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How Easy Is It to Start a Business in South Africa?

How Easy Is It to Start a Business in South Africa?

Every year The World Bank publishes its Ease of Doing Business report where it ranks countries according to their ease of doing business. Countries that fall into the top 20 have a high ease of doing business. This means the regulatory environment is more conducive to the starting and operating of a local business. In 2017 New Zealand was ranked 1st overall for starting a business – it has the least number of procedures required (just one) and the shortest time to fulfil them (0.5 days). In this blog post, we will explore where South Africa is ranked and the regulations you need to consider when looking to start a business in South Africa.

 South Africa’s Global Rankings

According to The World Bank, South Africa is ranked 82nd in the Ease of Doing Business category and 136th in the Starting a Business category. The report shows that it’s easiest to start a business in Ekurhuleni (formerly known as the East Rand), Johannesburg and Tshwane, with Cape Town coming in at 4th position. Cape Town is also regarded as the city where it is easiest to deal with construction permits.

Navigating through the red tape

South Africa’s low score on The World Bank rankings with regard to starting a business correlates directly with the fact that registering a company in South Africa can take in excess of six weeks. In addition, South African processes are not as easy as other countries when it comes to obtaining construction permits, registering property and securing electricity.

There are also a number of regulatory and legislative demands that must be complied with when setting up a business in South Africa. These demands can be time-consuming for business owners, however compliance is essential if you are to avoid penalties.

Here are the basic regulatory issues that every new business needs to adhere to when starting up:

 

1. Following the bylaws

Municipal bylaws governing issues like zoning, noise levels and hygiene will all have an impact on your business. Ensure your business is compliant with all bylaws – especially if you are renovating your premises or building new ones.

2. Consumer Protection

The Consumer Protection Act and the Protection of Personal Information Act (POPI) are designed to protect the rights of consumers in South Africa. POPI was signed into law on the 26th of November 2013, however its commencement date has not yet been established. Once this is announced, companies will have 12 months in which to comply.

As a new business owner, it’s essential that you investigate these laws to ensure you are adhering to them with regard to structuring your contracts with your customers, handling your customer data, dealing with merchandise returns under warranty and even advertising your goods.

3. Abiding by Labour Law

If your business employs people, it is essential that you are familiar with the Basic Conditions of Employment Act, which sets out the rules governing the relationship between a business and its employees. Aspects covered include rules governing overtime, leave, working hours and dismissal. You will also need to register with the Department of Labour and contribute towards the Unemployment Insurance Fund (UIF).

4. Compliance with Health and Safety Regulations

Employees of your business will have a range of rights in terms of their personal health and safety under the Occupational Health and Safety Act. This act outlines regulations concerning the different aspects of the workplace ranging from first aid to machinery, lighting, temperature and noise. As a business owner, it’s essential that you place the health and safety of your employees first and ensure you are adhering to all aspects of the act or you will be severely penalised.

5. Taking care of Tax

The South African Revenue Service (SARS) is one of the country’s most professional government departments and it’s wise to maintain a healthy relationship with them.

If you are operating as a sole proprietor or in a partnership, then register with SARS as a provisional taxpayer. If you have registered your company, ensure you have registered it with SARS in addition to registering yourself as a provisional taxpayer.

As an owner of your company, you are responsible for deducting your employees’ tax and paying it to SARS every month and you must also collect and pay VAT if your business has an annual turnover exceeding R1 million.

Start a business with our expert assistance

Keeping up with the changing regulatory and legislative demands with regard to setting up and running a business can be extremely time-consuming for business owners and it makes good business sense to receive professional help.

The GGD Group works with many businesses helping them to establish and maintain business processes that streamline the running of their operations in order to achieve their short and long-term business objectives.

Our services include:

  • World-class, cloud-based Accounting services that improve your business’s agility in ever-changing times; powered by Xero
  • Company Secretarial services to incorporate your company and to ensure your business is compliant with the latest Companies Act
  • Payroll services that alleviate your administrative overheads
  • Taxation services that include a variety of year-end and provisional taxation services for individuals and companies
  • Sage Accounting & Payroll software solutions that cover the entire range of business operations for small, medium and large businesses
  • Recruitment solutions in the Financial Accounting, IT and Management sectors where we source, match and deliver leading talent.

For more information about how The GGD Group can assist you with starting and running your own business, contact us today.

 

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