South Africa has over 12 million young people aged 16-28 years and, of these, only 2,5 million were in the labour force, either employed or unemployed. The largest share (9,5 million or 75,1 %) of this group of young people are those that are out of the labour force (i.e. inactive). The main reason for being inactive is discouragement, i.e. they have lost hope of finding a job that suits their skills or in the area they reside. Is there a possible way out of this dilemma?
We at FM attorneys realise that one sure way to curb unemployment, poverty , inequality, prostitution, crime and other youth plagued vices is through entrepreneurship and innovation. You have this amazing idea, you know how to execute it, and you already have potential customers, so what is next?
FM attorneys has taken the liberty to furnish aspiring entrepreneurs and small business owners 5 legal steps required to start up a scalable business in SA :
Step 1: Registering your business with the Companies and Intellectual Property Commission (CIPC)
Every business in South Africa will need to be registered with CIPC.
To begin, you will need to decide the structure of your business. Will you start a sole proprietorship, partnership or company? This is where legal knowledge comes into play, and it would be best to seek legal advice on which structure best suits your business needs.
- Sole Proprietorship: A simple structure for a single trader. This does need to be registered with CIPC but will need to be registered with the South African Revenue Service (SARS) for tax returns.
- Partnerships: This structure can have between 2 and 20 partners contributing to the business and entering into a partnership agreement. This should be registered with CIPC but will also need to be registered with SARS for tax returns.
- Company or Pty Ltd: This is a legal entity which is a separate entity to the owner or owners. This is a very popular option, as it protects an owner’s personal property should things go a bit south.
Step 2: Registering with SARS
The nice thing about registering with CIPC is that your business will automatically be registered with SARS when registering a company. But if you don’t register your business with CIPC, it is very important that you register with SARS. It is best to speak to a tax practitioner who can guide you through the correct steps.
Step 3: Protecting your intellectual property
Most of the time, your “amazing ideas” (intellectual property) need to be protected to avoid the risk of copycats.
Your company’s intellectual property includes trademarks, patents, designs and copyright. All of these are overseen by CIPC.
Step 4: Basic and legal requirements for employees
For your full-time staff members you will need to ensure that they (or you) are registered and in compliance with:
- Compensation for Occupational Injuries and Diseases Act 130 of 1993, for their health and safety rights while they are working;
- Unemployment Insurance Fund (UIF), which covers your staff during long term illness, maternity leave and more;
- Skills Development Levy (SDL), when you expect your payroll to exceed R500 000 annually; and
- Pay As You Earn (PAYE), if your employee earns over R40 000 annually.
Step 5: Speak to a legal advisor
There are many by-laws and regulations that you may not be aware of that affect the type of business you start. That is why we always recommend speaking to an attorney or someone in the legal setting.
We hope this information was helpful and we wish you good luck as you activate and excercise your entrepreneurial abilities .
If you require any assistance, please don’t hesitate to contact FM attorneys through our offices , via email or telephonically . We are able to assist fully with all the steps involved in having you set up a scalable business in SA, from business registration, to sars clearances, IP, business consultations and even having us as legal advisors for your business.
Good luck and all the best.
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