So, you have to start a new business? Perhaps a trendy restaurant in a hotspot location that’s becoming known as ‘the place to go’. The clientele is fantastic, and you’re turning a profit; that’s great, but is the business registered with the Companies and Intellectual Property Commission (CIPC)? If not, you’re likely trading illegally.
There are only two ways that a business can trade without CIPC registration:
- If you are trading as a sole proprietor, meaning you (as an individual) own and operate the business; or
- If you have signed a legal partnership agreement with two or more parties or companies.
What is the CIPC?
The Companies and Intellectual Property Commission (CIPC) is the government agency responsible for registering companies, intellectual property rights and co-operatives. This includes trademarks, patents, designs and copyright. Also, you are required, by South African law, to file tax returns annually to SARS and the CIPC to prove that the business is still actively trading.
As you can see, starting a business is much, much more than finding the seed capital, renting premises and hiring qualified employees. Let’s help you sort out all the CIPC prerequisites first.
How do I register with the CIPC?
It’s in your best interest to speak to a reputable company that specialises in CIPC administration as well as tax and accounting. It’s an ideal business and finance trifecta, one company to ensure you’re trading legally, filing your taxes annually, and making sure that your intellectual property is protected.
You can register your trademarks with the CIPC
Are you using a logo and slogan as part of your brand identity, is it protected? According to the CIPC, “a brand name is a word or combination of words (e.g. Kentucky Fried Chicken). A slogan is a short phrase or a sentence, and a logo is a distinctive picture or symbol. They provide a distinctive identity in the marketplace and can apply to both products and services.” CIPC administers the Register of Trademarks which is the official record of all the trademarks.
In addition to being CIPC compliant, did you know that you require specific permits and licences to legalise
Business license: Business License: According to The Restaurant Association of South Africa (RASA), The Businesses Act (1991) states, “where a person carries on the business of selling or supplying any foodstuff in the form of meals for consumption on or off the business premises, or any perishable foodstuff, then that business is required to hold a business license.”
Entertainment license: Do you want to play music at your restaurant? This isn’t as simple as ‘plugging in and playing’; you need to obtain a license from The Southern African Music Rights Organisation (SAMRO) as well as another license from The South African Music Performance Rights Association (SAMPRA).
Tax & Accounting services
Running a business is not easy, especially when you’re focused on making sales, retaining and attracting new clients.
It may be worthwhile outsourcing the time you would have spent paying and calculating employees’ salaries to payroll specialists. Professional payroll administration can help increase proficiency and provide much-needed risk management measures for your business. When looking for a company to take charge of your payroll, ensure they use the latest, most innovative technology to ensure accuracy and adherence to legal and compliance regulations. You’ll also have peace of mind knowing that you have a dedicated team of experts looking after your staff’s compensation.
All registered businesses in South Africa are obligated to pay company tax, and depending on the size and structure of your business, it can become complicated. If you’re an entrepreneur investing in a start-up, you may not be familiar with your tax responsibilities.
Whether this is the case or not, it’s wise to outsource this job to company tax specialists.
Failure to pay company tax can have financial and legal repercussions. Your restaurant obviously has employees; therefore, you’re liable to pay the following taxes to the South African Revenue Service (SARS) as the owner.
- Pay-as-you-earn (PAYE) for employees
- Unemployment Insurance Fund (UIF)
- Skills Development Levy (SDL)
You may be thinking, what happens if I default on my annual tax return with the CIPC? In that case, the CIPC will assume that the company is inactive and begin a deregistration process which, when completed, will legally pronounce your business no longer exists, making any trading illegal.
This is a lot of information to take in; relax and take a deep breath. Fio’s tax & accounting experts will register your company at CIPC and file your annual return. We can also make any changes your company may require, for example, changes in directors of the business, the business’s name and physical address should you decide to relocate.
BONUS TIP: The importance of budgeting
What about budgeting and cash flow?
Sourcing capital to get your business off the ground isn’t an easy task, but maintaining it will be next to impossible without the proper financial support structures in place.
Having a proper budget set up is one of the most vital financial steps to manage your business’s finances. If you are always up to date, sufficient cash flow should be available.
Have you compiled a business budget before? No? It’s best to speak to an independent financial adviser (IFA). They will first assist you in understanding your financial situation and mapping out the necessary income and expenditure needed to keep your company running smoothly.
It’s vital that you can make informed financial decisions within the South African Revenue Services regulations’ recognised framework. For more information, please book a consultation.