What constitutes a bona fide retailer? Apparently I need to do this before I can stock and sell certain products from wholesalers.

Interested in entering the retail industry?

Answer / Solution

To become a bona fide retailer the business must be registered with Companies and Intellectual Property Registration Office (Cipro). The business must also register with SARS for Value-Add-Tax (VAT), and finally, if you are seeking credit facilities with suppliers you must have a clean credit record.

The first steps to take

One of your first decisions when starting a business as a bona fide retailer will be whether to operate as a sole trader (under your own name) or register the business under its own name (as a close corporation, partnership, or company). To become a bona fide retailer the legal company that you can form can be:

•  Private or public limited liability company
•  Close corporation
•  External company (i.e. a branch of a foreign company)
•  Partnership
•  Trading trust
•  Sole trader

The Basics First

After you have registered your business, you need to ensure that various registrations are in place.

Contact the South African Revenue Services to register as a:

• Provisional tax payer (If you company is a CC or Company) and register the company as a taxpayer
• Employees tax
• VAT
• Skills development levy
• RSC levy

Trading licences

Only certain enterprises, such as liquor stores and arms dealers, require a licence to trade in South Africa. If you own a legally registered company, you have to pay a Regional Service Council (RSC) levy. Even if you don't employ any full-time staff you are still required to register the RSC in the area in which you operate.

Doing business with wholesalers

If you are going to buy goods from large suppliers they will need a company registration number and a VAT number. If your turnover is more than R300 000 a year, you must charge your customers value-added tax (VAT) on products they buy, and pay this VAT over to the South African Revenue Services (SARS) regularly. Contact SARS to register as a VAT ‘vendor’ and to learn how to fill in a VAT return

Talk to the South African Revenue Services (SARS) to find out how to register yourself, your employees and your business as tax payers.

Employment regulations

If you have anyone working for you, you must register as an employer with the Department of Labour, and make contributions on behalf of your employees for Unemployment Insurance (UIF) and Workmen’s Compensation.

As an employer, you need to comply with the Basic Conditions of Employment Act, which regulates working hours, overtime, leave, deductions, etc. It also says that you must give employees their terms of employment in writing, and can only dismiss them using the correct procedure.

Good credit

If you want to establish a line of credit with wholesalers, you need a clean credit record and you must build a good and solid relationship with suppliers.

Published | Editorial Disclaimer
© Entrepreneur Media SA (Pty) Ltd. All rights reserved.

We respect your privacy. Unsubscribe here