South Africa

Starting a Business in

South Africa

Listed below is a detailed summary of the bureaucratic and legal hurdles an entrepreneur must overcome in order to incorporate and register a new firm, along with their associated time and set-up costs.  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 (GNI).

The information appearing on this page 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 183 economies. The most recent round of data collection for the project was completed in June 2011.

  • Standardized Company

  • Legal Form: Private Limited Liability Company
  • City: Johannesburg

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No. Procedure Time to Complete Associated Costs
1 Lodge formation documentation with the Companies and Intellectual Property Commission (CIPC) for registration

The new Companies Act 2008 of South Africa requires the following documents to be lodged:
-Notice of Incorporation (CoR 14.1)
-Memorandum of Incorporation (MOI) (CoR 15.1 A)

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) has a cost of R50 if done electronically.

 5-7 days ZAR 175
2 Open a bank account

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.
1-2 days no charge
3 Register with the office of the local receiver of revenue (SARS) for income tax, VAT, and employee withholding tax (PAYE and SITE).

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) . 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 ZAR60 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 also carries out a physical inspection of the business premises and performs an interview with the public officer (or the tax practitioner authorised 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 authorised 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 with the Department of Labor for Unemployment Insurance.

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.
4 days, simultaneous with Procedure 4 no charge
* 5 Register with the Comissioner according to the Compensation for Occupational Injuries and Diseases Act.

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