How To Register A Small Business In South Africa

Most small businesses can register to be sole proprietors, private companies or closed corporations. However, the Companies and Intellectual Property Commission CIPC no longer accepts the registration of closed corporations. A small busines can be registered by the lodging of a notice of Incorporation document (CoR 14.1) and a Memorandum of Incorporation document (CoR 15.1 A-E). All the relevant forms are available in the CIPC website.

A Sole Trader

Registering as a sole trader with the Companies and Intellectual Property Commission (CIPC) is not necessary however you need to be registered with the South African Revenue Services and will be liable for tax if your income exceeds a certain threshold. Any unregistered informal small business is regarded a sole proprietor.

A Private Company

According to the CIPC, a private company can be registered with either a standard Memorandum of Incorporation (MOI) or a customised MOI. The Memorandum of Association sets out the rules for the management and maintenance of the company that the shareholders agree upon.  The standard Memorandum of Association is provided for by law and it is integrated into the company registration process. A customised memorandum of incorporation allows shareholders to put in place certain conditions or remove certain requirements. A customised MOI may need the assistance of a legally qualified person and companies with customised MOI’s can only be registered manually.

Registering A small business with the Standard MOI

• You first register as a customer through the CIPC website or through a collaborating bank. From there you can get your customer code and password
• The second step is making the payment. To register a company without a name reservation you pay a fee of R125 into the CIPC’s bank account and to register a company with a name reservation you pay a fee of R175. Ensure to use your customer code as reference when making the deposit.
• If you want to register a company with a name reservation you then reserve a name. There are three options for name reservation when it comes to registering a company with a standard MOI which are;

1. Applying for a name

• You can select this option if you want to apply for a name as part of the process.
• Your company will only be added to the company registration queue only after your chosen name has been approved.
• However, if the chosen name is not approved the company will be registered under the company’s enterprise number as the company name.
• If this happens you will need to apply for another name and follow a company name change process if your chosen name has been approved.

2. Reserving a name first then registering the company

• Your company will be added to the company registration queue if you have made the payment for registration

3. Registering the company using an enterprise number as a company name

• Your company will be added to the registration queue if you have already made the payment for registration
• You can later add a name through a name amendment
• A name amendment needs an approved name reservation, as well as special resolution to effect the change in the MOI.
• The registration process can be done online on the CIPC website and all the supporting documents can be uploaded such as the identity documents of all the directors.

Registering A small business with a customised MOI

Take note that registering a private company with a customised MOI can only be done manually.

• You first register as a customer on the CIPC website and obtain your customer code and password
• Make a deposit into the CIPC bank account, a deposit of R425 without a name reservation is required
• Reserve a company name
• A company can be registered with or without a name, if a name reservation is not included a company will be registered with its enterprise number
• The next step would be to register your company with a customised MOI manually by printing and completing the CoR 14.1, and CoR 14.1A form where you fill in information about the directors details.
• The service turn around time is approximately 25 working days

Documentation

Co14.1 Notice of Incorporation is lodged together with the Memorandum of Incorporation and contains the following information;

• The type of company
• The date of Incorporation
• The financial year
• The registered office of the business
• The number of directors
• The company name
• Whether or not the company name will be the registration number
• The reserved name and the reservation number
• A list of names to be checked by the commission

Cor15.1 Memorandum of Incorporation. This document contains the following Information;

• Details of the Incorporators
• The number of directors and/or alternate directors
• The share capital issued.

Registering A company using a 3^rd party

There are a number of reputable consulting companies that can assist you with registering your small business for a fee. These consulting firms can assist with starting a business in South Africa, company registrations, accounting and tax. Some even go as far as assisting with regulatory license and government grants as well as recruitment. Company registration consultants are knowledgeable and experienced consultants that can offer you with the right business solutions for newly formed or established companies.

Why you should register your small business

It is important for small businesses to register their companies with the CIPC because it will protect the business owners in case there are any lawsuits. Your assets and properties can be protected. Also, registering your company will increase your customers trust in you and your business. Suppliers, clients, and other business stakeholders prefer to deal with companies and not individuals. Thus, registering your company can broaden your client and supplier base. Registering a company signifies that you take your business seriously. In addition, securing funding and tenders is much easier when your company is registered. Banks and investors will not fund companies that are not registered. If your company is registered other people cannot claim your business or idea as theirs. Thus, the importance of registering your small business cannot be overstated.