If you are interested in starting a new company in South Africa, now is a good time to do so. The country, like many other nations, has successfully battled the economic downturns caused by the COVID-19 pandemic. According to the African Development Bank Group (AFDB), South Africa’s real Gross Domestic Product (GDP) declined by 8.2% in 2020. This is one of the aftermaths of the Coronavirus pandemic that negatively affected critical sectors, such as the mining, construction, and manufacturing industries.
But the decline wouldn’t belong because the International Trade Administration (ITA), in 2021, published a report mentioning that the country’s economy was picking up. Capital goods exported contributed a larger sum to the country’s revenue with franchising and consumer goods trailing behind.
In this article, you will find out the step-by-step processes of starting your new company in South Africa.
1. Register and Secure the Business Name
The first step to starting your company in South Africa is to register it. The registration is more of a name check or business name availability, meaning that if the name is unavailable, you should consider changing it.
To register your business name, visit either Bizportal.gov.za or the CIPC website. CIPC stands for Companies and Intellectual Property Commission. It is an umbrella body covering the most important aspects of doing business in South Africa, including the company categories and the types of companies to register with the commission.
How to Register Your Business with CIPC
To register your business with the CIPC, here are the steps to take:
- Create a user account via the “Customer Registration” portal.
- Provide your information, such as full name, and contact information.
- Upload your document for verification. Typically, you will be asked to upload your identity card.
Use Third-Party Business Name Registrars
If you don’t have the time to use the CIPC portal to register your new company in South Africa; consider outsourcing the same. Several third-party registrars offer that service. They can help register your business or company while you attend to other business-related matters.
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2. Brand Your Business
What makes your new company stand out from the crowd? How will the target market or prospective customers identify your company amidst other companies out there? That is where branding comes into full force.
By branding, I mean investing in creating an identity that is exclusive to your company. Logo design is a part of it, but it is not the most important. You must choose a “brandable” business name.
Your company’s business name should be:
- Communicate value on what your brand is all about.
Reserve the Name
Remember that is all about reserving your suggested company names before some other entrepreneurs go for it. Once you’ve got ideas of brand names, navigate to the “Name Reservations” section on the CIPC website to start the name reservation process.
Provide up to four (4) company names. One of those names should be your first choice or the most prioritized, while the others are meant to be “second name options.”
Receive Your C0R9.4
COR9.4 is a document that confirms your business name reservation. The reservation is only done after the registered or reserved business names on the CIPC platform do not match yours.
The COR9.4 document contains the tracking number with which you can complete the business name registration when you are ready.
3. What Type of Company do You want to Register with the CIPC?
What type of business entity do you intend to operate in South Africa? The Close Corporations (CC) used to be one of the most popular, after it was introduced with the New Companies Act in May 2011. However, it is no longer in vogue, as other business entities have been used in its place.
Here are some of the business entity options you can pick from to finalize the registration of your new company with the CIPC:
This is the replacement for Close Corporations (CC). Private companies in South Africa must end with “Pty Ltd” and must have up to 50 shareholders. Also, the board of the company must have at least a director to help pilot its affairs in the country.
Non-profit companies or Non-Profit Organizations (NPOs) are companies that do not make revenue from offering their services.
Rather, such companies are registered to offer collective services to the benefit of the public.
Personal Liability Companies
These are incorporated companies that hold both the previous and present directors responsible for any financial activities, including debts.
As the name suggests, this type of South African company is operating because it wants to generate revenue. Income is made by way of offering a service, selling products, or running a chain of businesses that yield profit.
Go for this if you are looking to list the stock of your company on the stock exchange. Typically, business owners looking to register a public company must issue their stocks or securities through an Initial Public Offering (IPO), after which its stock will be open for everyone to buy.
Now, you know the different types of business entities to register in South Africa. Which will you go for?
4. Register the Business Name
Now that your business entity is settled, complete the business name registration by providing the required information and making the necessary payments.
You will get the COR 15.1A document in your registered email address; being confirmation of your business name registration.
5. Provide Supporting Documents to Complete Your Company Registration in South Africa
The last step is to provide the relevant documents to complete your company registration in South Africa. You will be asked to provide a copy of your Power of Attorney form. This is required only if you are registering the company as a representative of the actual owner. That is, if you are a relative to the owner, you will be directed to provide the Power of Attorney form, confirmation that you are authorized to register the company on the owner’s behalf.
You will also be asked to provide both copies of the document issued when the business name was reserved and the document issued when it was registered – the COR 15.1A form.
A copy of your South African identity card will also be required – if you are a citizen looking to register your company. Check the CIPC website for more information about the documents required for verification.
Doing business in South Africa is great because the country’s economy is set to grow in the next couple of years – GlobalData puts it at 4% GDP growth. Your new company stands a better chance of gaining traction if it is playing in core industries, such as automobile, finance & banking, real estate, and mining.