Company registration isn’t the only thing you need. Avoid these rookie company documentation mistakes.
So, you’ve taken the leap and formally registering your first company and you’re ready to take on the world of contracts, tenders and bigger opportunities?
According to Ilana Steyn, the MD of Company Partners (a business that assists entrepreneurs with fast-tracked compliance services), newly-registered companies often skip-over vital tick-boxes. The reason being: common misconception on company documentation.
Here are the 4 rookie company documentation mistakes you should avoid:
1. Don’t assume you can’t get a B-BBEE (BEE) Affidavit – just because your company does not have 100% black ownership
According to new legislation, you don’t need a formal B-BBEE (formerly known as BEE) Certificate if your turnover is less than R10mil a year. Your business is considered an Exempted Micro Enterprise (EME). You need a B-BBEE Affidavit.
This simply means you need a formal letter, called an affidavit, to formally state how your company’s ownership looks like. There are three options: 100% black ownership, more than 50% black ownership or less than 50% black ownership.
Once this affidavit is stamped by a Commissioner of Oath, it serves as your legal B-BBEE certificate.
You can request a free B-BBEE Affidavit template HERE; simply talk to one of Company Partners’s B-BBEE experts.
If you have 100% Black ownership your company will receive a B-BBEE status Level 1; more than 50% Black ownership earns you a Level 2 and less than 50% gives you a Level 4.
When your company hits the 10mil. mark the process becomes much more complex. Then you’ll need to apply for a formal B-BBEE certificate.
Click HERE if you’d like an expert to assist you with a formal B-BBEE certificate.
2. Don’t ignore PAYE, UIF and COID
According to South African law, all registered companies should comply with annual, bi-annual and monthly PAYE (pay-as-you-earn tax), UIF (Unemployment Insurance Fund) and SDL (Skills Development Levy) requirements.
If you employ someone you should be registered as an employer at both SARS (for PAYE and SDL) and the Department of Labour (for UIF).
There are only a few exemptions; here they are:
- If an employee works less than 24 hours a month, UIF is not required.
- When your yearly expense on salaries is less than R500 000 (that’s about R42 000 a month), SDL is not required.
If you need assistance with your business’s PAYE, COID or UIF, simply click HERE.
3. Don’t assume CIPC registration protects your business name
Simply registering your company name at CIPC does do protect it.
The only way to protect your brand name efficiently and that’s doing a Trade Mark registration at the CIPC. This gives you the legal power to use South Africa’s Trade Marks Act – if anyone ever tries to steal or copy your trademark.
It’s possible to defend your brand name without the additional Trade Mark registration. However, that would leave you fending for your brand using common law – which is really challenging in a court of law.
Trade Mark registration also allows you to add that famous small ‘TM’ to the end of your brand name. This helps to ward off the wolves.
Click HERE if you’d like to talk to our experts about Trade Mark registration.
4. Don’t assume Directors and Shareholders are the same
A director can be a shareholder, but it’s not an automatic association; it’s two separate titles.
Shareholders are the legal owners of company shares. Directors are simply those individuals appointed to head the company management.
The original signed shareholder certificate serves as the shareholder’s the proof of ownership.
Here it’s important not to skimp on the formalities. It’s your company’s responsibility to issue share certificates to every shareholder.
The CIPC does not issue the share certificates upon your company’s initial registration. You only stipulate how many shares will be available for distribution within your company during the registration process.
It’s also a good idea to create a shareholder’s agreement. You should rather have an agreement that’s specifically set up by a lawyer when there’s more than one shareholder.
Our experts can assist you with formal Shareholder agreements, just click HERE for a FREE business consultation.