have the option to identify as a sole proprietor company, a private company, a co-operative (co-op), or a personal liability company.

Company and Tax Registrations

All company registrations are attended to by CIPC. To register a company, you need the following information:

  • Name of the company (a few names are required in order of preference)
  • Registered and/or street address
  • Postal address
  • Financial year end (if any)
  • Directors information, which includes:
    • Full names
    • Identity numbers (if not South African then date of birth and where director is from) and/or passport number (if any)
    • Residential addresses
    • Companies business address
    • Postal address
    • Cell phone numbers
    • Email addresses
  • Shareholder/s details (if any) which include:
    • Full names
    • Residential addresses
    • Auditor details (if any, as you are not required to have auditors)
    • Name of auditors
    • Designated person at auditor firm
    • Postal address
    • Street address and
    • Their professional status i.e. chartered accountants as well as their practice code

Furthermore, the CIPC requires original certified copies of all identity documents of all nominated directors. Tax registrations are attended to by SARS and compulsory VAT registration commences once your turnover exceeds R1 million per annum.

Other Registrations (UIF, PAYE, SDL AND COIDA)

The Basic Conditions of Employment Act 75 of 1997 is of paramount importance. It is vital that you thoroughly understand it before you start your business and hire employees. Business owners are also obliged to register their companies with the Unemployment Insurance Fund (UIF), Pay as You Earn (PAYE), Skills Development Levy (SDL), and the Department of Labour in terms of the Compensation for Occupational Injuries and Diseases Act (COIDA).

Getting the Right Advice and Know How

As an entrepreneur, doing all the paper work and start-up administration yourself might seem like a good idea. You might choose this approach to "save costs", however, having experts assist you from the beginning of and throughout your business journey will ultimately prove invaluable.

The content in this article was provided by Clair Vogelpath-De Iongh, former legal associate at BKM Attorneys.

About BKM Attorneys:

BKM Attorneys is a 100% women owned law firm based in Rosebank. Our approach is governed by high levels of service and efficiency. Our expert advice and intervention early in a matter, whether it be a litigous matter or a commercial transaction, can save time and money. We value our relationships with our clients and work closely with our clients in order to ensure that we understand our clients business and commercial needs in order to establish a mutual understanding of the commercial issues at stake and the most appropriate solution.

BKM’s services include areas such as: BBBEE, risk management, commercial law, employment and industrial law, law of contracts, construction and engineering law, mining law, company secretarial work, due diligences, advice regarding compliance with company legislation, defamation, intellectual property, constitutional and public law, aviation law, insolvency and liquidations, forensic investigations, insurance law, competition law, dispute resolution (including court litigation and arbitrations), product liability, landlord and tenant, occupational health and safety, family law and winding up of deceased estates.

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