Bright future for new business owners

 

New Business owners

Bright future for new business owners

Looking back over the past 10 years one can clearly see that the South African business environment is evolving into a simplified and more efficient information technology based system.

Several of our government departments have adapted simplified policies and procedures of which the following were the most significant:

  • The implementation of the Companies Act, 71 of 2008.
  • Automation of the Companies and Intellectual Property Commission (CIPC), formerly known as the Companies and Intellectual Property Registration Office (CIPRO).
  • Improvements on the functionality of SARS E-Filling.
  • Implementation of single tax registration.

The Companies Act, 71 of 2008

The new companies act phased out the registration of new Close Corporations, which was the preferred business entity for new business owners due to the easy registration procedure and less stringent compliance requirements, but it didn’t leave the new business owner without a alternative. The regulations in the new Act were simplified to accommodate Small and Medium business enterprises (SME’s) who cannot afford to comply with some of the stringent requirements of the old Act.

Some of the key changes in the companies act:

Old Act New Act
Company formation It was compulsory to reserve a name for the companyThe following documents had to be prepared and submitted:

  • Memorandum of association
  • Articles of association

 

Complex administrative process for incorporation and registration

Name reservations are optional. A company may elect to be registered with its registration number as a nameThe following documents need to be prepared and submitted:

  • Memorandum of incorporation (MOI)

 

Simplified registration process

Audit of financial statements – Companies All companies must be audited. The following companies MUST be audited:

  • Public companies
  • State owned companies
  • Private companies, Personal liability companies and non-profit companies when it is in the public’s best interest.

 

All companies that are not audited must be independently reviewed with the exception of companies where all the shareholders are also directors (Owner managed companies).

Audit of financial statements – Close Corporations Close Corporations had no obligation to be audited but may voluntarily choose to be audited. Close Corporations that have a large public interest are obligated to have their financial statements audited.Close Corporations with a low public interest score are not obligated to have their financial statements audited but may voluntarily choose to be audited.
Registers to maintain Requirement to keep:

  • Register of members
  • Register of directors
  • Register of auditors
  • Register of interest in contracts of directors and officers
  • Register of pledges, cessions and bonds
  • Register of debenture-holders
Requirement to keep:

  • Register of directors
  • Register of auditors
  • Register of company secretaries
  • Certificated and certificated securities register

 

System automation at CIPC

The Companies Act 2008 simplified the registration requirements for new private company registration to such an extent that the Companies and Intellectual Property Commission (CIPC) developed an online tool for the registration of private companies. The CIPC went through a rough patch in  2012 when their IT systems could not keep up with the mass of transactions but it was taken care off and the CIPC’s systems are fully functional.

Further developments from the CIPC were :

  • The implementation of a fax to email service
  • Electronic submission of most company forms
  • Automation of procedure for director changes

Implementation of single tax registration

SARS announced the implementation of single registrations on 12 May 2014. This entails that taxpayers will no longer be obligated to stand in the long queue at SARS branches to get their companies registered for Income tax, PAYE and VAT. For more information on Single tax registration please refer to posts on our Facebook page or the SARS website.

Improvements on the functionality of SARS E-Filling.

SARS continually strive to be technology innovative. They have made significant improvement in their operational procedures with the implementation and development of:

  • The efilling system
  • Easyfile Employers and
  • Easyfile Dividends

The development of e-filling enables taxpayers to:

  • Register for a variety of taxes through the single registration portal
  • Register your companies employees for income tax quickly and efficiently
  • Submit your company’s tax returns
  • Submit your company’s employer reconciliations and employee tax certificates.

Apart from the significant technological improvements the cost of starting your business have also decreased significantly. With the implementation of the single registration from SARS one can only anticipate that the costs for tax registrations will also decrease considerably over the next 3 – 6 months.

We are committed to adopt the new changes first, therefore bringing you the cost savings first.

Written by: Henry Coetzee