Business entity types & details

Sole proprietorship

A sole proprietorship is a business owned and managed by one person. The sole proprietor is responsible for all decision-making, profits, and losses.

Partnership

A partnership is an arrangement of two or more people conducting business together to generate profit. Nonetheless, the number of participants in such groups usually is at most twenty. Types: General partnership, limited partnership, limited liability partnership

Limited liabilities companies

Description: This business form shields people from personal accountability for the company's debts and losses whenever they occur. Types: Limited by shares, Unlimited by shares, Limited by guarantee

Corporation

A corporation is a type of commercial organization that shields its shareholders from losses that exceed their original capital contributions.

Business Registration Requirements

Business Name:

Choose and reserve a unique business name through the Companies and Intellectual Property Commission (CIPC) online portal.

Company Structure:

Decide on the type of business entity—Private Company (Pty Ltd), Public Company, or Sole Proprietorship are common choices. Each has different requirements and legal implications.

Identification Documents:

Provide a certified copy of the South African ID for all directors, along with proof of address not older than three months.

Company Registration Documents:

Submit the Memorandum of Incorporation (MOI), which outlines the company’s governance and structure. You can use standard MOI forms available on the CIPC portal.

Tax Registration:

Obtain a Tax Reference Number from the South African Revenue Service (SARS) for VAT and PAYE registration if you plan to hire employees.

B-BBEE Certificate:

Depending on the industry and your business goals, you may need a Broad-Based Black Economic Empowerment (B-BBEE) certificate to access certain contracts or incentives.

Registration Fee:

Pay the registration fee on the CIPC portal, which varies depending on the business structure.

Bank Account:

Once registered, open a business bank account with a South African bank using your registration documents and Tax Reference Number.

Additional Licenses:

Depending on the nature of your business, apply for any required industry-specific permits or licenses from relevant local authorities.

Steps of Registering a Business

Choose the ideal business form

Sole proprietorships, partnerships, cooperatives, limited liability companies, and branch offices are among the business organizations you can register in South Africa. The business form you select determines the licenses and annual filing requirements you need to operate your business.

Choose a distinct name.

Your business name should be catchy and functional yet distinct from others. Select three suggestions for your business name and verify if you can use one with the Companies and Intellectual Properties Commission (CIPC). Every name application usually costs R50. Reserve the business name that the CIPC approves for use.

Prepare and submit the necessary documentation

Compile and complete all required documents, such as the Articles of Association. Also, provide evidence of physical residence for both your business and shareholders before making registration fees. The CIPC will issue your business with a registration certificate upon approval of your documents.

Obtain a Tax Reference Number

Now that your business is registered, you must obtain a Tax Reference Number from the South African Revenue Service (SARS) to be eligible for taxation. The law in South Africa also mandates businesses making more than R1 million to register for value-added tax.

Open a bank account

Open a bank account with a credible South African bank to ensure effective business transaction management.

Business Registration Requirements

• Reserve a Company Name: Verify the availability of your preferred business name and secure its reservation with the Companies and Intellectual Property Commission (CIPC).
• Register with CIPC: Complete and submit your company registration application via the CIPC portal, including necessary documents such as the Memorandum of Incorporation (MOI). Registration as a private company (Pty Ltd) is a standard choice for foreign investors.
• Provide Certified Passport Copies: Furnish certified copies of passports and other identification documents for all foreign directors and shareholders involved in the company.
• Register for Income Tax: Acquire a tax identification number for the company from the South African Revenue Service (SARS), a mandatory requirement for all businesses operating within South Africa.
• Apply for a Business Visa: If you intend to work in South Africa, apply for a business visa. The Department of Home Affairs mandates submission of a business plan and proof of an investment of at least ZAR 5 million, among other prerequisites.
• Open a South African Bank Account: Utilize your company registration documents and passport to establish a local business bank account for managing company finances.
• Register for VAT and Other Taxes: If your company’s annual turnover surpasses ZAR 1 million, register for Value Added Tax (VAT). Additionally, register for other applicable taxes such as Pay-As-You-Earn (PAYE) for employees, if relevant.
• Comply with B-BBEE Regulations: Gain an understanding of and adhere to Broad-Based Black Economic Empowerment (B-BBEE) requirements, which affect numerous industries and can impact company eligibility for specific contracts and partnerships.
• Apply for Necessary Licenses or Permits: Depending on the industry, obtain any required licenses or permits from pertinent local or national authorities to ensure legal operation.

Steps of Business Registration

1. Select Business name and format selection 

Based on your business plan, choose a format that suits your proposed business project and hierarchical structure. Give your business a unique name that will serve as its brand identity. 

2. Reserve the business name.

Reserve your unique business name with the Companies and Intellectual Properties Commission (CIPC).

3. Submit relevant documents

Foreigners must submit their work permits and immigration documents, such as passports or visas, in addition to the typical documents. The Department of Home Affairs oversees immigration and passport clearance in South Africa.

4. Appoint local directors

If you register a company, you must appoint local directors to oversee the operations and fulfill regulatory requirements.

5. Register your business locally

As soon as CIPC verifies your documents and immigration status, your business will obtain a Certificate of Incorporation.

6. Register for taxation 

The South African Revenue Service (SARS) collects taxes and thus issues Tax Identification Numbers to all registered businesses.

7. Open a local bank account

Open a bank account for your business to improve financial management and credit facilities.

Annual filing documents & requirements

• Annual Returns with CIPC: It is incumbent upon all companies to submit an annual return to the Companies and Intellectual Property Commission (CIPC) to verify that the company’s information is current. This filing must occur within 30 business days following the anniversary of the company’s incorporation.
• Income Tax Return (ITR14): Companies are required to file an annual income tax return with the South African Revenue Service (SARS). This return details the company’s taxable income and any relevant deductions for the financial year.
• Provisional Tax Returns: Companies must submit two provisional tax returns during the fiscal year—one mid-year and another at year-end—with an option for a third payment to avert penalties.
• Value Added Tax (VAT) Returns: VAT-registered companies are obligated to submit VAT returns either bi-monthly or monthly, contingent upon the company’s turnover. This process can be efficiently managed through SARS eFiling.
• Pay-As-You-Earn (PAYE) & UIF: Businesses employing staff are required to file monthly PAYE and Unemployment Insurance Fund (UIF) returns. An annual PAYE reconciliation is also necessary, which involves issuing IRP5 certificates to employees.
• Skills Development Levy (SDL): Employers with an annual payroll exceeding ZAR 500,000 must file monthly returns. The SDL is allocated toward employee training and development programs.
• Broad-Based Black Economic Empowerment (B-BBEE) Certificate: Although not mandatory, obtaining a B-BBEE certificate is advantageous for demonstrating compliance with South Africa’s empowerment initiatives, particularly when pursuing government contracts or partnerships.
• Financial Statements: Public companies, along with certain other entities, are required to submit audited financial statements on an annual basis. Private companies are generally expected to maintain these records internally and present them upon request by SARS or CIPC.
• Environmental and Industry-Specific Reports: Specific sectors, such as mining and manufacturing, have additional annual reporting obligations to pertinent industry regulators, with a focus on environmental impact and conservational compliance.

Businesses must continue to complete specific annual filling criteria before the deadline passes to avoid penalties or legal ramifications. Furthermore, the International Financial Reporting Standards (IFRS) should be followed when preparing all financial records. The South African Revenue Service should receive all completed returns (SARS). You should consult a lawyer or other expert to ensure all regulations are followed.

All registered businesses must meet the following annual filing obligations: annual returns, VAT returns, PAYE returns, tax returns, and annual financial statements. Businesses must also regularly hold annual general meetings to submit required reports. Completing annual reconciliation reports for employee taxes and Unemployment Insurance Fund (UIF) contributions is an additional requirement. 

Frequently Asked Questions

When registering a business in South Africa, is it necessary to enroll for VAT?
If your company's yearly revenue surpasses a predetermined level, typically ZAR 1 million, you should register for VAT. 

Can a company employ foreign workers in South Africa?
It is possible to hire foreign workers, but you may also need to follow immigration regulations and get them work permits or visas.

Is it possible to remotely register a business in South Africa without physically being there?
Specific registration processes can be completed online, but opening a bank account or acquiring permissions may require traveling to South Africa.