Are you wondering how to start a business but have no idea where to start? Are you ready to make a massive change and take control of your destiny? Starting your own business is an exciting adventure, but we know it can be scary and complicated too!
In this blog post, we will share with you some tips on how to start a small business at home. Identify successful business ideas, as well as the necessary steps you need to take to register your company. We have also included important information that you need to consider before you start trading and hiring employees.
How to Start A Business: Where To Begin
Starting a company can be an exciting and rewarding experience. It takes hard work, determination, and dedication to make it successful. But where do you begin? It all starts with a business idea, but what is a business idea? And how can you identify a business idea that will boost your chances of success?
What is a Business Idea?
A business idea is the driving force of any successful enterprise, and understanding how to come up with small business ideas and how to turn them into reality is essential.
It’s important to note that great business ideas don’t just “happen”. They are typically the product of research and understanding customer needs. Identifying potential opportunities and resources, evaluating risks, and then creating a business plan that you can put into action.
By taking these steps to develop a solid business strategy, including plans for marketing, operations, and finance, you would have done the essential groundwork needed to move your concept through its inception stage quickly. All of this will lead you closer towards building a successful and profitable enterprise!
How to identify a business idea?
Start by exploring your own interests and passions, and consider if there is an existing need or problem that could be satisfied with your unique offering. Consider what unique service or skill set you offer, as this may help define the company’s focus or provide specific details to the idea. Reflect on previous experiences and learn from past successes and failures; this may lead to insight into how you can create something new.
Also, try to identify potential roadblocks and plan for potential solutions, as this will prepare you for future contingencies. Finally, take risks and research ideas fully before committing to any venture, but don’t be afraid to make mistakes along the way. Mistakes provide valuable lessons for an entrepreneur and will not necessarily define your success.
Now that you have your business idea, let’s explore how to start a business and register it with CIPC so you can start trading!
How To Start A Business in 5 Easy Steps
Step 1: Register Your Business with CIPC
If you’re starting a business in South Africa, registration with the Companies and Intellectual Property Commission (CIPC) is required. CIPC can assist you with a multitude of services, including and not limited to the following:
- Enterprise registrations
- Name reservations
- Annual tax return filing
- Intellectual property protection
Choose your business structure
You need to decide on the structure of your enterprise carefully. When considering how to start a business, you might consider a sole proprietorship, partnership or Pty Ltd. This is where having legal insight can be quite beneficial. For the best possible outcome, seek guidance from an accountant, tax consultant or lawyer on which structure would work most effectively with your company’s objectives.
Here is a quick guide to your options:
- Sole Proprietorship: A straightforward structure for single traders and does not require registration with the Companies and Intellectual Property Commission (CIPC). However, you must register the enterprise with the South African Revenue Service (SARS) to allow the filing of tax returns.
Be mindful that this structure is directly tied to you personally, and if your company runs into financial trouble with creditors, they could claim against your personal assets to pay back your debt.
- Partnerships: An ideal business structure for groups of two to twenty individuals wishing to come together and form an enterprise. Although partnerships do not require registration with CIPC, they must be registered with SARS in order to pay taxes efficiently.
- A Pty Ltd: A legal entity completely separate from the owner, which makes it an incredibly popular option. The law sees a Pty Ltd almost as if it’s own person, meaning when things get tough, it protects your personal assets.
Ultimately, this gives you peace of mind that no matter what happens to your venture, you won’t have to pay for any liabilities out of your own pocket.
***Please note: This is not legal advice. We recommend discussing this in-depth with a lawyer, accountant or tax practitioner to decide which structure suits your unique needs and how each option interacts with legislation in SA.***
Pick a company name
When looking into how to start a business, choosing the right company name can be tricky, but it’s essential to get it right. An excellent place to start is by considering your target audience, mission and values. Your chosen name should reflect what your company does and who you’re trying to reach. It should be engaging for your customers but not too cliche or hard to say and, above all, easy to remember!
In addition, researching similar companies in the same industry can provide some creative business name ideas and help you ensure originality. You will need to have five options when reserving a name with CIPC, and they have a tool to help you see if the names you have in mind are already registered. Adding full stops, hyphens, and other accepted characters can help if you are set on a specific name, but it is already registered.
Once you have completed your application, you will pay any necessary fees online and then wait until CIPC completes your registration. Typically this takes 1-4 business days.
What are the costs involved?
- Enterprise registration: R125-R175
- Name Reservation fee: R50-R100
- Bank Account: Depends on which bank you choose, your company structure and more.
You can find step-by-step guides to all of CIPC’s services here: CIPC Step-by-step guides
Step 2: Register for Tax with SARS
The great news is that registering your company with CIPC will automatically register you with SARS. However, if you decide not to sign up for CIPC registration, it’s imperative that you go ahead and register with SARS.
You should ideally do this after consulting a professional tax practitioner who can advise on the right course of action. Many practitioners will provide basic information for free or request a fee for their services. Make sure to ask them about their fee structure before using their services, and don’t be afraid to compare quotes!
Step 3: Use CIPC to Help You Protect Your Intellectual Property
Your innovative ideas (intellectual property) require safeguarding to stop any potential replicas. Your firm’s intellectual property consists of trademarks, patents, designs and copyright, all overseen by CIPC in South Africa. This will keep your creations safe from unauthorised use or infringement and is vital for the success of your venture.
Step 4: Learn the Basic and Legal Requirements for Employees
If you intend to have full-time staff members, you need to ensure you are familiar with the applicable legislation. It is critical that you maintain compliance with the following:
- Basic Conditions of Employment Act [No. 75 of 1997]: Outlines fair labour practices for all employees who work more than 24 hours per month in South Africa. It is essential to align your employment contracts with the BCEA, as nothing in your employment contract may conflict with the law.
Beware, there are many misconceptions and myths that are commonplace in offices across SA, so always check the facts before including certain conditions in your employment contracts to avoid complications with the Commission for Conciliation, Mediation and Arbitration (CCMA).
- Unemployment Insurance Fund (UIF): You and your employees will need to make monthly contributions to UIF. UIF will help your employees when they become severely ill for an extended period of time, are on maternity leave, or if they are retrenched from your company etc.
- Pay As You Earn (PAYE): PAYE refers to income tax that your employees will need to pay to SARS if they earn over R40 000 every year.
- Compensation for Occupational Injuries and Diseases Act 130 of 1993: Legislation that governs the health and safety right of your employees when they are at work.
- Skills Development Levy (SDL): If your payroll exceeds R500 000 per year, you will need to pay towards the SDL, which encourages learning and development in South Africa.
Step 5: Join the Over The Rainbow Entrepreneurship Program
Does all of this sound overwhelming and daunting? Don’t worry! Over The Rainbow’s Entrepreneurship Training is here to help! Our course is designed to provide you and other entrepreneurs with the knowledge, support, and resources you need to succeed! We can give you the right information, support and tools on how to start a business and make your dreams a reality.
Our incredible mentors, Dawn Nathan Jones and Lesley Waterkeyn, support you on your business journey and help you grow a successful company from scratch. Through our mentorship, we will share easy-to-follow steps allowing learners to gain an understanding of what it takes to create a thriving and profitable venture. Let us help you navigate your incredible journey towards turning your passion into profits!
Now that you know everything you need to know about how to start a small business in South Africa. We wish you all the best in your future venture! Remember, there will always be obstacles and bumps along the way. Stay focused and consistent with your goals. Eventually, you’ll be able to get through them. Believe in yourself, and never give up on your dreams!
Still unsure about how to start a business and need more guidance? Enrol in our Entrepreneurship Training today!
Good luck from everyone at Over The Rainbow! We look forward to hearing from you!