Registering your business
Advice & Guidance
This is for you if you’d like info on setting up your business in a certain country & to find out what your options are.
How to set up/register your business
South Africa
What to register your business as
A sole proprietor – This is one of the most simple business structures to start & it’s commonly referred to as a sole trader. It can be the perfect option if you’re going to be the only person running your business & you want to trade as yourself. However, there can be some risks since there’s no legal separation between you & the business.
A partnership – Do you have a friend or a colleague that you wanted to go into business with? If you do, a partnership can be a great business structure to choose. It can also be a partnership with more than one other person, as long as everyone contributes to the business operations. It just requires you to outline certain terms & financial details with a partnership agreement.
A company – A company business structure means that the business will have separate liability from you as the owner or operator. Depending on the type of business you conduct this can be a good option to choose.
How to set up your business
In South Africa, there are a few different ways to register a business name. The first way is by registering online on the Companies & Intellectual Property Commission (CIPC) website. As well, you can register through a bank if that’s easier, which includes the First National Bank & Nedbank.
Registering for statutory requirements
There are some certain statutory requirements you’ll need to follow when you first start operating your business.
The CIPC is an agency in South Africa that’s part of the Department of Trade & Industry. Its general purpose is to assist businesses with registration & any intellectual property rights. These can range from designs, copyright, patents & trademarks.
Regardless of business size, you also need to register with the South African Revenue Service (SARS). This ensures your business meets certain statutory & regulatory requirements. If you’re a company structure, your business automatically gets registered with SARS when you register your business name with CIPC.
Registering with SARS also provides you with an income tax reference number & it’s mandatory within 60 days of starting your business. As well, if your turnover is, or is expected to be, more than R1 million per year then you must register for Value Added Tax (VAT). You can also do this online on the SARS website by submitting form VAT101.
Open a business bank account
Most businesses are required to open a business bank account in South Africa.
☼ Valid ID for the business owner & anyone else that will be a signatory on the account
☼ Proof of address for the business, which can be a utility bill, or in the case of a sole proprietor, the owner’s address
☼ Three months of business statements are often required
☼ Proof of CIPC registration
UK
You'll start paying income tax once your profit goes above your personal tax allowance, which is £12,570 in 2023.
You NEED to register your business no matter if you’re reaching the above threshold or not - you can get fined!
What to register your business as
You can register in the UK as either a sole trader, limited company or partnership.
Sole Trader = It’s simpler to set up as a sole trader, but you’re personally responsible for your business’s debts. You also have some accounting responsibilities.
Expenses if you’re Self Employed - If you’re self-employed, your business will have various running costs. You can deduct some of these costs to work out your taxable profit as long as they’re allowable expenses here
Limited Company = Your finances are separate from your personal finances, there are more reporting & management responsibilities here. Get help from an accountant, or you can set up a company yourself.
Your responsibilities running a Limited Company here
Partnership = A partnership is the simplest way for 2 or more people to run a business together. You share responsibility for your business’s debts. You also have accounting responsibilities.
How to register your business
Sole Trader
When starting out it’s best to register as a Sole Trader, until your earnings grow.
Check if you need to file a tax return (file number SA100) here first & then Register for Self Assessment here
You need to submit a Self Assessment tax form each year.
The end of the tax year is 5th April - You must tell HMRC by 5th October if you need to complete a tax return & you have not sent one before. You could be fined if you do not.
Deadline for paying Self Assessment tax bill is 31st January - for any tax you owe for the previous tax year & your first payment on account. 31st July for second payment.
You need to pay Income Tax (The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on. Personal Allowance Up to £12,570 0% Basic rate £12,571 to £50,270 20% Higher rate £50,271 to £125,140 40%)
You have to pay class 2 & 4 National Insurance (Class 2 £3.45 a week, Class 4 9% on profits between £12,570 & £50,270, 2% on profits over £50,270)
You’ll need to apply for a National Insurance Number if you’re moving to the UK for business here
You can trade under your own name, or you can choose another name for your business. You do not need to register your name. You must include your name & business name (if you have one) on official paperwork, for example invoices & letters.
Limited Company
As your earnings begin to rise you want to be thinking about registering as a Limited Company instead of a Sole Trader bcus they pay less tax (19% compared to Sole Trader 20%-40%)
A limited company is a company ‘limited by shares’ or ‘limited by guarantee’.
Limited by shares companies are usually businesses that make a profit. This means the company:
☼ is legally separate from the people who run it
☼ has separate finances from your personal ones
☼ has shares & shareholders
☼ can keep any profits it makes after paying tax
Limited by guarantee companies are usually ‘not for profit’. This means the company:
☼ is legally separate from the people who run it
☼ has separate finances from your personal ones
☼ has guarantors & a ‘guaranteed amount’
☼ invests profits it makes back into the company
Set up a Limited Company step by step here
Register your Limited Company with Companies House here
Partnership
In a partnership, you & your partner (or partners) personally share responsibility for your business. This includes:
☼ any losses your business makes
☼ bills for things you buy for your business, like stock or equipment
Partners share the business’s profits, & each partner pays tax on their share. A partner does not have to be an actual person. E.G. a Limited Company can also be a partner.
Choose a name
Choose a designated partner
Register the partnership here
Other things to check & be sure of
You may ned a license for certain businesses & activities, check them out here
Distance selling - You must provide certain information if you’re selling goods or services through digital TV, by mail order or by phone or text message. This is called distance selling, find out more here
Selling online - If you’re selling goods from overseas to customers in the UK click here
How to import items into the UK step by step here
If you’re exporting items from the UK here’s your step by step here
Data protection & your business - You must follow rules on data protection if your business stores or uses personal information here
When to register for VAT
Your total VAT taxable turnover for the last 12 months was over £85,000 (the VAT threshold)
You expect your turnover to go over £85,000 in the next 30 days
You must also register (regardless of VAT taxable turnover) if all of the following are true:
☼ You’re based outside the UK
☼ Your business is based outside the UK
☼ You supply any goods or services to the UK (or expect to in the next 30 days)
Register for VAT here
When to not charge VAT
VAT exempt goods and services that may relate to you include:
☼ financial services, investments and insurance
☼ property, land and buildings
☼ education and training
☼ charity event
☼ antiques
☼ sports activities
SPAIN
What to register your business as
EU citizens setting up as sole traders or partnerships can get set up pretty quickly.
It’s a different matter, though, for expats from outside of the EU (now includes UK); you will require a work permit to move to Spain & set up a business.
Self Employed - this is what I am!
Self-employed workers in Spain are known as autonomos, & must register their business with the Spanish tax authority & Spanish social security department.
Autónomos have to present quarterly VAT (IVA) returns, as well as an annual income tax return(I.R.P.F.).
The cheapest way of setting up a business in Spain is by either being a Sole Trader (empresa individual) or a Partnership (sociedad civil). There are no minimum investment requirements & you won’t need to go through many of the formalities required when setting up a Limited Company.
You will be responsible for your own personal tax return (I would get an accountant unless you are fluent in Spanish). There is no legal distinction between your business assets & your personal assets; so if your business gets into debt, you are personally liable.
Limited Company
Being a Limited Company protects you as the owner from personal liability in the event of bankruptcy, but this kind of structure does involve a number of additional tax, accounting, & mercantile obligations.
How to set up your business
Sole Trader (Autónomo)
☼ Obtain a foreigner's entity number (NIE)
☼ Register the company with the Mercantile Registry (Registro Mercantil Central or RMC)
☼ Register as an autónomo with the Spanish tax authority
☼ Open a Spanish bank account.
☼ Register with social security authority – for freelancers; this is RETA.
Limited Company
☼ Ensure you have a foreigner’s tax identification number (NIE)
☼ Register the company name with the Mercantile Registry (Registro Mercantil Central or RMC)
☼ Get a company tax identification number (CIF)
☼ Open a business bank account - need a minimum of €3000 in there
☼ Sign the deed of incorporation - supply the notary with tax form 036, your certificate from the Mercantile Registry, your NIE, evidence of having cash in your bank account
☼ Register the company
☼ Register for social security
How to obtain a business visa in Spain
Non-EU citizens moving to Spain to start a business will need a valid work permit to do so. To get a work permit, you will need to apply to the Spanish embassy in your home country.
First of all, you will need to provide evidence that you have enough capital to invest in your business & support yourself while living in Spain. You may also be required to submit a business plan & proof of your skills & experience. The Spanish government can ask you to provide evidence on how your company could create jobs for workers in Spain.
Work permits must be renewed every year, but after five years you can instead apply for resident status in Spain. This removes the need to get a work permit in the future.
You need to get an NIE first
Before setting up a business in Spain, all resident & non-resident foreigners with financial affairs in Spain must have a foreigner’s tax identification number (NIE).
The NIE is essential for any fiscal transactions in Spain, such as incorporating a company. If you are a Spanish national, you will have a NIF rather than a NIE number. Applications for a NIE can be made at a processing office for foreign citizens (Oficina de Extranjeros) at a national Spanish police station (comisaría).
You need an NIE to pretty much do everything in Spain.
You can apply for your NIE number in one of the following ways -
☼ Through making an appointment at your local immigration office (in Spanish) if you live in Spain
☼Via the Spanish embassy or consulate in your home country if you live abroad
☼ Using services such as e-residence who can take care of the procedure for you
You will need to fill out an EX-15 application form (in Spanish) for your NIE number, along with the annex Form 790 Code 12 (link to both the online and PDF versions of the form, in Spanish). If you are a non-EU/EFTA national requiring a TIE card, you need to complete the EX-17 form.
Since Brexit, UK nationals need to fill in an EX-23 form instead to obtain their TIE card.
Along with completed application forms, you should provide:
☼ Your passport or valid photo ID
☼ Two passport photos
☼ Proof of your address
☼ Proof of power of attorney, if someone else is applying for your NIE number on your behalf
☼ Payment of administration fee, which is currently around €12
USA
What to register your business as
Sole proprietorship
A sole proprietorship is the simplest business structure because it is owned & managed by a single person. The owner is personally responsible for all business debts & liabilities, and the owner reports business profits on their personal income tax return.
Partnership
A partnership is owned by two or more people who share profits and losses. Each partner is personally responsible for the partnership's debts & liabilities, & each partner reports profits & losses on their personal tax return.
Corporation
A corporation – such as an S corp or a C corp – is a separate legal entity owned by shareholders. It's responsible for its own debts & liabilities, & profits are taxed separately from the owners' personal income. Corporations also offer limited liability protection to their owners.
Limited liability company (LLC)
An LLC is a hybrid of a corporation & a partnership. It offers the same limited liability protection as a corporation but with more flexibility in management & tax structure. Owners report profits & losses on their personal tax returns.
How to set up your business
Apply for an EIN
After choosing a business structure and name, the next step to register your business in the US is to apply for an Employer Identification Number (EIN). An EIN is a unique nine-digit number assigned by the IRS, and receiving one helps to establish its legal identity. It's like a social security number for your business. An EIN is often required for tax & banking purposes, and it can also help protect your personal assets from business debts and liabilities.
You can apply for an EIN online, through the IRS website. To apply, you will need to provide some basic information about your business, such as its legal name, address & business structure.
Apply for business licenses
Depending on your industry & location, you may need to obtain various permits & licences in order to operate your business legally. The process of identifying & applying for business licences might look slightly different based on location but it's mostly similar throughout the US:
1. Identify the necessary licences - Before applying for licences, research & identify which ones are required for your business based on your industry & location. Common examples include professional licences, industry-specific licences & business activity permits.
2. Check with the issuing agency - After identifying the required licences, check with the issuing agency to confirm the specific requirements & process for applying. This may vary by state or even by county or city.
3. Gather the necessary documentation - Depending on the licence, you may need to provide various types of documentation, such as proof of insurance, zoning approval or educational credentials.
4. Complete the application - Once you have gathered all the necessary documentation, you can complete the licence application. This can often be done online or by mail, depending on the issuing agency.
5. Pay the application fee - Most licences require payment of a fee. The amount may vary depending on the type of licence & issuing agency.
6. Wait for approval - After submitting your application and fee, you will need to wait for the licence to be approved. This may take several weeks.
7. Display your licence - Once you have received your licence, you may need to display it prominently at your business location if doing so is required by law.
There are many resources available to help you identify the necessary licences for your business. A good place to start is your state's Secretary of State office or Department of Revenue. You can also use online resources such as the SBA's permit and license guide, which allows you to search for necessary licences by state & industry.
After choosing a business structure, naming your business and obtaining an EIN, the next step is to register with state agencies. The requirements may vary depending on your state and the type of business you operate. However, as a minimum, it is likely that you will need to file paperwork with the state government and pay any necessary fees.
Here's what registering your business with state agencies typically entails:
Register your business entity - Register your business entity with your state. This involves filing paperwork such as Articles of Incorporation, Articles of Organisation or Partnership Agreements, depending on your business structure.
File for taxes - Depending on your business structure & where your business operates, you may need to register for federal, state or local taxes. This may include income tax, sales tax & payroll tax.
Obtain any necessary insurance - you may need to obtain certain types of insurance such as liability insurance or workers' compensation insurance.
Comply with any other state requirements - there may be additional state requirements you need to comply with such as registering for unemployment insurance or complying with environmental regulations.
Open a business account
Understand your compliance regulations
Understand your tax obligations
Other advice
When thinking of a business name - Verify that the names you have chosen are available & do not conflict with existing trademarks. You can use the US Patent and Trademark Office's (USPTO) search tool to check for existing trademarks that might conflict with your name. This is also a good time to check whether the relevant website domain names & social media handles associated with your desired business name are available also.