Going freelance? Becoming a contractor? Starting your own business? Get the low-down on setting up as a sole trader in South Africa.
There’s no denying it: being your own boss is pretty great. You have higher earning potential, the freedom and flexibility to choose your own hours, and you’ll build something of your very own. If that sounds enticing, you’re not alone: approximately 80% of South Africa’s economy is made up of small micro medium enterprises (SMMEs).
However, there are some less glamorous parts to being self-employed, and most of it has to do with paperwork. And whether you’re starting a business or taking the freelancer route, one of the first things you’ll need to do is register as a sole trader with the South Africa Revenue Service (SARS).
Although you’re on the road to self-employment, don’t worry — you’re not alone. In this guide, we take you through everything you need to know about setting up as a sole trader in South Africa.
Also Read: Try QuickBooks Online Accounting Software
What is a sole trader?
According to SARS , a sole trader (more commonly referred to as a “sole proprietorship”) is a business that’s owned and operated by one individual. It’s the most simple and straightforward type of business you can own, because there’s no division between the owner and the business as an entity.
This means you won’t need to register it as a separate company with the Companies and Intellectual Property Commission (CIPC). However, you will need to register with SARS for the purposes of tax returns. This is so SARS can accurately determine how much you need to pay in taxes at year-end. You can do this under your own name, or under a trading name.