Starting a Business in South Africa

This table summarizes the procedures and costs associated with setting up a business in South Africa.

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Standardized company

Legal Form: Private Limited Liability Company
City: Johannesburg

Registration Requirements Summary:


  Procedure Time to complete: Cost to complete:
1 Reserve a company name with the Registrar of Companies and pay fees 3 days (electronic lodgments - The lodgment of a name reservation application in person at Cipro’s office may take longer.) ZAR 50
2 Lodges formation documentation with CIPRO in Pretoria, Gauteng Province, South Africa for registration 5-7 days ZAR 350 (administrative fee) + 0.5% of authorized capital + ZAR 60 (certificate to commence business)
3 Open a bank account 1-2 days no charge
4 Register with the office of the local receiver of revenue (SARS) for income tax, VAT, and employee withholding tax (PAYE and SITE). 12 days no charge
*5 Register with the Department of Labor for Unemployment Insurance. 4 days, simultaneous with Procedure 4 no charge
*6 Register with the Comissioner according to the Compensation for Occupational Injuries and Diseases Act. Around 10 days, simultaneous with Procedure 4 no charge
* Takes place simultaneously with another procedure.

Registration Requirements Details

Procedure 1.
Reserve a company name with the Registrar of Companies and pay fees
Time to complete:
3 days (electronic lodgments - The lodgment of a name reservation application in person at Cipro’s office may take longer.)
Cost to complete:
ZAR 50
Name of Agency:
Comment:
The company name can be reserved electronically via the Internet. Otherwise, the promoter must go to the CIPRO and pay the prescribed fee. The official at the CIPRO offices will submit the application electronically on the person’s (company or individual) behalf. Once CIPRO has approved the propose company name, the reservation is valid for 2 months extended by a period of 1 month, within which the company can be incorporated. The name reservation application is processed only if the agent has a credit balance on his or her account. CIPRO officials assign a tracking number to the electronic name reservation and process it in that order. The filing takes 5 minutes; the approval/rejection process takes about 3–5 days depending on the availability of the Web site and the number of applications received and any backlog. In-person filing of a name reservation application at the CIPRO offices may take longer. A name reservation can be extended for another month by filing a name reservation extension form (Form CM6) and paying ZAR 20. When an applicant lodges documents with CIPRO the applicant would be required by CIPRO to open an agent account for the purpose of debiting the amount of any fees payable in connection with that lodgment and future lodgments. On lodgment of the reservation of name application (Form CM5) CIPRO will immediately debit the agent account with an amount of ZAR 50.
Procedure 2.
Lodges formation documentation with CIPRO in Pretoria, Gauteng Province, South Africa for registration
Time to complete:
5-7 days
Cost to complete:
ZAR 350 (administrative fee) + 0.5% of authorized capital + ZAR 60 (certificate to commence business)
Name of Agency:
Comment:
A certificate to commence business is required by law (s172 of the Companies Act) before a company can legally trade or raise finance. The form CM46 – certificate to commence business is submitted together with the formation documentation. The Registrar will incorporate the company once all the following documents are submitted simultaneously:
- A copy of Cipro’s letter advising that the name has been approved and reserved.
- One signed set of the certificate of incorporation, Memorandum and Articles of Association together with the necessary signatories pages. The memorandum of association must reflect the lodgement fees payable which are calculated based on the authorized share capital of the company as a flat rate of R350 plus R5 for every R1,000 or part thereof or, in the event of the company having shares of no par value, R5 for each 1,000 shares or part thereof. The minimum fee payable on a formation of a company is R415.
-Form CM22 (notice of registered office and postal address) in duplicate.
-Form CM29 (information pertaining to a company secretary).
-Form CM31 (consent to the appointment of the auditor) in duplicate. Every South African company must appoint a South African auditor.
-Forms CM27 (consent to the appointment, one for each director).
-Form CM46 (the certificate to commence business)
-Form CM47 (statement by each Director indicating there is adequate capital in the Company for the purpose of the company's business)
The Registrar will attend to the recording of the registration by allocating a registration number to the company and will release the Memorandum and Articles of Association, certificate of incorporation and certificate to commence business, one form CM22 and CM31. In addition to the CM forms listed above a CM47 which is a statement by each Director indicating there is adequate capital in the Company for the purpose of the company's business, also needs to be completed by the directors of the Company and lodged with CIPRO.


Procedure 3.
Open a bank account
Time to complete:
1-2 days
Cost to complete:
no charge
Name of Agency:
Comment:
In order to open a bank account, the applicant needs to have a proof of who the directors are, and the original company documents.this procedure might take longer if required documentation are not in order.
Procedure 4.
Register with the office of the local receiver of revenue (SARS) for income tax, VAT, and employee withholding tax (PAYE and SITE).
Time to complete:
12 days
Cost to complete:
no charge
Name of Agency:
Comment:
Business with annual taxable income of more than ZAR 1,000,000 needs to register for VAT.The application for the registration of VAT is done on a VAT101 form. Cipro and the South African Revenue Service are linked electronically. Once a company is incorporated the relevant South African Revenue Service office is advised and an income tax number is allocated to such entity.

The company also has to register as an employer by means of "EMP 101e" form that caters for the necessary registration of all the witholding taxes applicable to the taxpayer including PAYE (Pay as You Earn. ie: employee tax) or SITE (inclusive of employee tax), UIF (Unemployment Insurance Fund) and SDL (Skills Development Levy). SITE always is payable on the "first" R60 000, whereafter PAYE is payable on the excesss (e.g. amount after R60 000. The Employer is compelled to register as employer in terms of paragraph 15 of the 4th schedule to the Income Tax Act. If an employee earns less than ZAR 1,000,000 SITE is payable and if the employee earns more than ZAR 1,00,000 PAYE is payable. No separate registration required for SITE. Any employer who is liable to register with SARS for the payment of employees' tax is also required to register with SARS for purposes of paying unemployment insurance fund contributions. An employer does not have a discretion whether to register with SARS or the Unemployment Insurance Commissioner (Department of Labour), as the liability of the employer to register and pay employees' tax and SDL will determine with whom an employer must be registered for UIF purposes.

With regards to VAT applications, SARS assesses the viability of the business as part of the registration process. The company must appoint a public officer in terms of section 101 of the Income Tax Act and must advise the relevant SARS office of the full name, residential and postal address of such person. This person must be a resident of South Africa.

SARS introduced new verification procedures for VAT registration with effect from 13 November 2008 in an attempt to combat fraud. These requirements include 1) applications must be submitted in person or by a duly authorised and registered tax practitioner, 2) applications must be accompanied by proof of identity, bank particulars and documentation substantiating the physical business address.
Procedure 5.
Register with the Department of Labor for Unemployment Insurance.
Time to complete:
4 days, simultaneous with Procedure 4
Cost to complete:
no charge
Name of Agency:
Comment:
To register for unemployment insurance, the company submits U18 & U19 application forms at once. Once the application is approved, the Department of Labour issues a reference number.
Procedure 6.
Register with the Comissioner according to the Compensation for Occupational Injuries and Diseases Act.
Time to complete:
Around 10 days, simultaneous with Procedure 4
Cost to complete:
no charge
Name of Agency:
Comment:
Registration forms can be obtained from the Department of Labour’s Web site (www.labour.gov.za). Businesses do not have to wait for the approval of registration to start operations. The relevant form is a W.As.2, and written notification will be sent once the completed application has been examined.