1. Home
  2. Business
  3. What is a Business?

What is a Business?

What is a Business
Business on iBusiness, image: pxhere.com

A business is an activity that includes producing or buying and selling products and making money through the process. The products can be goods and services, from which one can make a profit from.  A business transaction doesn’t have to form a registered entity such as a corporation, partnership, or any registered company.

A business, according to CIPC (Companies and Intellectual Properties Commission) doesn’t have to be registered to qualify as a business and again, not every business needs to be registered, however, each business, registered or not, qualifies to pay tax when it has received a certain threshold.

A business name represents the brand and doesn’t separate the business entity from the owner – the owner will be held liable for debts incurred by the business and should take full responsibility and if the business acquires debts, creditors have the right to go after the owner’s personal possessions such as their house, car, etc.

The sole proprietor (A person who owns a business) is taxed personally on all income from the business.

The most colloquial use of the word or the term “Business” is to refer to as a company. But a company and a business need to be separated. A company is a legal entity. Company Structures are more complicated, they come in different forms which vary by jurisdiction, but there are some common entities around the world.

Business Entities/Business Types

In South Africa, all businesses are governed by the Companies Act No 71 of 2008 and administered by CIPC (Companies and Intellectual Properties Commission). The new Companies Act which was first made public in 2009 and has been effective since May of 2011, made a whole lot of changes. It aims to modernize to international practice.

Close Corporations (CCs), which was a type of business entity can no longer be created, but exist CCs will continue to operate. If you are a foreigner and willing to invest in SA companies, you will need to apply for a business permit.

Under the Companies Acts, there are two types of companies namely:

Non-Profit Companies

Non-profit companies were in the past Section 21 Companies, now, they are Section 1 Companies to the Act. These types of companies are for public benefit or for cultural, social, communal activities. The income and property of a non-profit company can only be applied to the company’s main project and not for personal gain and use.

Profit Companies

A company provides for limited liability and corporate tax rates depending on the type or the form of the company.

Sole proprietorship

Also known as a sole trader, this type of company is owned by one person. The owner operates the person alone, if the company grows – She/he can hire employees. This type of company has unlimited liability for all obligations.

Every single piece of infrastructure is owned by the sole proprietor.

Public (“Ltd”) or private (“Pty Ltd”) company

Public Companies have no limit to the number of shareholders, whereas the private company needs to have at least one director and shareholder and membership are restricted to 50.

Personal Liability Company (“Inc”)

This is a type of a company that ends with the word “Incorporated”, and meets the criteria of a private company.

Partnership

A partnership is a business company entity owned by two or more people. Each Partner has unlimited liability for the debt incurred by the business.

Business trust

External company

This type of company operates non-profit activities in South Africa

Registering a Business with CIPC

  • I did mention it before that it is not necessary for all businesses to register with CIPC, there are a lot of informal businesses in South Africa as well as sole proprietors, this type of business when not need to register as there may not be benefits.
  • You can register your business with CIPC if your business wishes to make transactions with the government and a formal Sector. For such businesses, there will be tax benefits because of a registered business as a lower tax rate.
  • NB: You will still be required to be registered with the South African Revenue Services whether your business is registered or not and you’ll still be liable for tax should your turnover exceed the prescribed threshold.
  • CIPC offers the lowest registration prices and it’s only a few steps. Registration of a company brings with it some responsibilities like filing an annual return and paying an annual fee.

Domesticate a foreign company with CIPC

This can only be done manually. You have to register as a CIPC customer or login to your CIPC business registration portal

You will be required to Deposit R100 into the CIPC bank account.  You will need to use your customer code as a reference when you do deposit the money.

You are required to print a Cor 17.1 form

Read more…

Registering a Non-Profit Company with Members

This can only be done manually. You have to register as a CIPC customer or login to your CIPC business registration portal

You will be required to Deposit R425 into the CIPC bank account and that’s for company registration if you want to include name reservation you will have to deposit R475.  You will need to use your customer code as a reference when you do deposit the money.

Learn more about name reservations

Read more…

Registering Non-Profit Company without Members, with a Customized MoI (Memorandum of Incorporation)

This can only be done manually. You have to register as a CIPC customer or login to your CIPC business registration portal

You will be required to Deposit R425 into the CIPC bank account and that’s for company registration if you want to include name reservation you will have to deposit R475.  You will need to use your customer code as a reference when you do deposit the money.

Learn more about name reservations

Read more…

Registering a Non-Profit Company without Members, with a Standard MOI (Memorandum of Incorporation)

This can only be done manually and electronically. You have to register as a CIPC customer or login to your CIPC business registration portal

You will be required to Deposit R125 into the CIPC bank account and that’s for company registration if you want to include name reservation you will have to deposit R175.  You will need to use your customer code as a reference when you do deposit the money.

Learn more about name reservations

Read more…

Registering a Personal Liability Company

This can only be done manually. You have to register as a CIPC customer or login to your CIPC business registration portal

You will be required to Deposit R425 into the CIPC bank account and that’s for company registration if you want to include name reservation you will have to deposit R475.  You will need to use your customer code as a reference when you do deposit the money.

Learn more about name reservations

Read more…

Registering a Private Company with a Customized MOI (Memorandum of Incorporation)

A private company is very different, it may not offer shares to the public, and there are conditions in the transfer of their shares. With a private company you need at least one director and one incorporator and both can be the same person, and by a person, it includes a juristic entity.

This can only be done manually. You have to register as a CIPC customer or login to your CIPC business registration portal

You will be required to Deposit R425 into the CIPC bank account and that’s for company registration if you want to include name reservation you will have to deposit R475.  You will need to use your customer code as a reference when you do deposit the money.

Learn more about name reservations

Read more…

Registering a Private Company with a Standard MOI

A private company may not offer shares to the public, and there are conditions in the transfer of their shares. With a private company you need at least one director and one incorporator and both can be the same person, and by a person, it includes a juristic entity.

This can only be done manually. You have to register as a CIPC customer or login to your CIPC business registration portal

You will be required to Deposit R125 into the CIPC bank account and that’s for company registration if you want to include name reservation you will have to deposit R175.  You will need to use your customer code as a reference when you do deposit the money.

Learn more about name reservations

Read more…

Registering a Public Company

A public company may be listed on the JSE and must have at least three directors, public companies are audited – and annual audited financial statements have to be produced. The company must have an Audit Committee and a Social and Ethics Committee.

This can only be done manually. You have to register as a CIPC customer or login to your CIPC business registration portal

You will be required to Deposit R425 into the CIPC bank account and that’s for company registration if you want to include name reservation you will have to deposit R475.  You will need to use your customer code as a reference when you do deposit the money.

Learn more about name reservations

Read more…

Registering a State-Owned Company

This can only be done manually. You have to register as a CIPC customer or login to your CIPC business registration portal

You will be required to Deposit R425 into the CIPC bank account and that’s for company registration if you want to include name reservation you will have to deposit R475.  You will need to use your customer code as a reference when you do deposit the money.

Learn more about name reservations

Read more…

Registering an External (Foreign) Company

This can only be done manually. You have to register as a CIPC customer or login to your CIPC business registration portal

You will be required to Deposit R400 into the CIPC bank account and that’s for company registration.

Read more…

Registering a Co-operative with CIPC

A co-operative is a form of enterprise that renders products and/or services to its members and the surpluses (Profits) are divided among members. There must be at least five natural persons, two juristic persons or a combination of any five persons in order to form a primary co-operative

Registering a co-operation can only be done manually. You have to register as a CIPC customer or login to your CIPC business registration portal

You will be required to Deposit R215 into the CIPC bank account and that’s for company registration.

Read more…

Applying for a change of financial year-end

Companies in business can now change its financial year-end by filling a CoR25 form with CIPC (Companies and Intellectual Property Commission), Companies can only change a financial year-end once, and the current financial year-end must not have ended.

And as expected the financial year-end must be later than the date of filling the CoR25 form, and it may result in a financial year longer than 15 month – the form must be signed by a director, company secretary or any authorized person of the company.

When the current financial year for the company has already ended, you cannot change it.  The Company Act, 2008 of the financial year-end changes is regulated by Section 27.

Deregistration of a company

A company or close corporation can be deregistered upon request from such as a company or third party provided that the company has stopped to trade, or is no longer in business and has no assets. The vital information that CIPC requires to start the deregistration process is the statement of confirmation that the company or close corporation is no longer in business. There are no assets and Tax clearance certificate and or any SARS written confirmation that there is no tax liability outstanding.

Loading...
Get in touch

Isaac More

Blogger at iBusiness
Founder and Business Writer of iBusiness.co.za, (born June 28), a South African Business Reviewer and Blogger. A native of Ventersdorp, Mogopa Village (SA), often referred to as Zack. Let's talk iBusiness.
Isaac More
Get in touch

Latest posts by Isaac More (see all)




    Updated on October 20, 2019

    Was this iBusiness information helpful?

    Related iBusiness Talk

    Add A Comment

    Comments and ratings are subject to verification and approval. Your email will never be published or be shared with a third-party.

    2 × 3 =

    DMCA.com Protection Status
    Money

    What is a Business?

    by Isaac More time to read: 9 min
    0