Business planning

Do these 3 things before launching your small business

Before you open your doors, get these three things right: your business structure, your name and registrations, and the tools that will save you time once you are trading.

Published September 2, 20261 min read Share

Do these 3 things before launching your small business 

Before you start trading in South Africa, decide on your:

• business structure,
• confirm the registrations and compliance requirements that apply to your business,
• and choose software that will help you manage day-to-day work.

Getting these foundations in place can reduce avoidable administration and give you more time to focus on building your business. 

Key takeaways 

• Decide early whether to trade as a sole proprietor or register a formal company. This affects your liability, tax, and paperwork from day one. 
• Confirm your business name, place of business, and any industry-specific registrations before you start trading. 
• VAT registration becomes compulsory once your taxable supplies exceed R2.3 million in a 12-month period. This threshold increased from R1 million on 1 April 2026. 
• Choose practical software for accounting, project management, communication, and other essential business tasks. 

Who this guide is for 

This guide is for sole proprietors, entrepreneurs registering a company, and small business owners preparing to trade for the first time in South Africa. 

What should you do before launching a small business? 

Make time to work on your business, not only in it.

Before you open your doors, prepare for the day-to-day work of running the business as well as the bigger decisions that will shape its direction.

Start with these three actions. 

1. What business structure should you choose? 

Will you trade as a sole proprietor or as a registered company?

The structure you choose determines the preparation and ongoing administration your business will need. 

How does a sole proprietorship work? 

A sole proprietorship is suited to a business run by one individual.

There is no legal separation between you and the business.

This means creditors can lay claim to your personal assets, and the business income is included in your personal tax return. 

You are not required to register a separate legal entity, which means less paperwork.

You can start trading as a sole proprietor and register a company later. 

Once your value of taxable supplies exceeds R2.3 million in any consecutive 12-month period, you must register for Value-Added Tax (VAT) with the South African Revenue Service (SARS).

This threshold increased from R1 million on 1 April 2026.

 You can also register voluntarily once your taxable supplies exceed R120,000. 

If you employ people, you will also need to register for Pay As You Earn (PAYE), the Unemployment Insurance Fund (UIF), and potentially the Skills Development Levy (SDL). 

What changes when you register a company? 

Registering a company creates a legal barrier between your personal assets and the liabilities of the business.

A registered company may also find it easier to demonstrate credibility and seek funding.

In return, you will have more paperwork during registration and on an ongoing basis. 

VAT and employer registration work in the same way as they do for a sole proprietor.

A registered business may also need a valid Tax Compliance Status (TCS) from SARS and a Letter of Good Standing.

TCS is the current SARS system, accessed through eFiling, that has largely replaced the old paper tax clearance certificate. 

Quick structure check 

• Choose a sole proprietorship if you want a simpler structure and understand that there is no legal separation between you and the business. 
• Consider registering a company if you want a separate legal entity and are prepared for additional administration. 
• Check the tax, employer, and industry requirements that apply before you start trading. 

 2. How do you confirm your name, location, and industry registrations? 

Your business name, place of business, and industry can affect the checks and registrations you need to complete before you start operating. 

Check and protect your business name 

Once you have chosen a name: 

• Confirm that the name is available using Govchain or a similar name-search service. 
• Register a web domain that includes the name using GoDaddy or another domain provider. 
• Consider registering the trademark with the Companies and Intellectual Property Commission (CIPC) if this is necessary for your business. 

If you are still choosing a name, this business naming resource may help you develop and assess options. 

Choose your place of business 

Keep rental costs manageable when you are starting out, and take care before committing to a long lease.

If you plan to run the business from home, check what your local rules and property arrangements allow. 

Read this overview of the legal considerations when running a business from home. 

Use the business address when opening your business bank account and on your invoices.

You will also need it if you register the business. 

Check industry-specific requirements 

Some industries require registration with a regulatory body before you can legally operate.

In some cases, you may also need a licence or a Broad-Based Black Economic Empowerment (B-BBEE) affidavit or certificate to compete for work. 

For example, check the relevant registration requirements if you work in security, home building, construction, cleaning, or health and safety. 

Before you start trading 

• Check that your chosen business name is available. 
• Confirm the address you will use for banking, invoicing, and registration. 
• Identify the regulator, licence, or industry registration that applies to your work. 
• Confirm whether customers or contracts require a B-BBEE affidavit or certificate. 

 3. What software should a new small business use? 

Choose tools that solve an immediate business need and are realistic for your budget.

Start with the tasks that take the most time or create the highest risk if handled inconsistently. 

Business need	Example tool	What it can help you do
Office productivity	Microsoft 365	Create documents, spreadsheets, presentations, and business email.
Accounting and payroll	Sage	Manage invoicing, cash flow, supplier payments, VAT returns, and payroll.
Project management	Asana	Keep project information and tasks in one place.
Team communication	Slack	Support communication and collaboration as your team grows.
Email marketing	Mailchimp	Send emails to customers and keep your community informed.
Data visualisation	Tableau Public	Turn business data into visual information that is easier to understand.
Learning	Blinkist	Access summaries of non-fiction books and podcasts.

Review each tool before committing to it.

The best choice will depend on your business needs, budget, team, and existing processes. 

Bonus: keep records of your start-up costs 

Keep invoices and receipts for the costs you incur while preparing to trade.

These records can help you support any deductions you claim and make it easier to manage your finances once the business is operating. 

Read more about how eligible costs may reduce the taxable income of your business.

Because tax treatment depends on the nature and timing of the expense, confirm the position with SARS or a qualified tax professional. 

Common mistakes to avoid before launching 

• Choosing a business structure without understanding its liability and tax implications. 
• Using a business name before checking whether it is available. 
• Missing an industry registration, licence, or other requirement. 
• Waiting until the business grows to understand VAT and employer obligations. 
• Failing to keep invoices, receipts, and other financial records. 
• Buying software before defining the business problem it needs to solve. 

What should you do next? 

Before you launch, choose your business structure, complete the checks and registrations that apply, and put simple systems in place for finance and operations.

Good preparation will not remove every challenge, but it can help you spend less time fixing avoidable problems once you start trading. 

Frequently asked questions on things to do before launching your small business

Do I need to register my business before I start trading? 

Not necessarily.

You can trade as a sole proprietor without registering a separate legal entity.

You may still need to register for VAT once your taxable supplies pass the compulsory threshold, and for PAYE and UIF if you employ people. 

What is the VAT registration threshold for a new business in South Africa? 

Compulsory VAT registration applies once your taxable supplies exceed R2.3 million in a 12-month period.

This threshold increased from R1 million on 1 April 2026.

You can also register voluntarily once taxable supplies exceed R120,000. Confirm current thresholds with SARS. 

What is the difference between a sole proprietorship and a registered company? 

A sole proprietorship has no legal separation between you and the business.

Your personal assets can be used to settle business debts, and business income is included in your personal tax return.

A registered company is a separate legal entity, which limits personal liability but brings more registration and ongoing compliance requirements. 

What is Tax Compliance Status? 

Tax Compliance Status is the SARS system that confirms whether your tax affairs are in order.

 It has largely replaced the old paper tax clearance certificate and is accessed through eFiling. 

Do all businesses need a B-BBEE certificate or affidavit? 

Not all businesses.

The requirement depends on the size of the business and the organisations you want to work with.

Many small businesses can complete an affidavit rather than obtain a formal audited certificate.

Confirm the requirement with a B-BBEE consultant or verification agency. 

Which industries require additional registration before I can start trading? 

Industries such as security, building and construction, cleaning, and health and safety may require registration with a specific regulatory body.

For example, security providers should check PSIRA requirements, while home builders should check NHBRC requirements. 

What software does a new small business need first? 

Start with software that supports essential tasks such as invoicing, accounting, payroll, office administration, and communication.

Add other tools only when there is a clear business need. 

Editor’s note: This article was originally published in April 2021 and has been updated for relevance.

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