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Types of Companies in South Africa

Types of Companies in South Africa

Investors who decide to open a business can choose between several types of companies in South Africa. The choice depends on the number of founders, the future plans for expansion and, in some cases, the available budget and the industry in which the business will activate.

Our lawyers in South Africa outline the main business forms in this article, along with their advantages for investors and the most important tax and compliance requirements.

If you wish to know more about company formation in South Africa, or if you require ongoing assistance during the registration of your business, do not hesitate to reach out to our experienced local team.

Types of companies in South Africa: overview

In broad terms, there are three essential types of business forms that may be incorporated by local and foreign investors. These are the sole proprietorship, the partnership (which is sub-categorized into general, anonymous, or commanditarian), and the corporations (private or public companies).

For the purpose of describing the types of companies in South Africa, we will be referring to the business forms with a legal entity, namely the private company which is a business form that offers several advantages.  

The main traits of the private company are the following:

  • It is a separate business form from its founder(s); it can enter into agreements in its own name, it can sue and be sued;
  • The company needs to be registered with the Companies and Intellectual Property Commission and the South African Revenue Service;
  • Upon registration, the company receives a company number and a tax number;
  • The private company is incorporated by at least 1 shareholder and 1 director (they can be the same person);
  • The is no mandatory minimum capital requirement, however, there are requirements to pay the registration costs and the name reservation cost.

If you are not interested in opening a corporation but wish to know more about the other types of companies in South Africa, such as one of the types of partnerships, you can ask our local agents for personalized information.

Understanding the particularities of each of the aforementioned business forms is easier with our help, and it is also an essential step before investors start the actual incorporation process. Our South African lawyers can give you more details upon request. We can also assist you with information about immigration to South Africa.

Company taxation in South Africa

Along with observing the registration and licensing requirements for the chosen business form, entrepreneurs are also asked to comply with the tax reporting, filing, and payment principles and deadlines. Once you choose to incorporate one of the types of companies in South Africa, tax liability will ensue.

Below, our tax lawyers in South Africa list the main taxes for companies:

  • The corporate income tax rate with a value of 27%;
  • The standard value-added tax of 15% with certain transactions being zero-rated;
  • 1% of gross income social security contributions by the employer;
  • A 1% payroll levy (with an exemption for companies with annual payroll costs below ZAR 500,000);
  • Donation (gift) tax in the case of certain resident companies.

For information about the taxation of the sole trader and the partnership, please reach out to our team.

We assist investors who wish to open one of the types of companies in South Africa throughout all the relevant incorporation steps. Moreover, we can also assist with licensing matters, such as the submissions made to different authorities in order to obtain the proper business licenses according to industry or object of activity.

Contact our law firm in South Africa for assistance during company formation, as well as pre-incorporation counsel on the types of companies in South Africa.