What You Need to Know to Successfully Run a Business in South Africa

Running a business is exciting, but it also comes with responsibilities. From compliance with government regulations to managing your finances, there are several requirements that every business owner must meet to stay legal and sustainable. Here’s a breakdown of the key things you need to know.

1. CIPC Compliance

 If your business is registered as a company, the Companies and Intellectual Property Commission (CIPC) requires you to stay compliant by submitting:

Annual Returns

• Every registered company must file annual returns with CIPC.

• This confirms that your company is still active and ensures your business is in “good standing.”

• If you don’t submit these returns, your company can eventually be deregistered.

Beneficial Ownership Declarations

• This is a newer requirement introduced to fight financial crimes like money laundering.

• A “beneficial owner” is any individual who ultimately owns or controls a company, either directly or indirectly.

• Companies must declare their beneficial owners annually to CIPC.

• This ensures transparency and protects both your business and the economy from financial abuse.

2. Tax Requirements for Businesses

Every business has tax obligations with SARS (South African Revenue Service). These include:

Income Tax

• All companies must register for income tax.

• Companies pay tax on their profits at a flat rate of 27%.

• Returns are submitted annually.

Provisional Tax

• Businesses don’t just pay tax once a year – SARS requires them to pay tax in advance through provisional tax.

• Two main payments: August and February.

• Third optional payment: September (if needed to avoid penalties).

PAYE (Pay As You Earn)

• If you employ staff, you must register for PAYE.

• This means you deduct employees’ tax from their salaries and pay it to SARS monthly.

• You must also register for UIF (Unemployment Insurance Fund) and SDL (Skills Development Levy, if your payroll is above R500,000 per year).

VAT (Value-Added Tax)

• VAT is a tax charged at 15% on goods and services.

• You must register for VAT if your turnover is R1 million or more in any 12-month period.

• Voluntary registration is possible if your turnover is above R50,000 per year.

• Once registered, you’ll need to file VAT returns every two months (sometimes monthly if SARS requires it).

• How it works:

  • You charge VAT on your sales (output VAT).

  • You claim VAT on your business expenses (input VAT).

  • You pay the difference to SARS.

3. The Importance of Bookkeeping and Financials

Many business owners underestimate the importance of proper bookkeeping, but it’s the backbone of a successful business.

• Up-to-date records help you track income and expenses, manage cash flow, and make better decisions.

• Financial statements (such as Income Statement and Balance Sheet) give a clear picture of your company’s financial health.

• They are often required by banks if you’re applying for loans, and by SARS during audits.

• Good bookkeeping also makes compliance (tax returns, VAT, PAYE, etc.) so much easier and less stressful.

4. Must-Know Financial Terms for Business Owners

Here are some key financial terms every business owner should understand:

• Turnover – The total income your business earns before expenses.

• Profit – What’s left after expenses are deducted from turnover.

• Cash Flow – The movement of money in and out of your business. Positive cash flow = your business can cover expenses.

• Assets – What your business owns (equipment, vehicles, bank balance).

• Liabilities – What your business owes (loans, creditors).

• Equity – The value of the business that belongs to the owner(s).

• Gross Profit – Sales minus the direct costs of producing goods/services.

• Net Profit – What’s left after all costs (including tax and salaries).

• Depreciation – The reduction in value of assets over time (like vehicles or equipment).

Final Thoughts

Running a business in South Africa means keeping on top of compliance, taxes, and finances. The good news is—you don’t have to do it alone. With the right support and systems in place, you can focus on growing your business while staying compliant.

Stay registered with CIPC, keep SARS happy, maintain your bookkeeping, and learn the financial basics. This way, your business will not only survive but thrive!

Emily Gomes (ICB Senior Bookkeeper)

Senior Bookkeeper/Marketing Manager