Part 3 of 7 · Entry mechanics
Setting Up a Business in South Africa: Legal Forms and Registration
Incorporation itself is fast and cheap. The critical path runs through bank FICA verification, work visas and sector licences — and the difference between a 30-day and a 90-day setup is almost always sequencing.
Section 4Choosing the vehicle
| Form | Best for | Key features |
|---|---|---|
| Private company (Pty) Ltd | Almost everyone — the default | Separate legal personality; one or more directors; no minimum capital; 100% foreign shareholding permitted; audit only above size and public-interest thresholds |
| External company (branch) | Foreign companies operating directly | Registers the foreign entity with CIPC; no separate SA legal person; profits taxed at 27% with no dividends tax on remittances, but unlimited parent exposure |
| Personal liability company (Inc.) | Professional practices | Directors jointly liable for contractual debts; used by attorneys, accountants and similar |
| Sole proprietor / partnership | Micro and informal scale | No registration cost or separation; income taxed in the owner’s hands; rarely right once employees or investors arrive |
| Trusts and JV structures | Asset holding; B-BBEE and consortium deals | Common in property and empowerment structures; specialist advice essential |
Section 4.1The registration mechanics
Incorporation runs through the Companies and Intellectual Property Commission (CIPC) online, typically in a few days, at a cost of a few hundred rand including name reservation. Income-tax registration with SARS happens automatically on incorporation.
The practical long poles are elsewhere: bank account opening — FICA verification is exacting for foreign shareholders and can run to weeks, so prepare certified IDs, proof of address and ownership structure diagrams in advance — payroll registrations (PAYE, UIF, SDL), the Compensation Fund (COIDA), VAT registration where turnover requires or merits it, and any sector licence.
A company with foreign directors should also note that at least one public officer resident in South Africa must be appointed for tax purposes, and that registered-address and beneficial-ownership filings with CIPC are now enforced — a legacy of the FATF remediation.
FICA verification for foreign shareholders, work visas and sector licences are the usual critical path. Bar positions are indicative planning ranges, not guarantees.
