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COMPLIANCE
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COMPLIANCE MAKES GOOD
BUSINESS SENSE Your SME compliance checklist
when declaring dividends. This will likely not happen in the early stages of a business, as most businesses prefer to spend surplus funds on assets and growth.
Labour law If you will be employing people, you must know what the Basic Conditions of Employment Act says about: • Working hours • Workplace conditions • Overtime • National Minimum Wage • Discipline • Leave • Health and safety regulations
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t’s a reality that high unemployment rates are driving new start-ups in South Africa. But while entrepreneurship is rewarding, there are numerous legal issues and red tape that comes with running your own business.
The term “business compliance” refers to a company obeying all the regulations and laws on how they manage the business, their staff, and the treatment toward their consumers. The concept behind compliance is to ensure that businesses act responsibly. Being compliant is not only necessary but also makes good business sense. Consumers are more likely to do business with those who follow and obey the law. Let’s take a look at a legal and regulatory checklist to consider to make sure you get compliance issues right from the start.
Get expert advice Meeting with a credible professional allows you to ask any questions you may have before getting started with your business. Questions, especially legal concerns pertaining to the industry you are focusing on, should be addressed sooner rather than later. If you iron out the big issues from the outset, you can avoid legal disputes or possibly getting into trouble with SARS in the future.
Register your business This is the first step in creating a formal business of your own. Company registration guarantees several legal benefits, one of which is asset protection, which ensures keeping your personal assets safe in case of a lawsuit against your company. If a company is legally registered, others can’t
claim your business name as their own. Another advantage of registering your business is that funding is more easily acquired. Banks will not give business loans to unregistered companies. You can register your company online with the Companies and Intellectual Property Commission (CIPC).
Open a company bank account This is a SARS requirement. A company bank account ensures separation of business and personal transactions for thorough bookkeeping.
Get your tax number You will need a business income tax number from SARS and if you expect your annual turnover to exceed R1-million or wish to claim VAT back on your expenses, you need to register for VAT. There are several taxes and returns to consider: • Annual returns: Only necessary for companies and CCs, submitted to CIPC; • VAT: Either by oneself or a professional service provider such as an accountant, by means of a VAT201 form; • PAYE, UIF & SDL: Only if workers are employees of the business, by means of an EMP201 form; • Provisional tax: Twice a year, after six months and at year-end (advance payment towards yearly income tax); • Income Tax @ 28% of taxable income (28% for companies; individuals according to tax scale): Due annually, one year after financial year-end; • Dividends: A dividend tax of 20% paid to SARS
The Occupational Health and Safety Act gives workers a range of rights in terms of health and safety in the workplace. It is important that you familiarise yourself with the guidelines around aspects of workplace safety. These include first aid, protective clothing, machinery, ladders, firefighting equipment, ventilation, lighting, temperature, noise and asbestos.
Consumer protection laws The Consumer Protection Act (CPA) was introduced to strengthen consumer rights. The CPA aims to level the playing field between consumers and companies. The Act includes: • Cooling-off periods after a consumer signs a contract with a supplier who approached them via direct marketing • Disclosure of information in plain, understandable language • Returns, refunds and repairs of products under warranty • A consumer’s right to safe, quality products and services • Small businesses with a turnover below R2-million are classified as consumers under the Act.
Protection of Personal Information (PoPI) If you are running any sort of business, you will probably be collecting personal information such as e-mail address, ID numbers and banking details from your customers and employees. The South African government has introduced privacy legislation such as the PoPI Act to protect people’s personal data. Every business is obligated to take reasonable steps to safeguard ALL personal data they have collected.
