Register Your Business?
As a Sole Proprietor, you are completely responsible for the financial consequences involved in running your business. Yes, you’re liable for all debts, but more importantly if the business weakens then all of your assets – even those not related to the business – can be detained and will be subject to the claims of your business creditors. This is a huge personal risk to take on as your company begins to grow; registering as a Private Company will relieve this burden by restricting your personal liability.
Registering your business could expand your potential client and supplier base, because many customers and suppliers prefer to do business with a Private Company as opposed to an individual. Moreover, being registered will allow you to pitch for business to larger corporates and government.
In South Africa, an individual is taxed on a sliding scale whereby the more they earn, the more their average rate of tax will increase. This applies to individuals earning more than R78 750 per annum. A registered company, however, is taxed at a flat rate of 28% of profits (as of 2019), and a further 20% when shareholders receive their dividends.
Based on this system, you can see how primarily, as you start up and remain within the smaller income bracket, it makes sense to operate as a Sole Proprietorship. However, as your company grows and your profits growths, you may lessen your tax burden by registering as a (Pty) Ltd. With that being said, it is important to perform an comprehensive analysis of both situations and evaluate which will be the most advantageous, taking into account factors such as tax incentives for registered companies, deductions and allowances.
Requirement to register a business
- Date of issue of the identity document or card
- Marriage date, as recorded by the Department of Home Affairs
- Spouse’s ID number
Business RegistrationPrice excluding VAT
Reserved company name
Company registration certificate (COR14.3)
Income tax registration number
CIPC filing fees (R175 fee included)
Memorandum of Incorporation
FREE B-BBEE Certificate
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