How to register a business in South Africa

Registering a company in South Africa can be done online, with the basic process handled through the Companies and Intellectual Property Commission (CIPC). For a standard private company, the registration fee is R125. If you want to reserve a company name, that costs another R50, taking the basic cost to R175. The registration itself is not the difficult part. The costs and paperwork start to build up after the company has been registered.

Start with CIPC

A private company can be registered with one director and one incorporator. They can be the same person. You also need a Memorandum of Incorporation (MOI), which sets out the rules for the company. For a straightforward business, CIPC's standard MOI is usually enough. A company that needs different rules can register with a customised MOI, which costs more. The standard private company registration fee is R125. CIPC's registration guide lists a turnaround of up to 24 hours for the standard electronic process.

You don't need a name

A company does not have to have a name when it is registered. You can register it using the registration number instead and add a company name later. If you want a specific name from the start, you can apply to reserve it with CIPC. The online reservation costs R50 and you can submit up to four names in one application. The reservation is valid for six months. The fee is non-refundable, including where the proposed names are rejected. This is worth checking before applying. If another business is already using the name, or the name cannot be registered, you may have to start again.

What you need

The registration requires information about the company, its directors and incorporators. South African applicants can use their identity documents for the registration process. Foreign nationals can use passport details where applicable. You will also need to decide what type of company you are registering and whether you are using CIPC's standard MOI or a customised one. The process is done through CIPC's online services.

Then comes SARS

Once the company has been registered with CIPC, SARS automatically generates a Company Income Tax reference number. The company's representative must then register on SARS eFiling to manage the company's tax affairs online. This does not mean every tax requirement has been dealt with. Depending on the business, you may also have to deal with VAT, PAYE, UIF and other tax requirements. A business with employees, for example, will have different obligations from a one-person company that has no staff.

Registration is not a licence to trade

Getting a CIPC registration certificate does not mean the business has every licence it needs. A restaurant may need municipal approvals. A liquor business needs the relevant liquor licence. A financial services company has separate regulatory requirements. The requirements depend on what the business does and where it operates. This is where some new businesses run into problems. The company exists on paper, but there are still other requirements to meet before it can legally operate.

How much does it cost?

For a standard private company, the basic CIPC costs are: Private company registration: R125 Name reservation: R50 Registration with a reserved name: R175 CIPC lists R425 for a private company with a customised MOI. That is the starting cost. A business may later have accounting costs, tax costs, licence fees, banking fees, employee costs and other expenses. For someone starting a small business, the R125 registration fee is therefore unlikely to be the biggest expense.

What happens after registration?

Once the company is registered, the owner still needs to get the business ready to operate. That can include opening a business bank account, setting up SARS eFiling, dealing with the relevant tax registrations and checking whether the business needs any licences or permits. The company also has ongoing compliance requirements. Registering it is not the end of the process.

South Africa at a glance

Company registration: CIPC

Standard private company: R125

Name reservation: R50

Registration with reserved name: R175

Minimum directors: 1

Minimum incorporators: 1

Online registration: Yes

Tax registration: SARS automatically generates the company income tax reference number after CIPC registration Name reservation: Not compulsory For a South African starting a basic private company, the first step is fairly cheap. The bigger question is what comes after the CIPC certificate. That is where tax, compliance, licences and the actual cost of running the business start to matter.