Starting a web based business - need advice

[Laro696]

So me and a partner will be launching a website soon.
It will basically be a business directory in a specific niche. Businesses will pay a set fee to have their details displayed on the website. I know there are many similar websites, but I feel we can do it better. Keep the info up to date, promote companies and their services through newsletters and social media etc.
We already have a few businesses keen to give us a try.

I've read two different books about starting your own business in South Africa, but they didn't really help me.

What I need help with is the following:
1(a) - Should the business be registered? (As far as I can gather, it doesn't need to be)
(b)If the business doesn't have to be registered, should I register a business name?
2 - We are basically going to split the income 50/50 at the end of every month. Should we just keep track of the money and declare it when we do taxes, or isn't it that simple?
The only expenses we will have is the hosting and domain (about R500 per year), which we are willing to pay out of our own pocket (from the money we get out each month)
3 - If it isn't that simple, how should we go about taxes?

I might have some more questions further on

Thanks

 

[rpm]

I think the big question here is: Can you do better than Google? Or do you offer something to businesses without a web presence?

 

[Centronix]

1. Yes you will have to be registered and pay income tax
2. I think if your income is less than R1m a year, you don't get taxed on there.
3. When you register your business you'll get a tax number and you can file your returns during the tax season

 

[Laro696]

I think the big question here is: Can you do better than Google? Or do you offer something to businesses without a web presence?

Fair question. The niche I'm going for is tourism, and I think 99% of businesses in this sector has a web presence (even if it might just be a Facebook page).
As for doing better than Google, I probably can't. But with some SEO knowledge you can rank in the first few positions for certain search queries or alternatively buy ad space on search results.

1. Yes you will have to be registered and pay income tax
2. I think if your income is less than R1m a year, you don't get taxed on there.
3. When you register your business you'll get a tax number and you can file your returns during the tax season

Thanks for the response. Do I just register on the CIPC website?

Also, would I need to register the company if I do this as a sole propietor?

 

[Centronix]

Thanks for the response. Do I just register on the CIPC website?

Also, would I need to register the company if I do this as a sole propietor?

Unfortunately you do. The legislation changed about a year or 2 ago.

I think going straight to the CIPC can be time consuming. I'm thinking of registering a business myself and so far the easiest way to going about it seems to be going via a bank, i.e. FNB. If you get a business bank account with them they register your business for you on your behalf. See link below for more info. And no I don't work for them

https://www.fnb.co.za/business-banking/cipc-registration.html

 

[semaphore]

http://www.traveldex.co.za/
http://www.tourismdirectory.co.za/

 

[Laro696]

http://www.traveldex.co.za/
http://www.tourismdirectory.co.za/

Tourismdirectory's twitter and facebook page go to a company that builds joomla templates and extensions. How are they promoting the companies that lists on them, except for the website?
There are no accomodation listed for Stellenbosch, the heart of the winelands.
As a matter of fact, very little accomodation at all.
Eastern Cape (13)
Free State (0)
Gauteng (0)
Kwazulu Natal (4)
Limpopo (1)
Mpumalanga (0)
North West (0)
Northern Cape (1)
Western Cape (0)
No info on adding your establishment (price, features etc.) before you register for an account.

Travledex's template looks outdated, just over 600 facebook fans and looks like they had just one post last year, advertising a dancing class or something. Free listing on the site, but for R300 you can add a logo.

Both sites that I can easily top.
My site will have ratings, comments, google maps that show the location of the place, responsive template that will work on PC, tablet and mobile phones, business can add photo's, users leave comments via their Twitter/Facebook/Google account and can add their own pictures to the comment, business owners can check the stats on their page to see how many times has it been viewed and which country the user is from, users can mail businesses directly from the site, business can embed a YouTube video straight onto their page. The price for a listing will not be more than R500 per year, and they can mail me at anytime to promote an event/promotion they have via Facebook, Twitter and blog posts. They can log in and edit their details (trading hours, prices, specials etc.) at any time. I will give each page a QR code that they can put on their slips/cards to direct users to the page where they can leave a comment.

This is just the beginning

 

[koeksGHT]

Question, if people are EFT'ing you say under 1M a year(tax limit) in fees for online stuff and you are not a registered business, personal account. Anything wrong with that? Or will they come try stuff you up for not having a business reg?

 

[semaphore]

Question, if people are EFT'ing you say under 1M a year(tax limit) in fees for online stuff and you are not a registered business, personal account. Anything wrong with that? Or will they come try stuff you up for not having a business reg?

You generally need to be a registered because, but you do dont always have to be registered for vat i believe. Unless you charge it.

 

[Laro696]

Yes you don't need to be registered for VAT, but then you can't claim any back either.

 

[JustAsk]

You generally need to be a registered because, but you do dont always have to be registered for vat i believe. Unless you charge it.

Yes you don't need to be registered for VAT, but then you can't claim any back either.

Really?

In this day and age you still get uninformed posts like this from people that have access to the internet.And the sad part is there is more in this thread.

Laro66...all the info you need is available on the cipc website.Do the basics...read.It is even discussed to death here on mybb,search for it.Sorry if this sounds harsh but running a business is hard work,if you don't even want to do basic research in the beginning then forget it.You seemed to know about cpic,have you visit the site? Go to "enterprises ---> companies ".The company links on the right have all the info you need.

Tourism is not a niche...cycle tourism,backpacking or bird watching are niche markets in tourism.

I think you misunderstood the google comment and I think your SEO knowledge is not good...no disrepect.If i am in cycle tourism,why would i pay to be on a generic tourism list.Almost all people search for something specific so my customers will search for cycle tours in SA.To get to your directory customers still have to search google,unless your directory is more popular then the google brand.Now,even if somebody get to your site,my paid listing on there still has to compete with others.I will put my business on a free directory any time but i will not pay for it.

Just do a simple google search,you will have to specifically search for "tourism directory" to have one popped up in the search.Do that for example "online shipping" too...same results...no one visible on the first page.You have to search for "online shopping directory" or something similar to see one.Now who in his right mind will do that if he wants to buy a laptop.

My advice...bad idea.

MY ZIM$

 

[koeksGHT]

You generally need to be a registered because, but you do dont always have to be registered for vat i believe. Unless you charge it.

Would VAT apply to personal accounts. Essentially people just EFT the amount given(say 10k), no invoice really needed. Electronic service essentially. Kind of the the same as having a bunch of friends EFTing you money monthly.

Would the bank report you receiving large amounts of cash(if over a limit)?

Would it still fall into needing a registered business?

 

[semaphore]

Really?

In this day and age you still get uninformed posts like this from people that have access to the internet.And the sad part is there is more in this thread.


MY ZIM$

Uninformed how ? My company is registered and im not VAT registered? And we have queried with SARS and accountants and they all have said that if im under X and dont charge vat its cool. So yeah um.. whatever.

Granted a lot of companies may not want to do business with you if you are not VAT registered, but that does not mean you have to be.

Unless laws have changed recently, but ye we are not.

 

[semaphore]

Would VAT apply to personal accounts. Essentially people just EFT the amount given(say 10k), no invoice really needed. Electronic service essentially. Kind of the the same as having a bunch of friends EFTing you money monthly.

Would the bank report you receiving large amounts of cash(if over a limit)?

Would it still fall into needing a registered business?

Any money you earn outside of your normal salary needs to be declared, VAT != Income. If you charge 9000 + VAT, its the fact you cant charge for. But you will still need to declare the 9000 on an income tax form. You could most likely not declare it but if you get caught you could get a nice fine and penalty as well.

 

[JustAsk]

Uninformed how ? My company is registered and im not VAT registered? And we have queried with SARS and accountants and they all have said that if im under X and dont charge vat its cool. So yeah um.. whatever.

Granted a lot of companies may not want to do business with you if you are not VAT registered, but that does not mean you have to be.

Unless laws have changed recently, but ye we are not.

This is what you said.

You generally need to be a registered because, but you do dont always have to be registered for vat i believe. Unless you charge it.

Which is not true.You can just decide to charge vat.It's illegal to charge vat without being registered. Vat is a tax that is paid by the one in the chain that can't (or don't) claim it back,which normally is the end user.So whether you charge it or not is irrelevant,if your company becomes mandatory for vat and you become registered,sars claim it from you. The onus is on you to recover it back from your buyers.

 

[semaphore]

This is what you said.


Which is not true.You can just decide to charge vat.It's illegal to charge vat without being registered. Vat is a tax that is paid by the one in the chain that can't (or don't) claim it back,which normally is the end user.So whether you charge it or not is irrelevant,if your company becomes mandatory for vat and you become registered,sars claim it from you. The onus is on you to recover it back from your buyers.

You are correct, agreed i did not put the thresholds in. But they are there and my company falls under it and as such im not registered for vat.

 

[Laro696]

@JustAsk my statement regarding VAT is correct, confirmed by an accountant.
And regarding your other comments:
I did do research. I read local books about starting a business. I looked at the CIPC website, but it was really confusing for me so I thought I'd just ask here to get a better explanation from people with experience.
My SEO knowledge is enough to get on the first page of Google for phrases like "accomodation in Franschhoek" or "wine tasting in Cape Town"
I don't really need to just rely on Google either, social networking has changed the whole game.
The reason people will list on a paid service is simple. As with all things, you get what you pay for. I am already in contact with travel agencies in Europe, who will recommend the site to their clients.
Yes your listing still has to compete with others, but getting good ratings by clients will push you up the rankings (guests can arrange listings by their ratings)
Searching for a place to buy laptop and searching for accomodation/things to do from the other side of the world is 2 completely different things IMO.

I appreciate your comments and respect your opinion, but if everybody that wants to start something decide not to do it because someone else thinks it's a bad idea, there probably won't be any cool stuff. Even if it is a bad idea, I gotta give it a go. You never know.

 

[JustAsk]

Looking back at your vat post,it seems like i misunderstood your post.I read it like it was an extention to semaphore's post.My apologies.

I appreciate your comments and respect your opinion, but if everybody that wants to start something decide not to do it because someone else thinks it's a bad idea, there probably won't be any cool stuff.

True.I still think its a bad idea but if you do your research and it proves feasible who cares what some guy on the interwebz thinks.

 

[pwstraton]

So me and a partner will be launching a website soon.
It will basically be a business directory in a specific niche. Businesses will pay a set fee to have their details displayed on the website. I know there are many similar websites, but I feel we can do it better. Keep the info up to date, promote companies and their services through newsletters and social media etc.
We already have a few businesses keen to give us a try.

I've read two different books about starting your own business in South Africa, but they didn't really help me.

What I need help with is the following:
1(a) - Should the business be registered? (As far as I can gather, it doesn't need to be)
(b)If the business doesn't have to be registered, should I register a business name?
2 - We are basically going to split the income 50/50 at the end of every month. Should we just keep track of the money and declare it when we do taxes, or isn't it that simple?
The only expenses we will have is the hosting and domain (about R500 per year), which we are willing to pay out of our own pocket (from the money we get out each month)
3 - If it isn't that simple, how should we go about taxes?

I might have some more questions further on

Thanks

1(a) You do not need to be registered as a company in order to operate as a business. You can operate as a partnership which will require a partnership agreement.

From the income tax perspective, partners are essentially taxed on the partnership income that accrues to them. Ie: If your partnership earns R1000 taxable income and you split it 50/50 then each partner will include R500 in his respective tax return (therefore this gets added to other forms of income like other salaries, interest, dividends, annuities etc).

You are therefore taxed according to your own personal tax threshold.

From the VAT perspective, if you make taxable supplies that exceed R1 000 000 in a 12 month period, you're required to register as a vendor.

Simplistically, this means the following:
You currently aren't a vendor. You provide taxable supplies (goods/services) which would be subject to VAT if you were a vendor (this includes zero-rated goods). You exceed R1 000 000. You must register as a VAT vendor and charge/be able to claim VAT.

There are voluntary registration provisions if you exceed taxable supplies of R60 000 in a given period.

You will be given a VAT registration number if registering for VAT.

If you register as a company, the company will be taxed on it's taxable income and will be registered for income tax in it's own right. It will also be given a VAT registration number if registered for VAT. Companies pay income tax at 28% (dividends witholding tax at 15% if you declare profits as a dividend), unless you are able to register for turnover tax in which case you'll be taxed on a sliding scale.

b) I don't know enough about registering business names to comment, but presume it would be a good idea if you felt that it should be protected.

2) This relates to the above - obviously you'll have to keep close track of the money regardless of whether you're a company or other business structure. This will be essential for normal good business operations as well as for tax returns (when VAT is involved you need to have invoices including certain details for example).

3) Go about taxes by consulting with a professional. If I were you I'd start trading as a partnership (with a partnership agreement - NB). I'd then assess how the business is doing to see whether it is worthwhile/necessary/recommended to register as a business.

Partnership advantages:
- Easy to start (no registration)
- Easy to administer

Disadvantages:
- Liabilities of the partnership attach to you each personally (but don't think this is particularly relevant as you seem to have your main expenses as minimal cash payments)
- Income is taxed at your marginal rate (if you're being taxed above 28%)
- Partnership agreements can become an issue if partners disagree and agreement isn't thorough

Company advantages:
- Tax at 28%
- You're not liable in your personal capacity for debt (limited liability)

Disadvantages:
- Possible extra admin to register


The above is as close to accurate as I can give off the top of my head. If there are any errors however, they should be minimal. This is obviously a forum so you should consult with someone who is qualified to answer, but this should give you an outline of the considerations to take into account. Also, it is not exhaustive of the considerations.