Small Business Start

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FBW

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Hi,

I want to start a small Web Design and Web Marketing business with my brother. I want to ask if anyone can tell me the steps I need to take to start the business. Where must I go to register the company. How much do I pay? Do I need to hire an accountant ?
Somebody told me that if my company doesn't have a R1 million turnover a year, I don't have to register anything and I don't have to have VAT registered invoices. I'm a South African citizen and I just moved back to South Africa from Greece where I lived all my life.
 
Basically, go to an accountant. He will answer all those questions and you don't have to go through hear-say
 
I Own and manage a small 1-man IT business, and its a piece of cake.

First step is to register a CC. This can be done through CIPRO's website (Now called Companies and Intellectual Property Commission). Visiting one of their offices is a better idea. (www.cipc.co.za)
If you are in a hurry, you can buy a shelf company, which i did. (Not too sure on exactly the finer details, but its quick and easy, like 3 days).
The bank wont give you a business account unless you have a CC number.
Secondly, visit the bank, I have a FNB Business Cheque account, just out of personal preference, but any bank will give you a business cheque account.
Thirdly, ask around and find a RELIABLE BOOKKEEPER. If you are ok with doing invoices yourself, then get "Pastel My Business" or "Pastel My Invoicing" depending on your needs, but you wont have stock per say, so basic invoicing will do.
The bookkeeper will only handle month end jobs, PAYE (Pay as you earn TAX), UIF (Unemployment Fund) etc, as well as company tax returns. So she'll be paid R2000 a month (Give or take)
You wont need an accountant until your year end financials need to be done and signed by an auditor.

You are right in one statement about turnover, but you still have to register a company and tax details no matter what you're earning. The minimum i think is R2m or R3m and not having to register for VAT.
I Am not personally VAT registered, as my turnover has stayed below that (Just), and having VAT returns just messes with your cashflow.

The last option is to register as a sole proprietor, and your brother would be an employee, but that would just confuse things...

You will however need to submit TAX returns every month or every 3 months but an accountant would point you in the right direction.

PM Me if you need more help...
 
ben dover said:
I Own and manage a small 1-man IT business, and its a piece of cake.

First step is to register a CC. This can be done through CIPRO's website (Now called Companies and Intellectual Property Commission). Visiting one of their offices is a better idea. (www.cipc.co.za)
If you are in a hurry, you can buy a shelf company, which i did. (Not too sure on exactly the finer details, but its quick and easy, like 3 days).
The bank wont give you a business account unless you have a CC number.
Secondly, visit the bank, I have a FNB Business Cheque account, just out of personal preference, but any bank will give you a business cheque account.
Thirdly, ask around and find a RELIABLE BOOKKEEPER. If you are ok with doing invoices yourself, then get "Pastel My Business" or "Pastel My Invoicing" depending on your needs, but you wont have stock per say, so basic invoicing will do.
The bookkeeper will only handle month end jobs, PAYE (Pay as you earn TAX), UIF (Unemployment Fund) etc, as well as company tax returns. So she'll be paid R2000 a month (Give or take)
You wont need an accountant until your year end financials need to be done and signed by an auditor.

You are right in one statement about turnover, but you still have to register a company and tax details no matter what you're earning. The minimum i think is R2m or R3m and not having to register for VAT.
I Am not personally VAT registered, as my turnover has stayed below that (Just), and having VAT returns just messes with your cashflow.

The last option is to register as a sole proprietor, and your brother would be an employee, but that would just confuse things...

You will however need to submit TAX returns every month or every 3 months but an accountant would point you in the right direction.

PM Me if you need more help...
Click to expand...

Thanks for the reply. Can you register a CC company? Somewhere I read that all CC's will become PTY's as CC's will cease to exist in the near future.
 
I checked the Website and they say that from 1st March 2011 no new CC's will be registered. So I need to register a new Company. Too many documents though... they don't make it easy for you to do it by yourself.... pfff.. anyone knows which forms exactly you need to fill ?
 
Contact rapid business registrations. R700 gets you a new company.
 
No CCs anymore. Only (Pty) Ltd. No you don't need an audit, only a review. No don't register for VAT (yet). No you can't put 14% VAT on your invoices if you're not registered. The main document you need is the memorandum of incorporation, but I'm sure CIPRO/CIPC needs some additional waste paper filled in too. Might be worthwhile consulting an accountant at the start rather than just the end...tax planning doesn't work well retrospectively.

For web design biz you *could* consider sole proprietorship since its not a particularly risky field, but honestly I'd just pay the extra cash.
 
HavocXphere said:
No CCs anymore. Only (Pty) Ltd. No you don't need an audit, only a review. No don't register for VAT (yet). No you can't put 14% VAT on your invoices if you're not registered. The main document you need is the memorandum of incorporation, but I'm sure CIPRO/CIPC needs some additional waste paper filled in too. Might be worthwhile consulting an accountant at the start rather than just the end...tax planning doesn't work well retrospectively.

For web design biz you *could* consider sole proprietorship since its not a particularly risky field, but honestly I'd just pay the extra cash.
Click to expand...

What are the main advantages of Sole Proprietorship? Do you pay less tax than a Pty (Ltd)?
 
Basically all the biz stuff get included in your personal income tax. A few minor differences do apply (mainly s23(m) I think), buts thats pretty close to the mark. The problem is you lose all legal protection if someone goes after you in court. i.e. You can lose your house & car.

Thats why its best to just suck it up & pay extra for a Pty.

Main advantage is less paperwork & slightly reduced costs. On the tax side it might be cheaper or more expensive, depends.
 
HavocXphere said:
No CCs anymore. Only (Pty) Ltd. No you don't need an audit, only a review. No don't register for VAT (yet). No you can't put 14% VAT on your invoices if you're not registered. The main document you need is the memorandum of incorporation, but I'm sure CIPRO/CIPC needs some additional waste paper filled in too. Might be worthwhile consulting an accountant at the start rather than just the end...tax planning doesn't work well retrospectively.

For web design biz you *could* consider sole proprietorship since its not a particularly risky field, but honestly I'd just pay the extra cash.
Click to expand...

Careful with the wording no offense.The memorandum of incorporation after receiving it from SARS allows you to start trading, and to register the specifics of your business are in line with current governance,

The under R1 million you are referring to relates to small business registered for TURNOVER TAX. The other side of where you were correct is that you are not required to register as a vat vendor under 1 million.However for this portion of tax let me tell you this
1) By registering you avoid future issues as all accounts will be vat,no need to switch if income exceeds 1 million ie no issues with SARS in future.
2) By being a vat vendor and trading as a vat vendor you may claim back vat input(ie vat you pay after purchasing trading stock for instance)
3) No issues with clients being difficult,as many small - medium firms/clients prefer to deal with VAT vendors,makes the invoicing cleaner,shows the company has decent turnover and easier tax practices.
4)For references to the companies above everyone was 100% correct. Dont be lazy,the line to register and create a private company is extremely quicker than you think,why wouldnt it be quick,the faster SARS allows you to trade,the faster they tax and generate more revenue
5) List down the following
What do you want to trade
What type of business will it be
DO you expect to give shares?
If so how many(Important as this will be your cap no matter what-you would have to do share splits further on ,but its technical)
Who will be the directors?
Are you a service or goods?
Where will you be trading(Nice for general deductions relating to your company)
What will your financial year run? 1 March - Feb or on its own periods - Important
Feasibility of profits - ie what do you expect to earn in your financial year end

Good luck.Remember the first step is always the hardest.Have the faith in your ability and dont be afraid to sell your service like a bad flu.

Hope this helps
 
HavocXphere said:
Basically all the biz stuff get included in your personal income tax. A few minor differences do apply (mainly s23(m) I think), buts thats pretty close to the mark. The problem is you lose all legal protection if someone goes after you in court. i.e. You can lose your house & car.

Thats why its best to just suck it up & pay extra for a Pty.

Main advantage is less paperwork & slightly reduced costs. On the tax side it might be cheaper or more expensive, depends.
Click to expand...

For the sake of a rule of thumb - Avoid Partnerships and sole proprietor
Both are not seperate legal entities and as Havoc said creditors have the ability to file for your liquidation in the event of non payment. What this means is that because the business is not a legal entity YOU a partner or owner of the sole proprietor are liable for the payments. If you register as a private pty ltd the company is a a legal entity.

So Havoc hit the nail on the coffin basically.
Cost wise is so negligable.
Tax wise there are some differences,but in general if you can prove an expense relates to your business you may deduct it for business purposes.
 
FBW said:
What are the main advantages of Sole Proprietorship? Do you pay less tax than a Pty (Ltd)?
Click to expand...

Minimum requirement for voluntary VAT registration is a turnover of above R60 000, and compulsory registration is above R1 000 000 in any given past 12 month period.

In my opinion going the company route is better. Apart from the legal liability side, I think it is better to keep things separate from you personal affairs and having to have to keep separate books is a good thing planning and business wise. I also think it looks more professional to your clients.

The real advantage is the tax rate that is limited to 28% after you have given yourself a salary. So you can still make use of the rebates and 18% and 25% tax rates by giving yourself a salary. You can charge interest on the starting capital and assets that you loan to the company and make use of the interest exemptions. Then there are a few more allowances that you can allocate to yourself that you can use. A good accountant will advise you on these (car allowance etc).

The starting costs and audit/accounting compliance cost may be more, but you can have it done for cheap. Otherwise, try out as a sole prop first to see how things go and then register a company later.
 
Greg C said:
Careful with the wording no offense.The memorandum of incorporation after receiving it from SARS allows you to start trading, and to register the specifics of your business are in line with current governance,

The under R1 million you are referring to relates to small business registered for TURNOVER TAX. The other side of where you were correct is that you are not required to register as a vat vendor under 1 million.However for this portion of tax let me tell you this
1) By registering you avoid future issues as all accounts will be vat,no need to switch if income exceeds 1 million ie no issues with SARS in future.
2) By being a vat vendor and trading as a vat vendor you may claim back vat input(ie vat you pay after purchasing trading stock for instance)
3) No issues with clients being difficult,as many small - medium firms/clients prefer to deal with VAT vendors,makes the invoicing cleaner,shows the company has decent turnover and easier tax practices.
4)For references to the companies above everyone was 100% correct. Dont be lazy,the line to register and create a private company is extremely quicker than you think,why wouldnt it be quick,the faster SARS allows you to trade,the faster they tax and generate more revenue
5) List down the following
What do you want to trade
What type of business will it be
DO you expect to give shares?
If so how many(Important as this will be your cap no matter what-you would have to do share splits further on ,but its technical)
Who will be the directors?
Are you a service or goods?
Where will you be trading(Nice for general deductions relating to your company)
What will your financial year run? 1 March - Feb or on its own periods - Important
Feasibility of profits - ie what do you expect to earn in your financial year end

Good luck.Remember the first step is always the hardest.Have the faith in your ability and dont be afraid to sell your service like a bad flu.

Hope this helps
Click to expand...

Good post. It is true that many big companies prefer to deal with suppliers who charge VAT as they can claim the input. It also indicates that the supplier has a solid business. People tend to forget that by charging VAT you are not giving a 14% of your money to SARS. You are adding it to your few and collecting and paying it over on SARS behalf. It is not your money and you should budget for it and work your profits ex Vat.
 
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