There seems to be so many legal and statutory requirements when setting up a business that sometimes it's hard to know where to start, and whether or not you're doing everything you're legally obliged to do.
With the new Companies Act having come in to play, the rules have changed, so let's look at that and go through the steps to getting your business registered.
Register Your Business
If you're setting up a private company ((Pty) Ltd), you need to register your company as a legal entity. All the information you require can be found at the Companies and Intellectual Property Commission (CIPC) website.
Register with the SARS
Whether you're running a sole proprietorship, a partnership or a private company, you have to be registered with the South African Revenue Services (SARS). If you've registered a company with CIPC, you'll automatically be registered as a tax payer with SARS. Sole proprietors or partners need to register as provisional tax payers directly, and this can be done at any SARS office or online.
For further information and to download the relevant forms, visit the SARS website, where you find an entire section geared to small businesses.
And don't forget:
- As soon as you start a business, you have to register with SARS and obtain an income tax reference number
- It's mandatory to register within 60 days of starting a business by completing a IT77 form, either at any SARS office or online
Register as a VAT Vendor
If your turnover is - or is likely to be - R1 million a year or more, you need to register as a VAT (Value Added Tax) vendor. This is done by completing and submitting a VAT101 form, which is available at any SARS office.
Close Corporations must submit the following documentation with their VAT101 forms:
- The VAT127 Form, which must be accompanied by a business plan
- A copy of Form CK1
- Certified copies of the identity documents of the member or members
- A cancelled business cheque
- A copy of a letter issued by the company's accounting officer accepting his or her appointment
- A list of business contacts, if available
Register for Employee Tax
If you employ one or more staff members who earn over R40,000 per year, you have to register your company for PAYE (Pay As You Earn) tax contributions. In addition, if your payroll is more than R500,000 a month, you have to register for payment of the Skills Development Levy (SDL).
In order to do this, simply complete an EMP101 Form at any SARS office. This includes sections for contributions to the Unemployment Insurance Fund (UIF) and payment of the SDL.
Register with the Department of Labour
All companies - and sole proprietorships that have one or more full-time employees - need to register with the Department of Labour. This is mandatory in terms of the Compensation for Occupational Injuries and Diseases Act (COIDA).
The Act replaced the previous Workmen's Compensation Act in 1993, and provides for employees who are injured or killed at work, or who contract a disease directly as a result of their work. It also protects employers from personal liability in these instances.
Here's how to register in terms of COIDA:
- complete and submit the WAs2 Form at the office of the Compensation Commissioner
- once your registration has been completed, you will be sent the following additional forms to complete from time to time:
- WAs8, which must be filed within 30 days of your financial year-end, and which must balance with your COIDA account
- WAs6a, which details the assessment of the Commissioner for premiums payable, less any amounts that may have been paid in advance
- WG30, WAs2 and WAc1(E), which are claims forms that must be kept in a safe place for use if and when necessary
Further information about COIDA, the registration process, and the obligations of companies in relation to the Act, visit the Department of Labour's web site.
Register with the Unemployment Insurance Fund (UIF)
All employers must register their employees for unemployment insurance, which can be done on Form UF8 at any SARS office, or online. They should also obtain copies of Form UI-19, which is required to register new employees when they join the company.
You will receive a copy of Form U133 to confirm your registration. Thereafter, UIF payments must be made monthly, either directly to the UIF or together with PAYE and the Skills Development Levy (if applicable).
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