Business Types

Sole Proprietorship

This is a type of business that is not formally incorporated. You practice for your own account and all monies earned get taxed in your hands. You are personally liable for profits and losses. Please note that if you are married in community of property this means your spouse will also be held liable for all profits and losses.

Partnership

This type of business is not formally incorporated and is brought into existence by two or more natural individuals deciding to work together. You and your partner/s practice together and share equally in all the profits (or losses) as determined by the partnership agreement. It is always a good idea to have a partnership agreement in place. This sets out rights and responsibilities between the partners. Please note this is a binding legal document that can have serious consequences further on – because of this it is advisable for you consult a chartered accountant or lawyer before drafting or signing any such document. You can find an example of one supplied by ABSA bank here.

Private Company (Pty (Ltd))

This business is formally incorporated and exists as a separate juristic entity. Private companies must be registered for tax with SARS and have more time-consuming fiduciary duties.
If you want to practice as an incorporated (private company) entity you have to register a private company with the Companies and Intellectual Property Comission (CIPC). This may take 4-8 weeks and there is a fee applicable. Please note that you can register your company yourself on the CIPC website but please bear in mind it is always a good idea to consult a Chartered Accountant before registering any new company. Just bear in mind the difference in cost between using a professional and doing it yourself (R175 to R475 to do it yourself).