Starting a new business

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Legosa

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Looking at starting a company for the first time to run part time on top of my permanent employment.

Been doing quite a lot of reading to find out what I need to do up front and consider in the first few months of operation. If I have missed anything, please let me know as I am totally new to this.

Business is launching a fashion brand that is well established in US and Europe, and not here yet. I have go ahead from the company to become the South African distributor and try and penetrate the market here.

Busy getting samples to do some market research before I launch the brand locally.

Here are the things I think I need to put in place before I place my first order, via China,

  1. Private Company registration
  2. SARS tax registration
  3. VAT registration (Projections currently over R1mil per year for revenue)
  4. Import/Export Clearance certificate
  5. Accounting software (was thinking pastel online)
  6. Capital (Will loan the company some of my cash reserves)
  7. Tell employer I am starting side line business (Required in my contract)

Then things to consider to keep the company afloat
  1. Cash Flow projections
  2. Ordering projections
  3. Sales projections
  4. Launch internet retail site
  5. Point of sale contracts (Online as well)
  6. Best courier options
  7. Sea or airfreight (lead time dependent)
  8. Channels (Internet/Exhibitions/Store retail)

Any assistance or advice would be greatly appreciated
 
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You can only voluntarily register for VAT if you've turned over more than R50 000 for the tax year. You won't be able to register before this.
 
deweyzeph said:
You can only voluntarily register for VAT if you've turned over more than R50 000 for the tax year. You won't be able to register before this.
Click to expand...

^ This

Also, if you've got some spare cash (doesn't cost a lot) get accountants/lawyers to do the registration and all of that for you, it is really quite a shlep. If not, use shelfcompanywarehouse.co.za Their website is horrible, but they actually have quite good service, and if you need to you can be up and running in a week. Also you'll need to open a bank account for the business, for this you'll need all of the registration documents.

Accountants will also be able to help you with your tax, so do consider getting someone. For instance if you put the startup capital in then it's effectively a personal loan so you can save quite a bit on tax.

Good luck!
 
Also (and this is out of interest), why via China? Do you mean "from"?
 
wont it be a bit hectic trying to operate a +1 million revenue business on the side of permanent employment?
 
Ofcourse he means from China...its all from China. My uncle owns a few boutique clothing shops and he shut down his local manufacturing factory which was going for 10+ years and gets everything made in China or Pakistan.
3 times cheaper
3 times more productive
No workforce= no unions, no stealing of milk and sugar, no pregnancies, no personal ***= more money for less work!
 
carlchurchill said:
Ofcourse he means from China...its all from China. My uncle owns a few boutique clothing shops and he shut down his local manufacturing factory which was going for 10+ years and gets everything made in China or Pakistan.
3 times cheaper
3 times more productive
No workforce= no unions, no stealing of milk and sugar, no pregnancies, no personal ***= more money for less work!
Click to expand...

Couldn't agree more. Can't think of any good reason to manufacture something locally in South Africa. The government has effectively killed the manufacturing industry in South Africa with its labour regulations.
 
Well I manufacture medical devices and sell 30% locally and 70% internationally=$$$...chinese cant compete with us in terms of price and it helps their quality has a bad reputation. We do keep staff complement as low as possible though and automate as much as we can, but I guess it depends on the industry you in...a shirt is a shirt at the end of the day!
 
I'm doing the same homework currently. What is missing though is ongoing running of the business, meaning not just the projection etc. Think about the accounting, reports to be sent to DTI, UIF, SARS, and any other department. Also determine what type of business you want. CCs are only available via Shelf companies as the new Company law removed CCs as an entity. Also remember the management of PAYE, UIF etc. if you have employees. I'm taking the approach of finding a good accountant to handle the financial and reporting administration.

Then there is the other component. The tax implication of having a company (and getting dividends).

On projections. Take your sales. Divide it by 2. Then divide it by 2 again. We tend to be too optimistic generally (ask me, I've done enough business cases). And also take into account currency fluctuations. Hedging strategies are tricky.
 
Thanks for the feedback all.

The brand is based in the States and has a manufacturing plant in China. So payment would go to US to get order shipped from China.

Any advice on which online website to use to register the PTY. Had a look at the following, and some of them offer, PTY registration, VAT registration (do not see how they can do this before you have sold R50k), clearance certificate, speedy service, Income tax registration, etc.
https://www.factcorp.co.za/
http://www.business-registrations.co.za/

Biggest concern I have now is getting the accurate projections, not to optimistic and not to pessimistic. Really do not want to sit with an issue of having no stock and new stock only arriving in a month or two's time.

Also looking forward to the challenge of stretching myself at work and with this venture so I have the option of resigning from my full time employment if I make a success of it.
 
Just to get back to the VAT registration thing, you will probably find this will be the biggest headache of all to sort out. SARS has clamped down big time on VAT registrations due to VAT fraud, and treat all VAT registration applications with great suspicion. Be prepared to have your business scrutinised in great detail, prepare to be have your business premises inspected, and possibly a full cavity search (jokes, but that's what it will feel like once SARS is done with you). I know several people who have been through the VAT registration process with SARS and it is a painful process.
 
Just curious, but can you tell us what product you are planning on selling.

Curious because with youtube/google it is quite easy to set up a website yourself to market and sell your product, use one of the local payment providers to set up the purchasing of goods electronically and maybe have a delivery company do the shipping for you. The last part im not sure about.

Good Luck.
 
I hope you've got experience dealing with China...its a big ask even for seasoned businessmen.

e.g. Don't be surprised if the sample is totally different from the actual product you get from the 1st order.

Not trying to discourage you - just saying people get some wild surprises on that front. Hell even Apple battles with this stuff.
 
Not wanting to divulge what I am going to bring in until I have a signed contract with the brand. Nothing is concrete at the moment.

My wife has bought the products in the states and is currently using them, so we know the brand quite well. Luckily I will be dealing with people from the USA and they need to liaise with their Chinese counterparts in terms of ordering. Biggest issue is finding a good 3rd party freight forwarder, but have a few local companies in mind for that. So hopefully what I think I order is what I get, touch wood.

Sounds like I am going to need some Vaseline for SARS, will be sure to stock up to prepare for the VAT registration :D
 
Legosa said:
Looking at starting...
Click to expand...

You CAN register for vat as a startup if you can provide sufficient docs that shows a likely turnover of R50K or more, like a signed contract.Remember, 50K is just a tiny R4166 per month.

My advise...
Wait for your contract to be signed,then apply for vat.

Also
Do NOT do online retail from the start.Try and establish at least one outlet per city by approaching suitable outlets for wholesale.
 
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Does anyone know any companies who can help a startup register for an import license?
 
Not sure if you have registered you company yet, but I am in the process of it. For R1293, I am having my Private Company registered, with name reservation, tax registration, VAT registration (in future when I need it), import/export clearance/licence registration. All from www.Factcorp.co.za
 
My samples have landed, got to love customs duties, ad valorem tax and VAT. Did not pay for the samples, but value is $100. All that comes to over R500 on duties, ouch and then another R250 to FedEx for admin.

Back to drawing board as I thought I would get away with around 16% import duties, now it is going to be 50%.

Also, can anyone comment on requirements for zero turnover companies to remain registered each year. Is it R100 to CIPC each year to submit zero turnover, or do you also have to get an accountant to perform an "independent review"/ mini audit as well? http://www.cipc.co.za/Help_files/HowTo_AR.pdf
 
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