What are the benefits of registering your small business?

[Dastan Kieton]

Sole proprietors are easily established by simply opening a bank account. The risk however is that personal assets are at risk if company is in financial trouble. Personal tax and income tax are combined which can be a hassle to submit. As well as no continuity in the company.

PTY registration portrays a sense of professionalism and has advantages for you as a shareholder and directors of the company:
Company is a separate legal entity to shareholders
Limited liability for shareholders
The company is continual
Capital is easy to raise

The characteristics of a private company, PTY are:
May have up to 50 shareholders
Minimum of one director
Shares are easily transferable
If turnover exceeds 5 million rand turn over annually, annual financial statements are audited

Despite common believe PTY's are not expensive to register and although there are a few legal steps to take when registering your PTY it can be hassle free with some assistance.
Steps you will need to take to comply with legal requirements when you register a PTY:
Register PTY
Once registration is complete you will receive a PTY company number and memorandum of incorporation from all directors which will be required to open a bank account for your company
You will then apply for SARS registration for company. This will include registration of Income tax, PAYE & UIF
Then you will apply for a SARS tax clearance certificate
You will register for VAT from SARS
*A company only qualifies for VAT if it has a turnover of more than 5 million annually, or 50 000- 60 000 monthly turnover, further more a company will have to have proof that they will attain these turnovers by quotes or tenders they have received.

Its not as hard as it may seem

[Dastan Kieton]

I hear rumours of state-funded financial assistance programs - wouldn't know where to find one...

Department of trade and industry launch ISP for micro- enterprises

The incubation support programme has been launched to boost small enterprises,The Department of trade and industry has launched ISP, the incubation support programme. The aim of the incubation support programme is to assist in the creation of successful enterprises to strengthen local and national economies.

This an incentive to financially assist SME development. Through ISP all small, micro and medium enterprises will be integrated into the mainstream economy. ISP establishes partnerships with macro enterprises and government to assist SME's.

The purpose of the ISP is to provide self sustaining funding to support small enterprises with the following aspects: Business development services, market access, equipment, infrastructure, ICT, Operational costs and more.

To qualify the enterprise must be a registered legal entity in South Africa in terms of the Companies Act, 1973.

“The government of South Africa also recognises and acknowledges the role that big business can play in boosting the development and growth of our small enterprises.”Minister of Trade and Industry, Dr Rob Davies

The ISP will be open for applications from 1 October 2012; a web-enabled application facility for online applications will be available from 26 October 2012.
Department of Trade and Industry. ISP application form: http://www.dti.gov.za/isp_form.pdf

[PlatinumWealth.co.za]

/boomarked for later reading, was gently googling and came accross this.

[Dave A]

I see the Incubation Support Program referred to above is "no longer open for applications". I wonder what the program stats ended up being?

[Greig Whitton]

I see the Incubation Support Program referred to above is "no longer open for applications". I wonder what the program stats ended up being?

I think it was a bit of a flop. There were a number of approved applications (e.g. Bandwidth Barn in Cape Town and Launch Lab in Stellenbosch), but most of them lacked the offtake agreements that the DTI was really looking for (and subsequently made explicit in revised versions of the program guidelines). Also, ISP wasn't aligned clearly enough to the DTI's primary agenda (i.e. industrialisation) since industry focus was never a qualification criterion. That's why the DTI repackaged it as the Strategic Partnership Programme which is limited to manufacturing and related sectors.

That all said, the Department of Small Business Development is busy reviewing an incubation funding program that they recently piloted and which is essentially an offshoot of ISP but with an emphasis on youth-owned startups.

[navitas]

Greig, do you have more info about the incubation funding program and when they are launching it? thanks