Legal Requirements

The law in South Africa demands that businesses operating in the country are registered and comply with various legal requirements. For many, this can be a daunting process especially when you are not sure of the relevant legal obligations. Below are the key statutory requirements you must be familiar and comply with.

Register the business

The Companies and Intellectual Property Commission (CIPC) should be your first point of contact. This organisation has been established in order to administer the registration of companies, cooperatives and intellectual property rights such as trademarks, patents, designs and copyright.

SARS Registration

South African Revenue Services (SARS) takes care of all tax matters and it is a legal obligation to pay tax regardless of the size of business being run. The law dictates that a business is registered with SARS within 60 days of starting operations. For those registered with CIPC the registration is automatic except sole proprietors or partners who need to register as provisional tax payers directly.

Department of Labour

This government department bears the responsibility of ensuring that businesses operate under conducive environment and abides by laid down legal provisions. Businesses with one or more full time employees are therefore required to register in accordance with the Compensation for Occupational Injuries and Diseases Act (COIDA).This Act has been put in place to safeguard the rights of employees who are injured, contract a disease or get killed as a result of their work.

Unemployment Insurance Fund

Unemployment Insurance Fund (UIF) benefits workers when they can’t work due to maternity, adoption leave or illness. UIF registration can be done on form UF8 at any SARS office or online.

Employee Tax

The law demands that if you employ one or more staff  members who earn over R40,000 per year, you have to register your company for Pay As You Earn (PAYE). If your payroll is more than R500,000 a month, you must register for skills development levy (SDL). The funds are to be used to develop and improve skills of employees.

VAT Vendor

If your projected sales per year will exceed R1 million, then you need to register as a VAT (Value Added Tax) vendor. VAT vendor registration can be done by completing and submitting a VAT101 form, which is available at any SARS office. The registration steps listed above will set you off to run a legally compliant business.