Frequently asked Questions
Must I register a company to get an import export license?
No, you can get an import export license in your individual capacity. However, if you plan to import or export as a business venture it is better to register a company first. If you don’t your name will have to appear on all your import and export invoices.
What are the benefits of registering a company?
Registering a company protects your brand, and it protects you from certain financial and legal implications. Companies also get better tax rates..
You can read more about these benefits and more by reading this article.
What types of companies can I have?
Most small companies are registered as a Property Limited or Pty Ltd. You can however register as a Non-Profit Company (NPO), a Co-operative Company (Co-op) or an Incorporated Company. Alternatively you can trade as a Business Trust.
You can learn about the differences between these registrations by reading this article.
Does registering a company mean I have to register for VAT?
No, companies are only required to register as a VAT vendor when their annual turnover exceeds R1 million.
I you want to register for VAT, you may do so if you can prove an annual turnover of R50,000.
You can read more about VAT registration in this article.
Can I register a company in South Africa if I don’t live there?
Yes. The company must have at least one director who is based in South Africa. Proof of a South African address is required for registration.
Must a company have multiple directors, or can it just be me?
A Pty Ltd requires a minimum of one director and one shareholder. You can be both.
What if my business idea doesn’t work out? Will I always have to pay taxes on behalf of the company?
There are no minimum income requirements to keep the company registered. If you want to stop trading you may keep the business registration as a dormant company, which means no taxes are due as long as there is no income, or de-register it. You are therefore not “locked in” to running a company once you have registered one.
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The benefits of registering your company
Company registration protects your brand.
If a company is legally registered, others may not claim your business name as their own. If you have an unregistered enterprise someone else can register your name and legally force you to change yours, which means you risk losing the brand creditably you’ve built.
You and your registered company are separate financial and legal entities.
Even if you give your import export venture a trading name, until it is registered it remains, for all legal purposes, you. A registered business is a separate financial entity. This means that your personal assets and funds cannot be seized to repay debts owed by your business – unless you have personally guaranteed them.
Company registration also means you have separate liability from your business. If your company should therefore be involved in a lawsuit, your personal assets cannot be seized.
Registered companies have better access to financing.
Banks do not give business loans to unregistered companies. This is more a matter of convention than a legal one, but registered businesses get taken seriously and unregistered businesses don’t. Similarly, investors will only put money towards a venture they feel has potential. Trading under your own name may put them off investing in your venture.
Registered companies get better tax rates.
If your import export business is an additional source of income, mixing its finances with your primary earnings may push you into a higher tax bracket, even if the venture’s income is paid into in a separate bank account in your name. A registered business may have its own banking profile and incurs tax separately at a flat (non-bracketed) rate of 28% of taxable income.
Many company running expenses are tax deductible, the taxable income is your income after subtracting deductibles.
Registered companies can change hands.
If, down the line, you decide to sell you import export business, hand it over to a successor, or put it in your will, it would have to be separated from you in a legal and financial sense for someone else to take over.
As an example, an import export license that belongs to an individual (sole proprietor) is linked to their ID number and cannot be transferred. An import export license that belongs to a business is linked to the company’s registration number. Although Customs would require an update of the director details, the import export license can be handed over with the company.