The requirements for starting a small scale business in South Africa depend on what you sell and whether you hire. A sole proprietor, such as a spaza shop owner, hair salon, food stall or one-person trade, does not have to register with the CIPC. You must still declare the income for tax, meet municipal zoning and health rules for your activity, and register as an employer if you take on staff.
The practical question is which obligations apply to a very small operation and which are worth doing voluntarily. For a company route see the company registration requirements.
Business Requirements at a Glance
- Sole proprietor: no CIPC registration is needed, and your business income is declared for personal income tax
- Company: can be registered online on BizPortal for R125 without a name or R175 including a name, with no documentation required
- Food premises: a certificate of acceptability from the municipality, plus a municipal business licence where your trade requires one
- Street or informal trading: a permit from the municipality
- Employees: UIF and Compensation Fund registration, PAYE where employees are liable for tax, and at least the National Minimum Wage of R30.23 per hour from 1 March 2026
- VAT: compulsory only above R2.3 million in taxable supplies, from 1 April 2026
Registration and Legal Requirements
Registering a company is optional. A company is registered through BizPortal, the CIPC’s online service, and every company registered there is automatically registered with SARS for tax. Trading unregistered as a sole proprietor means you are personally responsible for the business, and your business bank account will be in your own name.
Food businesses and spaza shops. Municipalities set the rules and document lists differ. Ekurhuleni, for example, lists a business licence application form, a zoning certificate or written consent, a Certificate of Acceptability, an approved building plan and occupancy certificate, a title deed or landlord letter, your ID or Home Affairs permit, CIPC registration, a recent municipal account and SARS tax clearance. See the City of Ekurhuleni notice.
Informal trading. In Cape Town, anyone unemployed and legally allowed to live in South Africa qualifies for an informal trading permit, applied for through e-services and awarded to the highest-scoring applicants. Food hawkers also need a hawking business trading licence and a certificate of acceptability. The City of Cape Town informal trading permit page has the steps.
Zoning. Check with your municipality that your premises, including a home, may be used for the activity before you invest in a fit-out.
Documents and Ownership Information Required
- Your South African ID, or the Home Affairs documents that allow you to live and work here
- Zoning confirmation or consent for the premises
- The municipal business licence, where your trade requires one
- A certificate of acceptability, for premises that handle food
- Proof of the business’s physical address. Absa’s BizStart account asks a sole proprietor for an affidavit if there is none, and does not ask for company registration documents
- Company registration details, if you register a company
A bank account does not need a company. Absa’s BizStart checklist excludes company registration documents for sole proprietors, where a sole proprietor’s account is held in their own name.
Tax, Licence and Compliance Requirements
Income tax. A sole proprietor declares business income in a personal tax return. Anyone receiving income other than a salary is a provisional taxpayer, according to SARS.
Turnover tax. For micro businesses with qualifying annual turnover of R2.3 million or less, turnover tax replaces income tax, VAT, provisional tax, capital gains tax and dividends tax. Sole proprietors, partnerships, close corporations, companies and co-operatives may qualify. The tax-free threshold is R600 000, with 0% on turnover of R1 to R600 000 and 1% on R600 001 to R950 000, with further bands on the SARS turnover tax page.
VAT. From 1 April 2026 the compulsory registration threshold is R2.3 million (previously R1 million) and the voluntary threshold is R120 000 (previously R50 000). See SARS on VAT.
Employees. An employer must register with UIF and contribute if it has employed people for more than 24 hours per month. The contribution is 2% of gross salary: 1% deducted from the worker and 1% paid by you. UIF and Compensation Fund registration through BizPortal are free, but a company without employees cannot register. The Compensation Fund page says an employer must register within 7 days after appointing an employee. You must register with SARS for PAYE within 21 business days of becoming an employer, unless none of your employees are liable for normal tax.
Process, Deadlines and Ongoing Obligations
Suggested order. Confirm zoning and any licence your trade needs, get the certificate of acceptability if you handle food, open a separate business account, and keep a simple record of income and expenses from the first day. Register a company when you want to separate the business from yourself. Register as an employer before your first employee starts.
- Zoning and licence checks with your municipality
- Certificate of acceptability, if you handle food
- Tax registration and declaring business income
- Check whether turnover tax suits you
- UIF, Compensation Fund and PAYE when you hire
- VAT once taxable supplies pass R2.3 million, or voluntarily from R120 000
Frequently Asked Questions
What are the requirements for starting a small scale business?
For a sole proprietor: no CIPC registration, income declared for tax, municipal zoning, and for food a certificate of acceptability and municipal licence. If you employ people, UIF, the Compensation Fund and at least R30.23 per hour from 1 March 2026. A company costs R125 to R175 on BizPortal.
Must I register a company?
No. You may trade as a sole proprietor, though you are then personally responsible for the business.
Do I need a licence for a spaza shop?
Spaza shops are registered and licensed by the municipality, and lists such as Ekurhuleni’s include zoning, a certificate of acceptability, a building plan and occupancy certificate and tax clearance. Ask your municipality for its exact list.
What happens when I hire my first person?
You register with UIF and the Compensation Fund, pay at least the National Minimum Wage, and register for PAYE within 21 business days unless none of your employees are liable for normal tax.
When must a small business register for VAT?
Compulsory registration applies above R2.3 million in taxable supplies, and voluntary registration from R120 000, from 1 April 2026.
Rules for licences and zoning are set by your municipality, and tax rules by SARS. Confirm current requirements with them. See the business and compliance requirements hub and the company registration requirements guide.