Benefits of registering a business in South Africa

Benefits of registering a business in South Africa

Some people prefer operating in the informal sector and not register their businesses. This has its advantages but also huge disadvantages, there are multiple benefits to registering your business in South Africa. These are the benefits of registering a business in South Africa.

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1. Having a business account

Registering a business allows you to have a business account. This is where all the business finances go. It makes it much easier to manage the finances when they are not mixed up with your personal finances, it also makes you that much more responsible. Another advantage is that you get to give your clients your business account name for deposits, which makes you seem more professional.

2. Establishes trust with your clients

People tend to trust registered companies more than unregistered ones; it shows that your business is not a scam or fly-by-night. More people will easily trust you; some people are so sceptical to a point that they will ask for your business name just to check if it’s registered.

3. Tax benefits

You will be taxed at a personal income tax rate if you, you might end up paying 38% in tax. Registering the business shields you from the responsibility of paying taxes until your business is really big. At which point you will only pay 27% in tax; you can pay 0% in tax if your business makes less than R335 000 annually. There are also a lot of tax benefits, you start paying the 28% corporate tax rate when you make more than R1 million per year.

4. Legal liability protection

You will not be held liable for the liabilities of the business if it’s registered. However, if your business is not registered, you are liable for all its debts and other liabilities. This means that you risk losing your personal assets like your car, house and other things. It only takes one customer to sue your business and your personal assets are automatically at risk.

5. Getting funding

It is much easier to raise funding when you have a registered business. Investors will not take you seriously if you are running an unregistered business, it’s also way harder to regulate a business that is not registered.

6. Applying for tenders

You can’t apply for government tenders if your business is not registered, this is a reality that faces most small business owners in rural areas. It’s also much harder to get other tenders like cleaning and gardening tenders from other government and private institutions.

7. Protecting your business identity

Registering the business means that your corporate identity is protected, no one will steal your business name. Other people can steal your business name, register it then sue you for using it. It’s best that you register your business and trademark your logo.

Conclusion

This were some of the benefits of registering a business in South Africa. Registering a business has more advantages than disadvantages and it’s something that you should absolutely do. Do you have any thoughts or questions? Comment below.

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