South Africa

Starting a Business in

South Africa

Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in South Africa. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2013.

Compare South Africa to 188 other economies.

  • Standardized Company

  • Legal Form: Private Limited Liability Company
  • Paid in Minimum Capital Requirement: ZAR 1
  • City: Johannesburg
No. Procedure Time to Complete Associated Costs
1 Register at the Companies and Intellectual Property Commission (CIPC)

The new Companies Act 2008 of South Africa requires the Notice of Incorporation (CoR 14.1) and the Memorandum of Incorporation (MOI) (CoR 15.1 A-E) must be lodged at the Companies and Intellectual Property Commission (CIPC) upon registration. These forms are available for download from the CIPC’s website.

The Memorandum of Incorporation (MoI) form must include the following information:
o Details of incorporators
o Number of directors or alternate directors
o Share capital (maximum issued)

The Notice of Incorporation form, lodged with the MoI, must include the following information:
o Type of company
o Incorporation date
o Financial year-end
o Registered address (main office)
o Number of directors
o Company name
o Whether the company name will be the registration number
o The reserved name and reservation number
o List of four names to be checked by the Commission

In addition, the following documents must be submitted:
o Certified ID copies of all indicated initial directors and incorporators.
o Certified ID copy of applicant if not the same as one of the indicated initial directors or incorporators.
o If an incorporator is a juristic person, a power of attorney is required for the representative authorized to incorporate the company and sign all related documents.
o If another person incorporates the company and signs all related documents on behalf of any of the incorporators and initial directors, a power of attorney and certified ID copy of the person is required.
o If a name was reserved before filing of incorporation documents, the valid name reservation document is necessary.

If a proposed name is rejected, the company may still be registered and the registration number then becomes the name of the company at incorporation. An approved name may then be submitted later. Application to reserve a name (Form CoR 9.1) costs ZAR 50 if done electronically and ZAR 75 if submitted manually. The applicant of a name reservation must be the same applicant for the new company registration documents, and will need to include a certified copy of their ID. The incorporation fee is ZAR 100.

5-7 days ZAR 175
2 Open a bank account

In order to open a bank account, the applicant must submit proof of the directors' identity, and the original company documents. This procedure may take longer in practice if the required documents are not in order.
1-2 days no charge
3 Register for income tax, VAT, and employee withholding tax (PAYE and SITE) at the South African Revenue Service (SARS)

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 VAT 101 form. CIPC 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 must also register as an employer by means of "EMP 101e" form that caters for the necessary registration of all the withholding taxes applicable to the taxpayer including PAYE (Pay as You Earn, i.e.: employee tax) or SITE (inclusive of employee tax), UIF (Unemployment Insurance Fund). SITE always is payable on the "first" R60 000, after which PAYE is payable on the excess (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 60,000, SITE is payable and if the employee earns more than ZAR 60,000 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 discretion whether to register with SARS or the Unemployment Insurance Commissioner (Department of Labor), as the liability of the employer to register and pay employees' tax and the Skills Development Levy will determine with whom an employer must be registered for UIF purposes. Skills Development Levy is a type of labor mandatory contribution that employer has to pay to the Tax Revenue Authorities. It is levied at 1% of gross salaries.

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 246 of the Tax Administration Act, No. 28 of 2011 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 also carries out a physical inspection of the business premises and performs an interview with the public officer (or the tax practitioner authorized to carry out the registration process) before the VAT registration application is processed

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 authorized and registered tax practitioner, 2) applications must be accompanied by proof of identity, bank particulars and documentation substantiating the physical business address.

12 days no charge
* 4 Register for unemployment insurance at the Department of Labor

To register for unemployment insurance, the company submits UI-8 & UI-19 application forms at once. Once the application is approved, The Department of Labor issues a form UI-33 to confirm registration.
4 days (simultaneous with procedure 4) no charge
* 5 Register with the Commissioner in deference to the Compensation for Occupational Injuries and Diseases Act

Registration forms can be obtained from the Department of Labor'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. After completing and submitting the W.As.2 form at the office of the Compensation Commissioner, the Company will be sent the following documents to complete from time to time (although these are not required for registration):

- W.As.8 must be filed within 30 (thirty) days of financial year end, which must balance with Employer's COIDA account;
- W.As.6a which details the assessment of the Commissioner for premiums payable, less any amounts paid in advance;
-WG30, W.As.2 and W.Acl(E) which are claim forms that must be kept in a safe place for us if and when necessary.

Around 10 days, simultaneous with Procedure 4 no charge
* Takes place simultaneously with another procedure.

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