Starting a Business in South Africa: A Step-by-Step Guide for Entrepreneurs

Starting a business in South Africa can feel daunting, but with the right information and support, the process becomes manageable. At Zazu, we’re building tools to simplify this journey for entrepreneurs. Here’s a comprehensive guide to get your company off the ground, from choosing the right structure to meeting your tax obligations.

Choosing the Right Legal Entity

Your first step is choosing the right business structure. The most common types in South Africa include:

• Sole Proprietor: Easy to start and ideal for solo entrepreneurs. However, there's no legal separation between personal and business liability

• Private Company (Pty) Ltd: Most popular structure for SMEs. Offers limited liability and can be registered with just one director

• Partnership: Involves two or more individuals sharing responsibilities, risks, and profits

For most entrepreneurs, a Private Company (Pty) Ltd offers the best mix of protection, credibility, and scalability.

Registering Your Company

You can register your company online via the Companies and Intellectual Property Commission (CIPC). You’ll need:

• A company name (or choose from pre-approved names)

• Director details and ID documents

• Registered address

Fees vary depending on the service package. CIPC also allows you to register for tax, UIF, and compensation fund in one go.

For these steps, you can also turn to trusted digital partners like GovChain, Zazu’s incorporation partner in South Africa, which simplifies and speeds up the registration process. If you're looking to incorporate outside South Africa, Clara offers streamlined international setups.

Opening a Business Bank Account

A business account is a legal requirement for a registered company and simplifies your financial management. Zazu offers smart business accounts with multi-currency support, virtual cards, and tools tailored for SMEs.

Setting Up Tax & Financial Compliance

Every business must register with the South African Revenue Service (SARS). This includes:

• Getting a Tax Reference Number

• Registering for VAT (if turnover exceeds R1 million annually)

• Submitting returns and paying Provisional Tax twice a year

Also required:

• Registering for PAYE and UIF if hiring employees

• Maintaining books of accounts and submitting annual financial statements

Hiring an Accountant

While not legally required for all SMEs, having an accountant is highly recommended. Zazu Connect offers a vetted directory of expert accountants who know what startups need, from gap assessments to full-service accounting.

Mandatory Costs to Consider

Here’s a breakdown of the typical monthly and annual costs of running a small business in South Africa:

• Company Registration: R125+ (once-off, via CIPC)

• Business Bank Account: Free to R250/month depending on the bank

• Accountant Fees: R1,000 to R5,000/month depending on scope

• Tax Submissions: Additional cost if handled by professionals

• Invoicing & Payroll Software: R200–R1,000/month depending on tools used

  
  

Other Tools & Services You’ll Need

While not always mandatory, there are other common and often necessary costs to run a compliant, trustworthy, and competitive business:

• Annual Return Filing with CIPC

  • Cost: Starts at R100–R1,000+ depending on turnover.

  • Why it matters: Failure to submit annual returns can result in deregistration of your company.

  
  

• B-BBEE Certificate (for Tenders or Contracts)

  • Cost: Free for exempted micro-enterprises (EMEs); up to R2,500+ for formal assessments.

  • Why it matters: Required to access certain clients, funding, or government work.

  
  

• Business Insurance

  • Cost: Varies by risk profile (R300–R2,000+ p/m).

  • Why it matters: depending on your industry liability, cyber-risk, or key person insurance to be protected

  
  

• Domain & Hosting Costs

  • Cost: ~R100–R500/month.

  • Why it matters: A basic but essential operational cost for your digital presence.

  
  

• Website Development or Low-Code Tools

  • Cost: Can range from R0 (using tools like Notion or Wordpress) to R10,000+ for custom dev.

  • Why it matters: Vital for credibility and marketing from day one.

  
  

• Legal Agreements

  • Cost: Free templates to R10,000+ for custom legal work.

  • Why it matters: Includes NDAs, MOUs, employee contracts, and supplier agreements.

  
  

• Payment Gateway & Merchant Fees

  • Cost: 1%–3% per transaction, depending on provider and industry.

  • Why it matters: For those taking card payments or online sales.

  
  

• Bookkeeping Software Add-ons or Integrations

  • Cost: Often billed per integration or seat.

  • Why it matters: Teams often forget these costs when scaling up.

  
  

• Employee Hiring and HR Setup

  • Costs: Job board listings, background checks, HR software (R100–R300/month).

  • Why it matters: Especially if you start hiring early or scale quickly.

  
  

Altogether, small businesses in South Africa typically face:

• Mandatory baseline costs: R2,000–R4,000/month

• Additional operational costs: R3,000–R6,000/month
  
  

That means most startups are spending between R5,000 and R10,000 every month before hiring a single employee or investing in growth.

Why Choose Zazu

Zazu helps you cut down those mandatory costs right from the start, bundling the key financial tools into one intuitive platform from smart business banking and invoicing to accountant access and payment workflows, so you can focus your cash flow on what really drives your business forward.

We combine:

• A modern business bank account with built-in invoicing and cash flow tracking

• Real-time expense categorisation to save time (and fees) with your accountant

• Seamless integrations with tools like Sage, Ikhokha, and GovChain

• And a vetted network of professionals via Zazu Connect, so you don’t overpay for specialists

Zazu helps you control your spend from day one, keeping you in the loop without getting buried in admin. Our mission is simple: to give every South African SME the clarity and tools to scale, without the banking headaches.

Explore our features at Get Zazu and take the first step toward building your business in South Africa today.