Oct 2021 2nd edition

Get your business off the ground

Starting your own business is exciting. It means fulfilling a personal dream and creating employment for others. But startup entrepreneurs need to follow certain rules and regulations to avoid clashes with the law or losing their money.

Vuk’uzenzele spoke to Mpumelelo Zikalala, an attorney at Zikalala Attorneys, about some legal considerations before establishing a business. Zikalala says there are three key areas to understand.

1. Regulatory role

You need to register your business with the Companies and Intellectual Property Commission (CIPC), a government agency responsible for the registration of any company in the country. Entrepreneurs can seek counsel from the agency on what compliance measures they need to take.

“There is no need to register a (PTY) LTD company if you will be selling chicken dust in a corner of your neighbourhood, because you simply buy meat, braai it and sell directly to the customer.

“But if you have grown your business and want to trade with other businesses or offer your service to big clients, you may need to register as a (PTY) LTD. Other businesses are likely to require that your enterprise be properly registered," he explains.

2. Compliance role

Some businesses require a licence or permit before trading can start. Some of these permits need to be renewed frequently.

“For example, a liquor business requires you to have a licence. Find out about the type of licence you need, the institution that issues it and the costs of getting it,” says Zikalala.

3. Relationship/stakeholder management

There are internal and external relations an entrepreneur needs to consider. If there are business partners, any contracts signed need to be clear on who does what and what happens if they do not meet their obligations.

Externally, customers need to know their obligation and that of the entrepreneur.

“Be clear about the service or product you offer and how much they need to pay you. The same applies to suppliers.

Understand what the contractual agreements are, the costs involved and penalties for non-delivery."

4. Seek legal assistance

Zikalala also urges emerging entrepreneurs to seek legal advice as they embark on their business journeys.

He says there are government and non-governmental entities such as the CIPC and the Small Enterprise Development Agency that can assist with starting a business.

“Entrepreneurs can also approach a private attorney for help,” he says.

For more information call the Companies and Intellectual Property Commission on 086 100 2472or the Small Enterprise Development Agency on 0860 663 7867

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