Legal Issues

ENGINEERING ENTREPRENEURSHIP
This brief guide is intended to structure your reading and self-study. Do not treat this summary of learning points as
a comprehensive note pack – it is insufficient to support an adequate comprehension of the material for examination
purposes.
LEGAL ISSUES FOR ENTREPRENEURS

It isn’t really possible to create a comprehensive note pack on legal issues confronting South
African entrepreneurs, without writing a complete text – this guideline must therefore be viewed
as a very brief peek into the murky issues that entrepreneurs often avoid until faced with the
harsh reality of having to comply with national, regional or local regulation. It is recommended
that you use this guide to serve as a map to navigate your way around the clusters of legislation
and regulation that serve to control and guide business activity.
Two significant clusters of legislation and regulation are presented to you here: business
formation, and business operation.
Business formation
• Business form
• Business licenses
Business operation
• Tax compliance
o VAT
o Employer liability for deducting PAYE
o Income tax
• Employment legislation
o Basic conditions of employment
o UIF
o Employment equity
• Health and safety

o OHS Act
o COIDA Act
o Health and safety
Recommended reading
Here are two of numerous sites to visit to obtain more information:
www.paralegaladvice.org.za
www.labourguide.co.za
Juta publish a very comprehensive text: Legal Issues for Entrepreneurs (Gordon-Davis & Cumberlege)
purposes.
BUSINESS FORMATION
Business form
There are four ways to incorporate (create a legal identity) a business.
Sole proprietorship
This form of business is a sole trader where there is one owner. The business trades
under the owner’s name. The advantage of this form of business is that there are no
formal documents required. The major disadvantage of a sole proprietorship is that it
does not have a limited liability. This means that the owner’s assets are not separate
from the business and they can be attached should the business go bankrupt.
Partnership
A partnership is a business consisting of at least of two partners and no more than 20
partners. Each partner is expected to contribute money, skill or labour. Like a sole
proprietorship, a partnership does not have limited liability; every partner is personally
and jointly liable for any debts. No formal registration is required to form a partnership,
however, a partnership agreement is essential as a guiding and management document
between partners. One problem with a partnership is that, if one member resigns or dies,
a partnership dissolves. This means that you have to start from scratch in forming
another partnership.
Close corporation
A close corporation, more commonly referred to as a “CC” is a vehicle for legal incorporation of
a business that was created in 1984 to cater for small businesses. Tens of thousands of
proprietary (private) companies converted to becoming CC’s because of the simplified
administration and statutory compliance (for example, no audit has to be performed when a
business is a CC).
A close corporation must have a minimum of one owner or a maximum of ten owners. Members
of close corporations enjoy limited liability. Registration of a close corporation is simple and less
expensive as compared to a company. Audited statements are not required, only production of
financial statements once a year.
Company
A company is more complicated and has more administrative formalities and
legal requirements. There are three types of companies namely a public company, a
private company and a Section 21 company.
Public companies are usually large businesses such as Telkom, Edgars and Pick 'n
Pay. They are called public companies because the public or shareholders who have
bought shares in them own them. The members of a public company should not be less
purposes.
than seven and it must have at least two directors.
A private company is different from a public company in that it cannot sell shares to the
public and therefore cannot list on a stock exchange. Members of a private company are
between 1 and 50. A private company has to prepare audited financial statements, but
unlike a public company it is not required to publish them.
A Section 21 company is an association not for gain or profit. Most non-governmental

organisations (NGOs) are Section 21 companies as their purpose is mainly developmental.
The matrix below sets out the types of business ownership and indicates their legal
characteristics, control and authority, transfer of ownership, liability and capital acquisition
potential.
TYPE SOLE PROPRIETORSHIP PARTNERSHIP CLOSE CORPORATION COMPANY
Characteristics Owned and managed Partnership can be Subject to Close Subject to the Companies
by an individual owned by a minimum Corporations Act 1984 Act 1973 as amended
of 2 and maximum of
20 individuals
No legal requirements Has characteristics of both Able to better attract
for registration except partnerships and financing and investors
for ensuring that owner There are some legal companies
is registered for income requirements
tax purposes
Established by way of a
By partnering with founding statement
Type of business other person/s, there containing details of
traditionally used for are more individuals to members, proposed name,
managing shop, provide access to skills interests of members
consulting, and finance
hairdressers, taverns,
and similar small The name must end with
business Type of business used cc
for legal, medical and
financial professionals
Legal persona It does not have a legal It does not have a It is a separate entity that Has a separate legal
personality separate legal exists separately from its personality
personality members
There is no existence
of the business without Partners act in their Membership must be
the owner personal capacity in expressed as a percentage
terms of agreements and total 100%
and contracts
All assets and income
belong to the owner in Members both own and
his personal capacity Partners are each control the business
liable for tax on income
from the partnership
He is taxed in his thus reducing Usually two or more
personal capacity individual tax liability members have to sign
legal documentation
Each member makes a

contribution when he joins
and it does not have to be
equal to other contributions
Liability The owner is liable for The partners are jointly CC is a legal person so Limited to paying up their
purposes.
all debts and claims and severally liable for members are not liable in share capital in full
against the business the debts and claims their personal capacity
against the partnership
Members are held jointly

Personal possessions and severally liable in
of partners are not specific instances
protected from any
claim
Exceptions to personal
exemption: abuse of
powers, fraud, etc
Profit taxed as company

tax and not in the hands of
the member
Control and authority The owner has direct Partners have joint Fiduciary duties (in good Board of Directors and
control over all control and authority faith) formal Annual general
decisions unless otherwise Meeting to be held
stated at the beginning
of the partnership in an Each member has
All profits go to the agreement authority to bind Board of Directors are
owner corporation to transactions guided by the Articles of
Association
Can lead to differences
Free to make all of opinion and in this
decision and changes regard the business is The Annual General
less adaptable to Meeting (shareholders’
changes than a sole voting rights) has power to
Business demands amend articles
proprietorship
high level of
commitment from
owner in terms of time However, broader Voting rights correlate with
and his or her based knowledge, number of shares held in
resources experience and the company
expertise; this allows
for improved
More skills, bigger decision
management
delays, focus on corporate
governance
Capital acquisition Limited to the owner’s Very good : public can be

potential personal and financial invited to buy shares; loan
credit rating capital more easily
accessed especially if
directors and shareholders
Expansion is limited provide security for the
because of the limited loan in their personal
availability of funds capacities
Exposure to excessive
loan capital can result
in the owner having to
forfeit control, authority
and freedom.
Transfer of Owner can decide at Transfer is complicated Not influenced by the Through unlimited and free
Ownership/Lifespan any time to sell, close by the amount of withdrawal of members transfer of shares in a
and continuity down to transfer to partners involved public company
someone else
Can be transferred to
Stipulations and individual if all members Transfer of shares has no
The lifespan of the provisions of the agree impact on daily activities of
business is usually contract must be company and therefore
linked to the owner’s complied with does not affect the lifespan
capacity Can be terminated in a of the company
Court of Law
Easier to sell a
If the owner dies or partnership than to sell Transfer of shares in a
purposes.
becomes insolvent, or a sole proprietorship private company is subject

otherwise legally to approval of the Board of
incapable, this usually Directors
means the end of the Dissolved by mutual
business agreement between
partners, withdrawal or
death of one of the
partners, entry of a
new partner, individual
partner’s insolvency,
legal incapacity or
where the partnership
insolvency causes
insolvency of each to
her partners
Legal prescriptions None A written contract These are not strict and Constitution contains rules
(desirable) which must registration costs are low pertaining to share capital,
be legally enforceable accounting records,
financial reporting,
Does not need an auditor auditing, minutes, registers
Although there are no but does need and of shareholders, legal
formal requirements, accounting officer requirements for
the contract should dissolution or liquidation
contain matters of
nature and goals of the Financial statements must
business, contributions be drawn up within 9 Tax liability of company
by individual partners, months of the year-end and shareholders
profit sharing, and approved by all the
management and members
dissolution Income tax (fixed rate) on
company earnings before
tax (29%)
Secondary tax on
dividends (12.5%)
Which types of businesses need a licence?
If a business has anything to do with:
• making or selling food which can go off

• health or entertainment activities, such as a business involving sauna, massage, snooker,
billiards, slot machines, a night club, disco or showing films
• selling alcohol
then the business must have a licence.
But no licence is necessary if:
• the person makes and sells the food from their home
• the trader has a hawker's licence
BUSINESS OPERATION
purposes.
Tax compliance
VALUE-ADDED TAX (VAT)
VAT is paid by each producer or distributor who handles the goods before they reach the
consumer or end user, who is usually a member of the public. It is called value-added tax,
When a business is registered as a vendor, it means two things:
• The vendor must collect VAT from customers and pay this VAT to the Receiver.
• The vendor can claim back any VAT that is paid on anything bought for the business.
Who should register as a vendor?

It is compulsory to register as a VAT vendor if the business will exceed a turnover threshold of
R1,000,000 per year. (Enterprises that can produce evidence of turning over in excess of
R50,000 per annum are entitled to voluntarily register, athough SARS tries to dissuade them to
avoid the administration burden). This is done by completing a form and submitting the
requested supporting documentation. The Receiver of Revenue issues a VAT registration
number that is reflected on all VAT invoices, and supplied to vendors who are issuing VAT
invoices. These invoices must have the following:
• the words ‘Tax Invoice"

• the VAT registration number of the business
• the amount of VAT paid by the customer separately from the price of the goods or
services.
What records must be kept
Businesses registered for VAT must keep records, which show how much VAT they have
collected. For example these records must be kept:
• invoices from your business to customers

• invoices from your suppliers to you
• a list of debtors (that owe the business money) and creditors (that the business owes
money to)
• bank statements, deposit slips, copies of cheques
• books of account, where the owner of the business writes down how much money has
come into the business every month, and how much money has been spent and on what
Records must be kept for five years.
Paying VAT to the SARS

purposes.
The owner of the business has to pay the VAT over to the Receiver of Revenue every two
months. The Receiver will tell you how your two-month cycle will work. You will be put into
category A or category B, paying in odd months or even months. The return and payment owed
to SARS, is submitted by the 25th of the month following the two month cycle.
If your return is late, you will have to pay interest and a 10% penalty calculated on the payment
due.
Claiming input credits
The vendor can claim back any VAT that is paid on anything bought for the business. The VAT
which the vendor can claim back is called an input credit. You can only claim input credits for
the amount of VAT shown on VAT invoices that you paid.
INCOME TAX AND EMPLOYER LIABILITY
Everybody must pay tax, commencing at an annual threshold announced every March in the
Finance Minister’s budget speech. Employers deduct tax from wages and salaries on behalf of
their employees and sends the tax to the Receiver.
If you own the business, the Income Tax Act says that you must register yourself as a provisional
taxpayer, whether a sole trader, a partner, a member of a CC or a director of a Company.
Sole trader and partnerships need only register in the name of the sole trader or of the partners,
because the law does not make a distinction between the debts and assets of the people who own
the business and the debts and assets of the business. Close corporations (CC) and companies
must be registered in the name of the CC or company. (The members of a CC, and the
shareholders and the directors of a company still have to pay their own personal tax, so they
would also be individually registered as taxpayers.)
A CC and a Company will be automatically registered as a taxpayer when the Registrar of

companies informs the SARS of the registration of the company. The Receiver will not send
notification of this registration as a taxpayer directly to the registered address of the CC or
company. In other words, a sole trader must register, but a CC or Company will automatically be
registered.
Provisional tax
purposes.
Individuals who are provisional taxpayers (the sole trader, partners, members and directors) must
pay tax twice a year.
At the end of February and again at the end of August, provisional tax payers pay tax based on
an assessment of their last return of taxable income for the period.
A sole trader or partner calculates the tax to pay by taking her or his income and subtracting all
the money spent on the business. Business expenses are things like:
• money spent on buying whatever you need to run the business

• rent for the place where you run the business
• water and electricity
• transport costs
• salaries and wages for employees and casuals
• money paid for Compensation for occupational injuries and diseases
• money you pay someone to help you with the books for the business
• bank charges, if you have opened a bank account for the business
CCs and companies pay tax on the income brought into the business, after the expenses of
running the business have been deducted. One of the expenses which a CC or company can
subtract is the salaries paid to members or directors. Members of CCs and directors of companies
cannot subtract the business's expenses from their own salaries. The CC or company will subtract
these expenses when it pays CC or company tax.
Employment legislation
BASIC CONDITIONS OF EMPLOYMENT ACT
Is it necessary to provide written particulars of employment?
In terms of S29, at the commencement of employment employers must give workers a document
containing the following information:
Employer and Worker Details
• Employer’s full name

• Employer’s address
• Worker’s name
• Worker’s occupation, or a brief description of the work
purposes.
Employment Details
• Place/s of work
• Date of employment
• Working hours and days of work
Payment Details
• Salary or wage, or the rate and method of calculating wages

• Rate for overtime
• Any other cash payments
• Any payments in kind and their value
• Frequency of payment
• Any deductions
Leave Details
• Any leave to which the worker is entitled
What is the notice period in terms of termination of employment?

In terms of the Basic Conditions of Employment Act, any party to an employment contract must
give to the other notice of termination as follows:
One week, if the employee has been employed for 6 months or less;
2 weeks, if the employee has been employed for more than 6 months by not more than one year;
4 weeks, if the employee has been employed for more than 6 months
A collective agreement may shorten the 4 weeks notice period to not less than 2 weeks
Notice must be given unless it is give by an illiterate employee
What is the procedure for termination of employment?

Whilst the contact of employment makes provision for the termination of employment, it must be
understood that the services of an employee may not be terminated unless a valid and fair reason
exists and fair procedure is followed. If an employee is dismissed without a valid reason or
without a fair procedure the employee may approach the CCMA for assistance. Pro- rata leave
and severance pay might be payable.
In the event of a worker being unable to return for work due to disability the employer must
investigate the nature of the disability and ascertain whether or not it is permanent or temporary.
The employer must try to accommodate the employee as far as possible for example, amending
or adopting their duties to suit the disability. However, in the event of it not being possible for
the employer to adapt the workers duties and/or to find alternatives then such employer may
terminate the services of the worker.
purposes.
The Labour Relations Act 66 of 1995 sets out the procedures to be followed at the termination of
services in the Code for Good Practice, in Schedule 8.
Regulation of working hours

Normal hours (excluding overtime)
A worker may not be made to:
Work more than 45 hours a week, work more than nine hours per day for a five day work week
or work more than eight hours a day for a six day work week; and
Overtime
A worker may not work more than three hours off overtime per day or 10 hours per week.
Overtime must be paid at 1.5 times the employer's normal wage or an employee may agree to
receive paid time off.
Daily and weekly rest periods

A daily rest period of 12 consecutive hours (rest time usually at home, but in some situations
may be employer provided accommodation such as a compound, hostel or residence) and a
weekly rest period of 36 consecutive hours (which must include Sunday) unless otherwise
agreed, must be allowed.
What does the Act says about meal intervals?

A worker is entitled to a one-hour break for a meal after not more than five hours work. Such
interval may be reduced to 30 minutes, by agreement between the parties. If required or
permitted to work during this period, remuneration must be paid
What does the Act says about Sunday work?

Work on Sundays is voluntary and a worker can therefore not be forced to work on a Sunday.
If the employee works on a Sunday he/she shall be paid double the daily wage.
If the employee ordinarily works on a Sunday he/she shall be paid one and one-half time the
wage for every hour worked. Paid time off in return for working on a Sunday may be agreed
upon.
What does the Act says about Public holidays

The days mentioned in the Public holidays Act must be granted but the parties can agree to
further public holidays. Work on a public holiday is entirely voluntary and a worker may not be
forced to work on such public holiday.
These days can be exchanged for any other day by agreement.
If the employee does work on a public holiday he/she shall be paid double the normal day’s
wage.
What does the Act says about annual Leave

Annual leave may not be less than 21 consecutive days for full time workers or by agreement,
one day for every 17 days worked or one hour for every 17 hours worked.
purposes.
The leave must be granted not later than 6 months after the completion of the period of 12
consecutive months of employment. The leave may not be granted concurrent with any period of
sick leave, nor with a period of notice of termination of the contract of employment.
What does the Act says about sick leave?

During every sick leave cycle of 36 months an employee is entitled to an amount of paid sick
leave equal to the number of days the employee would normally work during a period of six
weeks.
During the first six months of employment, an employee is entitled to one day’s paid sick leave
for every 26 days worked.
The employer is not required to pay an employee if the employee has been absent from work for
more than two consecutive days or more on more than two occasions during an eight week
period and on the request by the employer does not produce a medical certificate stating that the
employee was unable to work for the duration of the employee’s absence on account of sickness
or injury.
What does the Act says about maternity leave?

The employee is entitled to at least four consecutive month’s maternity leave. The employer is
not obliged to pay the domestic worker for the period for which she is off work due to her
pregnancy. However the parties may agree that the domestic worker will receive part of or her
entire salary/wage for the time that she is off due to pregnancy.
What does the Act says about family responsibility leave?

Employees employed for longer than four months and for at least four days a week are entitled to
take three days paid family responsibility leave during each leave cycle when the employee's
child is born, or when the employee's child is sick or in the event of the employee's spouse or life
partner or parent, adoptive parent, grandparent, child, adopted child, grandchild or sibling.
What does the Act says about other conditions of employment?

There is no provision, which prevents any other conditions of employment being included in a
contract of employment but any provision, which sets conditions which are less favourable than
those set by the Act, should be invalid.
UIF
Unemployment insurance is paid by employers and employees on a monthly basis. Only

employees who are registered with the Unemployment Insurance Fund (UIF) and who have been
contributing to the Fund can claim. One cannot claim if you have resigned from a job. You can
only claim unemployment benefits if you have been dismissed or retrenched or if the contract
has expired.
purposes.
What kind of benefits is covered by the UIF?

The UIF covers five kinds of benefits namely:
Unemployment benefits;
Illness benefits;
Maternity benefits;
Death benefits
When can I claim illness benefits?

You can claim illness benefits if you are of for illness for a period longer than two weeks.
How does the maternity benefit work?
Maternity benefits can be claimed if you are pregnant and take maternity leave. You can take
maternity leave at any time from four weeks before the expected date of birth and you may not
work for a period of six weeks after the birth.
Death benefit
The wife/ husband or minor child of someone who has died can claim death benefits if the
deceased contributed to the fund.
Claim limit
If you have been contributing to the Fund for four years or more, then you can claim for up to
238 days. If you have been contributing for a shorter period, then you can claim 1 day for every
6 days that you worked while you were contributing to the Fund.
If you take maternity leave, you can only claim up to 121 days.
The Fund pays a percentage of the wage/salary that you earned while you were contributing to
the fund. The highest amount that can be paid is 58% of what you earned per day.
Different procedures are required to register for benefits in each of the four sections. If
everything is in order, you should start getting money from the Fund within eight weeks of
registering. The money will then be paid every four weeks, until all the benefits are used up.
SKILLS DEVELOPMENT ACT (and Skills Development Levy Act)
This legislation provides for the establishment of sectoral education and training authorities
(SETA’s) that are responsible for ensuring the education and training of workers in their
respective sectors.
Employers are required to contribute 1% of their salaries and wages monthly to their SETA, and
are entitled thereafter to claim back a portion of their contributions based on evidence of having
undertaken structured training of their workforce.
purposes.
In July 2005, as part of the solution to perceived rigidity and impedance in labour regulation,
government declared that some small businesses would be exempted from paying the Skills
Development Levy and taxes.
Initially this exemption on contribution of skills development levies applied to those with a total
remuneration payroll of R250 000 or less, but the exemption was subsequently expanded to
include those whose turnover is R500 000 per annum.
"This is a major step towards easing the levy payment responsibility on small business without
compromising on the skills development imperatives necessary for small business as emphasised
in the second National Skills Development Strategy," said Labour Minister Mr Mdladlana at the
time.
However a preliminary analysis of the implications of these expanded exemptions shows that
government might lose approximately R1 billion over a period of five years in levies.
"At the moment I'm relaxed, but there might be unintended consequences, the key thing is to
make these SMMEs to operate and create jobs," said Mr Mdladlana.
EMPLOYMENT EQUITY (Act 55 of 1998)
The purpose of the Act is to achieve equity in the workplace, by

• promoting equal opportunity and fair treatment in employment through the elimination of
unfair discrimination; and
• implementing affirmative action measures to redress the disadvantages in employment
experienced by designated groups, to ensure their equitable representation in all
occupational categories and levels in the workforce.
Chapter II (sections 5 – 11) applies to all employers and employees while Chapter III (sections
12 – 27) applies to designated employers. A designated employer means an employer who
employs 50 or more employees, or has a total annual turnover as reflected in Schedule 4 of the
Act, municipalities and organs of state. The South African National Defence Force, National
Intelligence Agency, and South African Secret Services are excluded from this Act.
According to the Act, no person may unfairly discriminate, directly or indirectly, against an
employee in any employment policy or practice, on one or more grounds including race, gender,
pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual
orientation, age, disability, religion, HIV status, conscience, belief, political opinion, culture,
language, and birth. However, affirmative action that is consistent with the intention of the Act
is not unfair discrimination. Neither is it unfair to prefer or exclude any person on the basis of an
inherent job requirement.
purposes.
Similarly, medical testing of an employee is permissible only when legislation requires testing or
when this is considered justifiable in terms of job requirements. HIV testing is prohibited unless
such testing is determined to be justifiable by the Labour Court. Psychological testing and
similar assessments are prohibited, unless the test is scientifically valid and reliable, can be
applied fairly to all employees, and is not biased against any employee or group.
Affirmative action measures are measures intended to ensure that suitably qualified employees
from designated groups have equal employment opportunity and are equitably represented in all
occupational categories and levels of the workforce. Such measures must include:
• identification and elimination of barriers with an adverse impact on designated groups;
• measures which promote diversity;
• making reasonable accommodation for people from designated groups;
• retention, development and training of designated groups (including skills development);
and
• preferential treatment and numerical goals to ensure equitable representation. This
excludes quotas.
A designated employer must conduct an analysis of employment policies, practices, procedures,

and working environment so as to identify employment barriers that adversely affect members of
designated groups. The analysis must also include the development of a workforce profile to
determine to what extent designated groups are under-represented in the workplace. Designated
employers must also prepare and implement a plan to achieve employment equity, which must:
• have objectives for each year of the plan;
• include affirmative action measures;
• have numerical goals for achieving equitable representation;
• have a timetable for each year;
• have internal monitoring and evaluation procedures, including internal dispute resolution
mechanisms; and
• identify persons, including senior managers, to monitor and implement the plan.
Health and safety
COMPENSATION FOR OCCUPATIONAL INJURIES AND DISEASES ACT
Any person who has entered into a contract of service with an employer (which includes the
State) and who has met with an occupational injury or disease can claim from the Compensation
Commissioner in terms of the COIDA Act. All accidents, which entail medical expenses and/or
absence of more than three days from work, must be reported within 7 days in the prescribed
manner. Failing to report an accident is a criminal offence and the Commissioner could impose
a penalty on the employer which could be the full amount of the claim. The employer is liable
purposes.
for the payment of compensation for the first three months of the accident (according to the
specified compensation formula). The Commissioner will refund the compensation paid to the
employee.
OCCUPATIONAL HEALTH AND SAFETY ACT
The Occupational Health and Safety Act was passed in 1993. The “Osh Act” as it is called,
requires the employer to bring about and maintain, as far as reasonably practicable, a work
environment that is safe and without risk to the health of the workers. This means that the
employer must ensure that the workplace is free of hazardous substances, such as benzene,
chlorine and micro organisms, articles, equipment, processes, etc. that may cause injury, damage
or disease. Where this is not possible, the employer must inform workers of these dangers, how
they may be prevented, and how to work safely, and provide other protective measures for a safe
workplace.
However, it is not expected of the employer to take sole responsibility for health and safety. The
Act is based on the principle that dangers in the workplace must be addressed by communication
and cooperation between the workers and the employer. The workers and the employer must
share the responsibility for health and safety in the workplace. Both parties must pro-actively
identify dangers and develop control measures to make the workplace safe. In this way, the
employer and the workers are involved in a system where health and safety representatives may
inspect the workplace regularly and then report to a health and safety committee, who in turn
may submit recommendations to the employer. To ensure that this system works, every worker
must know his or her rights and duties as contained in the Act.
Inspections are usually planned on the basis of accident statistics, the presence of hazardous
substances, such as the use of benzene in laundries, or the use of dangerous machinery in the
workplace. Unplanned inspections, on the other hand, usually arise from requests or complaints
by workers, employers, or members of the public. These complaints or requests are treated
confidentially. If an inspector finds dangerous or adverse conditions at the workplace, a
prohibition, contravention or improvement notice may be issued.

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ENGINEERING ENTREPRENEURSHIP

LEGAL ISSUES FOR ENTREPRENEURS

• Health and safety

There are four ways to incorporate (create a legal identity) a business.

than seven and it must have at least two directors.

A Section 21 company is an association not for gain or profit. Most non-governmental

TYPE SOLE PROPRIETORSHIP PARTNERSHIP CLOSE CORPORATION COMPANY

Each member makes a

Members are held jointly

Profit taxed as company

Capital acquisition Limited to the owner’s Very good : public can be

becomes insolvent, or a sole proprietorship private company is subject

Which types of businesses need a licence?

If a business has anything to do with:

• making or selling food which can go off

then the business must have a licence.

But no licence is necessary if:

VALUE-ADDED TAX (VAT)

When a business is registered as a vendor, it means two things:

Who should register as a vendor?

• the words ‘Tax Invoice"

What records must be kept

• invoices from your business to customers

Records must be kept for five years.

Paying VAT to the SARS

Claiming input credits

INCOME TAX AND EMPLOYER LIABILITY

A CC and a Company will be automatically registered as a taxpayer when the Registrar of

• money spent on buying whatever you need to run the business

BASIC CONDITIONS OF EMPLOYMENT ACT

Is it necessary to provide written particulars of employment?

Employer and Worker Details

• Employer’s full name

• Salary or wage, or the rate and method of calculating wages

• Any leave to which the worker is entitled

What is the notice period in terms of termination of employment?

What is the procedure for termination of employment?

Regulation of working hours

Daily and weekly rest periods

What does the Act says about meal intervals?

What does the Act says about Sunday work?

What does the Act says about Public holidays

What does the Act says about annual Leave

What does the Act says about sick leave?

What does the Act says about maternity leave?

What does the Act says about family responsibility leave?

What does the Act says about other conditions of employment?

Unemployment insurance is paid by employers and employees on a monthly basis. Only

What kind of benefits is covered by the UIF?

When can I claim illness benefits?

SKILLS DEVELOPMENT ACT (and Skills Development Levy Act)

EMPLOYMENT EQUITY (Act 55 of 1998)

The purpose of the Act is to achieve equity in the workplace, by

A designated employer must conduct an analysis of employment policies, practices, procedures,

Health and safety

COMPENSATION FOR OCCUPATIONAL INJURIES AND DISEASES ACT

OCCUPATIONAL HEALTH AND SAFETY ACT

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