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 2014.

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)
Agency: CIPC

An entrepreneur has 4 different ways to register a company with the Companies and Intellectual Property Commission (CIPC). The most common form of registration, which is counted by the Starting a Business indicator, is through the CIPC website (www.cipc.co.za). Registration can also be done at the self-service terminals located in Pretoria, Johannesburg and Cape Town; at some bank branches (FNB so far); and by email. To register the company online, the entrepreneur needs to register as a customer on the CIPC website (www.cipc.co.za). Once registered, the applicant has to fund the new virtual account with at least 175 ZAR. This amount will cover the registration cost (125 ZAR) plus the name reservation cost (50 ZAR). The account can be funded via wire transfer. During the registration process the following information must be provided: 1. Details about the owners/directors: • Name/s • Country of origin • ID/Passport number • Appointment date • Date of Birth • Phone, email • Physical address and postal code 2. Details about the company: • Financial year end • Authorized shares • Email address, website, Physical address and postal code 3. Company name reservation: The next step is the “company name reservation”. At this point, the applicant can either apply for a company name as part of the process, use a name that was previously approved, or register the company using the registration number given by the CIPC as company name. If the applicant chooses the first option, he/she will need to enter at least 1 and up to 4 proposed company names, in order of preference. The first available will be selected. This process can take from 3 to 5 days. Once the steps mentioned above are completed, an email will be sent to the applicant requesting additional documentation to be emailed to CIPC: • Certified ID copies of all indicated initial directors and incorporators. • Certified ID copy of applicant if not the same as one of the indicated initial directors or incorporators. • Registration forms signed. Finally, once the company is registered, the customer receives an email confirming that the company is registered and a link back to the CIPC website to retrieve the disclosure certificate and all the Incorporation documents.
2 weeks ZAR 175
2 Open a bank account
Agency: Bank

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 as per the Know your customer ("KYC") requirements in The Financial Intelligence Centre Act No. 38 of 2001 are not in order.
1 day on average no charge
3 Register for income tax and withholding taxes (PAYE, UIF and SDL) at the South African Revenue Service (SARS)
Agency: SARS

The Companies and Intellectual Property Commission (CIPC) and the South African Revenue Service (SARS) are linked electronically. When the entrepreneur visits a SARS branch to register for income tax, SARS retrieves the information previously provided by the entrepreneur to the CIPC during procedure 1. The entrepreneur still needs to visit the SARS office for: a) Income tax registration – for which the applicant needs to present: • Owner ID • Registration Certificate • Bank Statement b) Employees tax (PAYE), Unemployment Insurance Fund (UIF) and Skills Development Levy (SDL) registration: The entrepreneur must submit the EMP 101e form which is available online or at the local SARS office. Registration is immediate and can be done online or at the branch. • Pay as you earn (PAYE) tax refers to the tax required to be deducted by an employer from an employee’s remuneration paid. The employer is compelled to register in terms of paragraph 15 of the 4th Schedule to the Income Tax Act. • Unemployment Insurance Fund (UIF): this is a compulsory contribution to fund employment benefits. The funds are used to provide short-term relief should workers become unemployed or unable to work for various reasons. Any employer who is liable to register for the employees tax (PAYE) is required to register with SARS for the unemployment insurance contributions. • Skills Development Levy (SDL): this levy is used by the government to fund education and training as stated in the Skills Development Act, 1998. This levy is payable monthly by employers to SARS.
1 day no charge
4 Register for VAT at the South African Revenue Service (SARS)
Agency: SARS

Businesses with annual taxable turnover of more than ZAR 1,000,000 must register for VAT. The application for the registration of VAT is done on a VAT 101 form. VAT registration can take from 1 to 21 working days depending on the risk level assigned to the company by SARS. The risk level is assessed based on different variables such as company activity, turnover and consistency of the information provided. For the case study company considered by the Starting a Business indicator the median time is 7 days.
7 days no charge
* 5 Register the company with the Unemployment Insurance Fund (UIF)
Agency: Department of Labor for Unemployment Insurance

According to the Unemployment Insurance Act and the Unemployment Insurance Contributions Act, all employees working more than 24 hours per month must be registered with the UIF. The employer is liable for the registration of the employees. Employers must pay unemployment insurance contributions of 2% of the salary of each worker's pay per month. The employer covers 1% and the employee another 1%. The employer is responsible of withholding the employee’s 1%. The payment is done through SARS but the employee claims are requests through the UIF. The employer must submit the forms UI-8 (company registration) and UI-19 (employees registration) either at the Pretoria UIF office, labour centers or by email. When the process is completed, a confirmation letter (form UI-33) is sent by email.
4 days (simultaneous procedure) no charge
* 6 Register with the Commissioner in deference to the Compensation for Occupational Injuries and Diseases Act
Agency: Office of the Compensation Commissioner

According to the Compensation for Occupational Injuries & Diseases Act 130/1993 amended in 1997, the employer is responsible for registering employees with the Compensation Fund. Registration forms can be obtained from the Department of Labor's website (www.labour.gov.za). However, online registration does not exist and must be done in person and the time it takes to complete this step varies according to the level of risk under which the business is assessed. The relevant form is 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 at various times throughout the year (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, excluding any amounts paid in advance; • WG30, W.As.2 and W.Acl(E) which are claim forms
30 days (simultaneous procedure) no charge
  * Takes place simultaneously with another procedure.

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