One of the major changes brought about by the New Companies Act that will affect start-ups is the availability of business names.
Under the new Act, name reservation is no longer mandatory before registering a company.
If a proposed name is rejected the company may still be registered and the registration number then becomes the name of the company at incorporation until an appropriate name has been reserved.
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Furthermore, symbols are allowed in company names and all languages are accepted.
To register a business name, you need to complete a CoR 9.1 form. The fee for a manual application is R75 for each name, while electronic is R50. You should indicate up to four alternatives to be considered for reservation in the listed order while only one will be registered.
You are also required to indicate whether any word, number or other element constitutes a registered trademark, and provide supporting documents for an associated name. The applicant of a name reservation must be the applicant on the new company registration documents, and will need to include a certified copy of their ID.
Searching and securing a company name
The new process does not require business owners to check that the name is available before the business can be registered. The CIPC will check the name against existing registered businesses and reject the names that are too similar.
Related: When Do I Register a Trademark
It is still possible, however, to check whether the company name you prefer is reserved but clicking on ‘Additional Services’ on the CIPC’s website. You will then be re-directed to the old CIPRO website and will see an entry field under ‘Name Search’ on the left of the webpage.
Alternatively, you can reserve a name on the CIPC’s website. By doing so you will be informed of its availability. To reserve a name online you need to do the following:
Step 1: Visit CIPC Site
Log onto the CIPC website
Step 2: Register
Register as a Customer. If you are not an existing customer, click on ‘Customer Registration’ to register and complete the required fields and submit.
Step 3: Payment
Before filing your documents you must ensure that you have enough funds available for the required transactions. Deposits may either be made at the CIPC walk-in centre in Pretoria, bank deposit or EFT payment.
Once the deposit is reflecting within your account, you may continue to file your applications. You may confirm whether your deposit is reflecting by logging on to the CIPC website, clicking on Additional Services, then Customer Log In, Customers, Customer Transactions, Selecting the date period, and Show Statement.
Step 4: Login
Login as a customer by clicking on Customer Login. Type in the Customer Code and Password selected at Customer Registration. Click on Login.
Step 5: Preliminary Search
Select ‘Name Reservation’ option under Name Reservation. Complete the required fields and click Submit. Select ‘Proposed Name’ or at the drop down box at Name Reservation Type option. Provide a maximum of four possible names in order of preference. Only one name will be registered.
A name may consist of number, letters, certain special characters ( only( ) @ . ‘ ) or a combination thereof. The system will do a preliminary search on the names provided and indicate any possible comparative names or any problematic words that has been used that may result in the application being rejected.
After the preliminary search, you may either go back to amend the proposed names or continue with the name reservation application by clicking on either Amend reservation or Continue with reservation. After you amended the application, the system will conduct a new preliminary search based on the revised proposed names.
Step 6: Business Name Reservation Application
The information provided on the online application is processed and the transactional information (assigned tracking number, deducted fee and application date is reflected).
You are advised to print this document by clicking on Print in order for later reference in corresponding with CIPC. The name is only approved after the CIPC name reservation processing team has processed the application.
Once reserved or rejected, you will receive an e-mail indicating the reservation detail for use in filing other documents with the CIPC.
Click on Print in order to print or save the application.
Step 7: Reservation of Company Name
Once one of the proposed names has been approved a form CoR9.4 will be issued to the customer who filed the name reservation.
Once the CoR9.4 has been issued, such may be used in registering a new company or co-operative or changing the company, close corporation or co-operative name by filing it with the required documents.
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Understanding Your Responsibility As An Employer
Now that you have your own employees, here is what you should know about your new responsibilities.
Hiring employees requires more work from you as the employer than simply placing a job ad, hiring the right person and training them on their role.
You need to be aware of the Labour Law requirements in terms of the various funds and other stipulated registrations.
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The law does not differentiate between different size organisations, and therefore it is imperative that SME’s fully understand the implications of all aspects of Labour legislation.
Employers may only deduct money from a worker’s salary if the worker agrees or if they are required to do so. The provisions for deductions do not apply to workers who work less than 24 hours a month.
Employers may not deduct money from a worker’s pay unless –
- the worker agrees in writing to the deduction of a debt, or
- the deduction is made in terms of a collective agreement, law (e.g. UIF contributions), court order or arbitration award.
Deductions for damage or loss caused by the worker may only be made if –
- the employer has followed a fair procedure and given the worker a chance to show why the deduction should not be made,
- the worker agrees in writing, and
- the total deduction is not more than 25% of the worker’s net pay.
Employers must pay deductions and employer contributions to benefit funds (pension, provident, retirement, medical aid, etc.) to the fund within 7 days.
What is UIF
UIF stands for Unemployment Insurance Fund and you need to register for it, whether or not you employ staff.
It applies to all employers and workers (except those working less than 24 hours a month), learners, public servants, foreigners working on contract, workers who get a monthly State (old age) pension and workers who only earn commission.
The fund makes short-term provision for individuals who become unemployed, or are unable to work because of illness, maternity or adoption leave. It also provides financial relief to the dependants of deceased contributors.
As an employer it is your responsibility to register with UIF and make the monthly payments. These include a 1% payment from you (based on your employees’ individual salaries).
Each individual employee needs to make a further 1% payment, but it is your duty to deduct this amount from their salary and pay it to UIF, together with your contribution, on a monthly basis to SARS if you are registered for PAYE or directly to the UIF if you are not.
You can register your business by completing a UF8 form and each new employee needs to be registered using a UI-19 form. These can be obtained from the Department of Labour.
What is COIDA
COIDA stands for the Compensation for Occupational Injuries and Diseases Act and being registered for it works in your favour. It is based on a no-fault system which means employees are entitled to compensation regardless of who caused the injury or illness.
But it also exempts you from liability for injuries or diseases contracted by your employees in the course of their work. In other words, employees can’t claim damages from you in those events. Instead, COIDA allows them to claim compensation for total or permanent disablement and death as well as reasonable medical expenses arising out of injury for two years.
You are required to pay the employee 75% of their normal salary for three months during the time that they are injured or ill but the fund pays you back this entire amount and covers all the relevant medical expenses.
If you are not registered, however, you are not indemnified. Getting registered involves submitting a WAs2 form, together with a copy of the registration certificate from the Registrar of Companies, or your ID document, if you are a sole proprietor.
Every year before 31 March you will need to submit a statement of earnings paid to your employees. You will also be required to pay an assessment tariff, which is fixed according to your class of industry.
If an employee gets injured during the course of their work or falls ill as a result of their work, they can claim from the Worker’s Compensation fund. Dependants of employees can claim if a family member dies from an accident or disease.
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Employees wishing to claim will need to be furnished with one of the WG30, WAs2 or WAc1(E) forms, which they need to submit to the Compensation Commissioner for compensation.
How Does Maternity Leave Work?
The law protects women against unfair discrimination arising from any form of prejudice. An employer may not ask a candidate who applies for a job if she is pregnant, nor if she is planning to start a family at any stage.
If you do, she could argue that you are discriminating against her. Equally, she is in no way obliged to disclose her pregnancy when applying for a position.
The bottom line is that it has nothing to do with the candidate’s ability to meet the requirements of the position. And nothing stops her from resigning once she has returned to work after taking maternity leave. She has rights regardless.
The Basic Conditions of Employment Act stipulates that an employee is entitled to four months unpaid maternity leave. All that is required is a notification by the employee that she is pregnant, accompanied by a doctor’s certificate.
This leave should start four weeks before the expected date of birth, or when a doctor or midwife certifies that leave is necessary for the health of the mother or child.
An employee must notify her employer in writing of the date on which she wants to start maternity leave.
She may not work for six weeks after delivery, unless she is declared fit to do so.
An employee who has a miscarriage during the last three months of pregnancy or who bears a stillborn child is also entitled to six weeks maternity leave, whether or not she has started maternity leave at the time.
Companies in South Africa are not obliged by law to provide paid maternity leave. A female employee who works for a company that does not offer maternity benefits can claim from the Maternity Benefit Fund if she has been contributing to the Unemployment Insurance Fund (UIF).
An employer who pays maternity leave does have some rights, however. Paid maternity leave is a benefit, and the company is within its rights to conclude a contract with the employee stating that if she does not return to work for at least one year following her confinement, she will be obliged to return the salary she earned during her maternity leave.
South Africa has no paternity leave provisions in place, but workers who have been employed at a company for longer than four months may take three days’ paid family responsibility leave during each year of employment.
Family Responsibility Leave
Workers may take up to three days of paid leave a year to attend to certain family responsibilities. The provisions for family responsibility leave do not apply to workers who work less than:
- Four months for their employer
- Four days a week for one employer
- 24 hours a month.
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Family responsibility leave expires at the end of the annual cycle. Employees may take family responsibility leave:
- when their child is born
- when their child is sick
- in the event of the death of a:
- spouse or life partner
- parent or adoptive parent
- child or adopted child
Employers may require reasonable proof of the birth, illness or death for which a worker requests leave.
The amount of overtime a worker may work is limited. Workers must get 1,5 times their normal hourly pay or paid time off in exchange for overtime. Alternatively, a worker may agree to receive paid time off or a combination of pay and time off.
The section of the Basic Conditions of Employment Act that regulate working hours does not apply to:
- workers in senior management
- sales staff who travel and regulate their own working hours
- workers who work less than 24 hours in a month
- workers who earn more than R115 572 per year
- workers engaged in emergency work are excluded from certain provisions.
Workers may not work:
- overtime, unless by agreement
- more than 10 hours’ overtime a week (collective agreement may increase this to 15 hours per week for up to two months a year)
- more than 12 hours on any day.
Employee Pay Slips
Each time workers are paid, employers must give them a pay slip containing certain details.
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Employers must give workers the following information in writing when they are paid:
- Employer’s name and address
- Worker’s name and occupation
- Period for which payment is made
- Total salary or wages
- Any deductions
- The actual amount paid
- If relevant to the calculation of pay:
- Employee’s pay and overtime rates
- Number of ordinary and overtime hours worked
- Number of hours worked on a Sunday or public holiday.
The total number of ordinary and overtime hours worked in the period of averaging, if a collective agreement to average working time has been concluded
Workers must get paid time off for public holidays, but if they agree to work, they must be paid double their normal daily wage. The provisions for public holidays do not apply to –
- senior management
- sales staff who travel
- workers who work less than 24 hours a month.
Workers must get paid time off for any public holiday that falls on a working day. Working on a public holiday is by agreement only.
A public holiday can be exchanged with another day by agreement. A public holiday cannot be counted as annual leave.
Employee Sick Leave
Workers may take the number of days they would normally work in a six-week period for sick leave on full pay in a three-year period. Employers may insist on proof of illness before paying a worker for sick leave. The provisions for sick leave do not apply to:
- workers who work less than 24 hours a month
- workers who receive compensation for an occupational injury or disease
- leave over and above that provided for by the Act.
During the first 6 months of employment, workers are only entitled to one day of paid sick leave for every 26 days worked.
An employer may require a medical certificate before paying workers who are absent for more than two consecutive days, or who are often absent (more than twice in an eight-week period).
Staff Working Hours
Basic Conditions of Employment laws set maximum working hours and minimum rest and break periods for workers.
The section of the Act that regulate working hours does not apply to:
- workers in senior management
- sales staff who travel and regulate their own working hours
- workers who work less than 24 hours in a month
- workers who earn more than R115 572 per year
- workers engaged in emergency work are excluded from certain provisions.
The maximum ordinary hours per day for someone who works one to five days per week is nine, the maximum amount of hours per week is 45.
For those who work more than five day per week should work a maximum of eight hours per day and 45 hours per week. Workers may agree, in writing, to work up to 12 hours a day without getting overtime pay.
However, these workers may not work more than:
- 45 ordinary hours a week
- 10 hours’ overtime a week
- five days a week
Workers must have a meal break of 60 minutes after five hours’ work. A written agreement may:
- reduce meal intervals to 30 minutes
- eliminate meal intervals for workers who work less than 6 hours a day
Workers must have a rest period of 12 hours each day; and 36 consecutive hours each week (must include Sunday, unless otherwise agreed).
Workers working between 18h00 and 06h00 must:
- get an allowance, or
- work reduced hours, and
- have transport available to them.
Skills Development Levies
Employers must pay 1% of their workers’ pay to the skills development levy. The money goes to Sector Education and Training Authorities (SETAs) and the Skills Development Fund to pay for training. The Skills Development Levies Act applies to all employers except–
- the public service;
- religious or charity organisations;
- public entities that get more than 80% of their money from Parliament; and
- whose total pay to all its workers is less than R 250 000 per year; and
- who do not have to register according to the Income Tax Act
Employers who are required to pay the skills development levy must register with the South African Revenue Services (SARS). Employers must pay 1% of all their workers’ pay to the skills development levy every month.
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Employers must pay the levy to the South African Revenue Services (SARS) by the seventh day of each month. Employers who do not pay will have to pay interest on the money they owe and may also have to pay a penalty.
What is PAYE
All employers are required to deduct Employees’ Tax from their salaries. The amounts deducted must be paid by the employer to SARS on a monthly basis.
Related: SARS PAYE Criteria
The process of deducting or withholding tax from remuneration as it is earned by an employee is referred to as Pay-As-You-Earn (PAYE).
Employers are required to:
- Deduct the correct amount of tax from employees’ remuneration.
- Pay this amount to SARS monthly, ensuring SARS receives a Monthly Employer Declaration (EMP201).
- Reconcile these deductions and payments with the completion of the interim and annual Employer Reconciliation Declarations. During the reconciliation periods, employers are required to submit an Employer Reconciliation Declaration (EMP501) confirming or correcting the PAYE, SDL and UIF declarations per EMP201s submitted, the payments made and the tax values of the Employee Tax Certificates [IRP5/IT3(a)].
- Issue tax certificates to employees
- An employer must issue an employee with an IRP5/IT3(a) where remuneration is paid or has become payable and from which Employees’ Tax was deducted. The IRP5/IT3(a) discloses the total employment remuneration earned for the year of assessment and the total deductions. IRP5/IT3(a) certificates must be issued to employees during the annual Employers tax season.
Seek professional advice
There is a lot to keep track of once you become and employer. It is advisable to call in an expert.
You can use the services of a suitable experienced and qualified HR consultant who can help to set up the principles and processes of the above, and then work on an ad hoc basis only as and when needed reducing the cost of a full-time HR manager.
- The Department of Labour: www.labour.gov.za
- SARS: www.sars.gov.za
- uFiling: www.ufiling.co.za
- Commission for Conciliation, Mediation and Arbitration (CCMA): www.ccma.org.za
- The South African Labour Guide: www.labourguide.co.za
Related: 10 Ways to Pump Up Your Employees
Zoning and Permits
If you are thinking about setting up a business in a residential area you will need to know about zoning.
Have you considered the legal ins and outs of starting a business in a residential area? You will need to know about zoning.
The Home Office
You want to open a simple consultancy, for example. You start out on your own, as so many entrepreneurs do, at home in your spare room. No inconvenient trading licences to worry about. As you take on some support staff, you hire your first few square meters of office space. Times are good and suddenly your new business is legit and firing on all cylinders.
Clients are happy, word of mouth has taken care of your marketing and you’ve had to take on more staff to cope with the increased workload.
All of a sudden you no longer fit into the modest office space you hired for your fledgling business and you have to think about expanding. But you’ve been paying rent for over two years and it seems such a waste. And now that you think of it, you were considering selling your substantial home and moving into a lock-up-and-go townhouse.
It occurs to you that perhaps you should keep the house (it’s an asset after all) and convert it into business premises. That way you’ll save on rent.
On the surface it all seems to make perfectly good business sense. Except for one thing. Your house is in a residential area and therefore not zoned for business purposes. In order to trade as a business on those premises, you will have to apply for the property to be rezoned – and the time and energy needed to achieve that may make another year’s worth of paying rent not seem so onerous after all.
If you are operating a one-person business, don’t employ staff and don’t have clients calling regularly at your premises, you don’t have to apply for business rezoning. But if you need to put up signage, expect clients, suppliers and staff, and if the property is used solely for business purposes then, in all likelihood, you’re in for a rezoning application.
If you are searching for a business premises, here is what you need to know about leases and landlords.
The Rezoning Battle
But here’s the catch – applying for a property to be rezoned as a business in no way means that it will automatically happen. As South African cities boom with business growth and congestion becomes an ever-increasing cause of frustration and wasted time, businesses are moving out of the CBD and into what were previously residential areas.
This is a natural phenomenon of urban geography and over time, as residents realise the potential value of selling up their homes to businesses that want to move in, areas are rezoned for business. However, if an area is not yet zoned for business, the residents usually have fairly strong objections to it becoming so.
Businesses generate traffic and parking problems. Local councils typically take the concerns of residents seriously and are reluctant to rezone an area for business on the strength of one application.
Add this to the fact that every local authority has a different set of parameters which guides rezoning decisions – and that each application is taken on its individual merits – and the process becomes extremely complicated.
Ultimately, if you want to avoid the daily horrors of traffic and purchase your own business premises in a residential neighbourhood, your best bet is to set up shop in an area in which other businesses are already established. After all, there is strength in numbers and this greatly improves your chances of getting the area rezoned.
Related: Register A Company In South Africa
To apply for rezoning in an area that is not zoned for business, you have to secure a zoning scheme departure or special consent from the City Council. Getting this can take a while – in some cases up to three months. You may need to advertise your business’s intention to conduct a particular business activity in the local newspapers.
Residents and other stakeholders will have the chance to respond with any complaints, which are heard by a board, before you will be granted or denied the departure. Being granted a departure usually paves the way for successful zoning approval but, once again, there are no guarantees. And all the while, you can’t operate legally as a business in that particular area.
When it comes to the legal side of setting up a business, it pays to do your homework and get professional assistance where appropriate. The cost of mistakes and bad judgement calls in this area can be severe.
Trading licences are governed by the Business Act of 1991, No. 71, which states that certain businesses require licences. These include:
- Those that sell or supply meals or perishable foodstuffs
- Those that provide certain types of health facilities or entertainment. These are defined as Turkish baths, saunas or other health baths; massage or infrared treatment; escort services (male and female); games halls that have coin- or token-operated mechanical or electrical devices or three or more snooker or billiard tables; night clubs and discothèques; cinemas and theatres, and “adult premises” as referred to in section 24 of the Films and Publications Act, 1996
- Those that hawk meals or perishable foodstuffs
Before you open your doors, you had better check whether your business needs a special permit or licence. Certain types of businesses, namely those that sell, hawk or supply meals or perishable foodstuffs and those that provide certain types of health facilities or entertainment, require a licence to trade. In addition, purveyors of liquor need to apply for a liquor licence.
To obtain a trading licence for your business, you need to apply to the Licensing Department, which in turn requires reports from the health and fire department and town planning. The latter two departments will check that your business meets health and fire regulations and that your proposed premises are in an area zoned for business.
- Provincial and Local Government directory
- South Africa Government Services: Permits, Licences and Rights
The Basics Of Registering A New Company
A guide to registering your company with CIPC.
Since 1 May 2011, the Companies and Intellectual Property Registration Office (CIPRO) ceased to exist and was replaced by the Companies and Intellectual Property Commission (CIPC). The New Companies Act came into being at the same time, changing the way business owners register a company.
The Act stipulates that no new close corporations (CC) can be registered, but those registered prior to 1 May can continue to operate as CCs.
Registering your company
The Companies Act provides for two categories of companies, namely non-profit and profit companies. Each of the different business entities under these categories has specific requirements in terms of the documentation that is required for company registration.
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1. Types of entities
- A company incorporated for public benefit or another object relating to one or more cultural or social activities, or communal or group interests.
- The income and property are not distributable to its incorporators, members, directors, officers or persons related to any of them.
- Profit companies are categorised as companies without restrictions on the transferability of their shares and that do not prohibit offers to the public (larger public companies), and companies that do contain restrictions on the transferability of their shares and that prohibit offers to the public (smaller private companies).
- They may take one of four different forms: a personal liability company, a state-owned company, a public company and a private company.
Personal liability companies:
- The directors and past directors are jointly liable with the company for any debts and liabilities arising during their periods in office.
- The company name ends with the word ‘incorporated’.
- This is a company defined as a ‘state-owned enterprise’ or a company owned by a municipality.
- The names of a state-owned company must end with the expression ‘SOE Ltd’
- The definition of a public company is largely unchanged.
- The only difference is that a public company now only requires one member for incorporation compared to seven members in the past.
- While comparable to private companies under the old Act, these are similar to previous close corporations.
- Some of the changes made to private companies include fewer disclosure and transparency requirements, no longer being limited to 50 shareholders, and a board that must comprise at least one director.
- The name of a private company must end with the expression ‘Proprietary Limited’ or ‘(Pty) Ltd’.
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A company is incorporated by the lodging of a Notice of Incorporation (CoR 14.1) and Memorandum of Incorporation (CoR 15.1 A-E). These forms are available for download from the CIPC’s website.
Memorandum of Incorporation:
The Memorandum of Incorporation (MoI) contains the following information:
- Details of incorporators
- Number of directors or alternate directors
- Share capital (maximum issued)
Notice of Incorporation:
The Notice of Incorporation, which is lodged with the MoI, contains the following information:
- Type of company
- Incorporation date
- Financial year-end
- Registered address (main office)
- Number of directors
- Company name
- Whether the company name will be the registration number
- The reserved name and reservation number
- List of four names to be checked by the Commission
To register a private company you will complete either a CoR 15.1A (for a standard private company) or a CoR 15.1B (for a customised private company) and a CoR 14.1. The supporting documents required include:
- Certified ID copies of all indicated initial directors and incorporators
- Certified ID copy of applicant if not the same as one of the indicated initial directors or incorporators
- If an incorporator is a juristic person, a power of attorney is required for the representative authorised to incorporate the company and sign all related documents
- If another person incorporates the company and signs all related documents on behalf of any of the incorporators and initial directors, a power of attorney and certified ID copy of the person is required
- If a name was reserved before filing of incorporation documents, a valid name reservation document is necessary
Fees: The basic filing fee is R175. According to Elsabie Conradie, head: Communication, marketing and stakeholder relations for CIPC, a private company can be registered within one day if the company registers without reserving a name first.
Do you know what business taxes you will have to pay? This handy guide will walk you through your business tax basics.
3. Register online
The CIPC’s website allows business owners to register their companies online. Once you are ± registered as a CIPC customer you will be able to access the transactional website. After you have logged in, look for the ‘New Companies’ link under the ‘Companies’ tab.
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