ONE of the most time-consuming aspects of running a business is complying with regulations, including tax, municipal by-laws, labour laws and many others. But if your business is not compliant on all fronts, you won’t be able to tender for contracts and you could be fined or jailed for non-compliance.
Take heart: it is not all bad news. Staying compliant is good for your business – it strengthens your systems and reputation in your sector.
How you comply depends a lot on the legal form your business takes – in other words, whether you are a sole proprietor, a partnership, a company, a trading trust or a co-operative.
For instance, as a private company, you need to pay an annual return (a few hundred rand) to the CIPC to continue making use of your business’s registered name. But here are some initial compliance issues for you to think about.
Once you have set up your business, you need to register for tax.
The South African Revenue Service (Sars) works efficiently to collect taxes from businesses and individuals; you can quickly be caught out if you don’t stay on top of the paperwork.
So, if you are a sole proprietor or in a partnership, register with Sars as a provisional taxpayer. If you employ staff, you must deduct tax from those who earn above the tax threshold – and then pay it to Sars after you registered as an employer.
Remember that as an employee of your own company, both you and the company must be assessed for tax.
All employers must also contribute to the Unemployment Insurance Fund (UIF).
The first step is to register with the Department of Labour as an employer. And if your salary bill is more than R250 000 per month, you’ll also have to pay a 1% skills development levy (but you can get some of this back as a rebate when sending staff on accredited training courses).
If your turnover is above R1 million per year, you must register with Sars as a Value-Added Tax (VAT) vendor and make regular reports to them on what VAT you pay and earn.
Managing your employees must also be done by the book. The Basic Conditions of Employment Act governs working hours, overtime, sick leave, maternity leave, annual leave, family responsibility leave and termination of employment, among other things – so be familiar with it.
When taking on a new employee, make sure you record certain particulars in writing, including names and addresses, job description, date of employment and rate of pay. Keep all records of employment, showing how long staff members have worked for you, and what they have been paid each week or month.
There are minimum wages in place. Industrial bargaining councils may also affect you, so check these out. The Department of Labour’s website (www.labour.gov.za) is a great source of guidance and information.
Occupational safety is vital, and every employer must have a safe and risk-free environment for staff.
Each industry sector also has its own set of health and safety regulations.
The law has things to say about on-site staff trained in first-aid, a first-aid box, fire exits and fire-fighting equipment.
Your local municipality must also control some aspects of business operations, especially regarding hygiene of premises, noise, traffic disruption, etc.
Talk to your local council before you enter into any long-term rentals or renovations, and make sure you’re above board.
These are just a few of the main legal matters to consider when starting up.
Do your research early and save yourself money and heartache down the line.
- Paul Crankshaw is an entrepreneur and mentor who specialises in print media. He is director of Cobweb Information SA (www.cobwebinfo.co.za).