You have found a viable idea for a business, but how do you start? What aspects do you need to consider when you opening your business? There are six aspects to consider when you open a business in South Africa.
Aspect 1: Business structure
The first step is to define what structure you want to register your business as. It could be a sole proprietorship, partnership or a private company. Each of these structures has pros and cons which need to be carefully considered as they will affect the tax you will pay, and what personal liability you will have in your business. If you do choose a business structure which has more than one owner then it is important to write up a partnership agreement where you decide the follow for each partner:
- Percentage of ownership,
- Amount of money invested,
- Amount of time invested and
- Who owns what.
Aspect 2: Company registration
If you decide to have a sole proprietorship, you will need to reserve the name for your business. It is important to do this so that you will be able to register your company with the brand you have established later on. If you choose to create a company, then you can register it on the Company and Intellectual properties commission website.
It is important to create a separate bank account for your business. This will make it easier for your accountant to evaluate what are business expenses. It will also be easier to fill out your tax form.
Aspect 3: Taxes
You are required to register with SARS as a taxpayer 21 days after starting your company. If you are in a partnership or a sole proprietor then you will pay tax in your personal capacity. If you are a company, then the company needs to be registered with SARS. You can learn more about your business and tax here. If you employ people to work in your business you will ought to register for PAYE, UIF, and SDL. If you plan to export goods, you will need to register for export tax too. It is important to employ the skills of an experienced tax practitioner to ensure you pay the right taxes.
Aspect 4: Government laws
It is important to look at what the BBE status of your company will be as this will affect whether you are able to get business opportunities with large organisations. You will also be required to have a clear understanding of the labour laws so that you don’t break them when you employee staff to work for you. This could cause you problems if you don’t have the labour laws in place properly. You will also need to consider the municipal by-laws applicable in the area where you wish to establish your business.
Aspect 5: Bookkeeping
One of the leading causes of small businesses failing is because entrepreneurs do not keep accurate accounting records. You should ensure you have a bookkeeping system in place when you start your business. If you have a few transactions per month, you could consider using Wave or an Excel document.
By having these six aspects in plan, you will ensure you start your business with good governance from the beginning. If you are unsure about the laws or taxes you need to adhere to it is always a good idea to get a professional involved.
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