Entrepreneur’s Brew – How to register your business

Pastor WTM Dlalisa

In our previous article, we dealt with the issue of “market opportunity”, or what you need to consider when deciding which business enterprise to start.

Once you know what you need to do, then you start the process to register your business.

The first thing in registering your company is to decide on the name of the company. My personal advice is that you must think carefully about the name of your company. The name of your business must align with what your business offers. In other words, people must be able to figure out what your business offers merely by looking at the name of the company. This will help you when you start marketing activities to potential clients.

When your business is registered, your clients will take you more seriously than if it is not registered. In fact, there are business opportunities which you cannot attract if your business is not registered, as required by Government legislation.

There are a few basic forms of business ownership which you need to consider when you register your company. These includes sole proprietor, which means that the business is owned by only one person. It is easy to set-up and is the least costly among all forms of ownership. However, the limitation is that as the only owner you miss out on skills and capital investment from other potential partners. In addition, as the sole owner, you face unlimited liability; meaning, the creditors of the business may go after the personal assets of the owner if the business cannot pay them.

This form of enterprise is usually adopted by small business entities.

The second type is a partnership, which is a business owned by two or more people who contribute resources into the entity. The partners divide the profits of the business among themselves. The challenge is that you need to choose your partner carefully as there are reputational risks that may arise from your partner and affect you and your business. Obviously, the advantage is that you can draw from the skills, networks and resources including capital from your partner. In limited partnerships, creditors cannot go after the personal assets of the limited partners.

The third one is called a corporation, which is a business organisation that has a separate legal personality from its owners. Ownership in a stock corporation is represented by shares of stocks.

The owners (stockholders) enjoy limited liability but have limited involvement in the company’s operations. The board of directors, an elected group from the stockholders, controls the activities of the corporation. In black townships in South Africa we also have what we call cooperatives. A cooperative is a business organisation owned by a group of individuals and is operated for their mutual benefit. The people making up the group are called members. Cooperatives may be incorporated or unincorporated. This has become the best model for fighting poverty in black townships.

There are cooperatives that do waste paper recycling, garden services, mortuaries, brick making, transportation and so on. The benefit is that there are a lot more founders and government agencies that are more willing to fund cooperatives than the other forms of businesses.

Most young people are asking themselves question like, “How do I get my business registered so that it is compliant with Government regulations?”

There are so many business consultants that help people to register their companies. The problem is that they charge a lot of money to register your company. Several young people have failed to register their companies or cooperatives because of the costs involved here.

The good news is that it so easy to register and hands on support is available to make it possible to register your company personally without hiring business consultants.

There are many service centres of Companies and Intellectual Property Commission (CIPC) erstwhile CIPRO. CIPC is located in Pretoria, Cape Town and Johannesburg and to inquire, contact 086 100 2472.

These self service centres offer help free of charge from beginning to end. I encourage all young people around Tembisa to take time and try them out instead of using expensive business consultants for this purpose. In addition, they have self-help machines which are available for free.

The advantage is that you can also download your registration certificate anytime and effect other changes like adding directors online as and when necessary.

In addition, you need to apply for a BEE certificate from the relevant agents and also tax clearance from the South African Receiver of Revenue Service (SARS).

Once again, SARS does not charge for tax clearance. These are absolutely free from SARS.

The problem and barrier for most young people is that they hire consultants who charge them a fortune. By the time they start their business operations, their capital is already depleted by these consultants.

Customers can apply for a BB-BEE certificate at the CIPC Self Service Terminals while registering a business, or when filing Annual Returns. According to CIPC guideline all businesses with a turnover of less than R10 million, a BB-BEE certificate is not required.

Many of our township businesses are below this threshold and will not need BEE certificate for their businesses. Customers can complete an Affidavit, signed by an Commissioner of Oaths, and hand it instead of the BB-BEE certificate. Once the Affidavit has been stamped by a Commissioner of Oaths, the Affidavit serves as a BEE certificate as no other verification is required for Exempted Micro Enterprises. A free sample or template of this BB-BEE affidavit form is available on the CIPC website (www.cipc.co.za) .

For more information, contact Pastor WTM Dlalisa on 083 395 1165.