How to Register a Business in South Africa
We’ve had a lot of queries from readers on how to register a business in South Africa. It can be a tricky process – the information out there is varied and there is no complete resource that tells you everything you need to know about the types of companies.
Many people elect to let an expert do their company registration – all the paperwork required can be done by an accountant or lawyer, leaving you to focus on your business. However, it is possible to do it yourself with a little elbow grease, perseverance and patience.
This handy article will help you understand the types of businesses available to you and guide you to all the resources you need to register your business.
1. Choose your business type
Since the new Companies Act 71 of 2008 came into effect on the 1st of May 2011, no new closed corporations can be registered In other words, registering a CC is no longer an option and existing businesses can’t convert.
There are a number of business structures in South Africa that fall into 2 categories: profit and non-profit.
Tax and other considerations affect the choice of a particular type of company, so speak to an accountant about your options, but here are the main company structures that you might encounter.
This is the simplest kind of business structure and does not need to be registered.
- The owner (sole proprietor) trades under his or her own name.
- No separation of personal and business assets and liabilities.
- Sole proprietor benefits from all the profit and assets accumulated through the business
- No limited liability – the sole proprietor is liable for any debt that the business incurs
Private Company – (Pty) Ltd
A private company is the type of company that will not be listed on the stock exchange – shares are never offered to the public. Private companies require the least amount of annual formalities
- Private Companies are granted Proprietary Limited or “(Pty) Ltd” status.
- May be founded and managed by 1 director if required (a one-man company)
- This business structure is ideal for entrepreneurs to run their business with no limit on the number of directors.
- Private companies are not allowed to offer securities (stock, bonds, shares, etc.) to the public and is also restricted from transferring its shares.
- No annual audits required, if all requirements are met (example: all the directors are also the only shareholders of the company).
Personal Liability Company
Personal Liability Companies are most often registered for a group of professionals where the liability is shared by directors.
- Personal Liability Companies are granted Incorporated or “Inc” status.
- Must have a minimum of 1 director.
- As a business owner or professional you can register a company that you want to be personally liable for.
- The Personal Liability Company and its directors, past and present, are jointly liable for any debts and liabilities incurred.
- This type of company is normally registered by individuals such as Doctors, Lawyers, Engineers, Accountants, Sole Proprietors, Partnerships, etc.
Public Company (Ltd)
Public companies raise funds by offering shares to the public, so there is no limit to the number of shareholders
- Public companies are granted the “Limited Ltd” status.
- Only requires one member for incorporation
- No limit on the number of shareholders
- Securities (stock, bonds, shares, etc.) can be offered to the public to raise capital, usually through the stock exchange
- Management is invested in a Board of Directors.
- A company created for public benefit or relating to one or more cultural or social activities, or communal or group interests.
- The income of a non-profit company is not distributed to its incorporators, members, directors, officers or persons related to any of them.
- The name of a Non-Profit Company will end with “NPC”.
- Incorporated by at least 3 persons for public benefit, social activities, communal or group Interest, etc.
- Must have a minimum of 3 directors.
- The primary objective is to be a benefit to the public and not to make profit.
- Income/property may not be distributed to the incorporators, members, directors or officers.
- Only reasonable compensation for services rendered by them may be taken.
2. Register Your Company with Cipc
Cipc, the Companies and Intellectual Properties Commission, is where all companies in South Africa are registered. They will issue you with your company registration number, without which you cannot trade.
Cipc has tried to make company registration much easier, and now allows for registration of certain types of companies online. For most small businesses, this is ideal. You can find them at www.cipc.co.za
The have created some really useful guides to registering your business, including this video:
There is also a written version of the video in PDF format which can be found here: http://www.cipc.co.za/Help_files/HowTo_NewCoReg.pdf
If you are not registering online, they have also got a handy breakdown of the forms and documentation that is required for the different kind of business structures. http://www.cipc.co.za/Help_files/Forms_and_supporting_documents_v3.pdf
All the forms can be found here – http://www.cipc.co.za/Companies_Forms.aspx And if all else fails and you need support, Cipc has a call centre which you can contact: 086 100 2472.
Her specialties include copywriting, web design and development, social media, community management, email marketing, and digital media.