What are the important compliance issues all entrepreneurs should look out for?
Some of the greatest entrepreneurs with very brilliant ideas have had their businesses shutdown, paid exorbitant fees in fines and penalties or even involved in costly lawsuits all because of non-compliance. Compliance with legislative requirements is very important for the successful running of business enterprises in many countries (including South Africa), and entrepreneurs should pay particular attention to this. There are two broad areas of compliance that all entrepreneurs should be aware of, namely, business specific and general compliance areas.
BUSINESS SPECIFIC COMPLIANCE
- An entrepreneur worth his/her salt must find out about the compliance requirements pertaining to his/her business (and/or industry). For instance, a potential business person who wishes to own a company in the construction space must have a firm grasp of the legal requirements that govern the construction and home building industry. Essentially, after registering your company with the CIPC, one may have to register with the two statutory bodies in this space, namely the National Home Builders Registration Council (NHBRC) and the Construction Industry Development Board (CIDB).
- In some cases, you may be required by law to register with an industry association. For instance, if you want to practice as a public auditor and issue an opinion on assurance engagements, you must be registered with the South African Institute of Chartered Accountants (SAICA) and the Independent Regulatory Board of Auditors (IRBA)
BUSINESS GENERAL COMPLIANCE
As a result of its history, South Africa is a country that promotes human rights more than most countries in the world; because of this, many areas of life are high regulated in order to ensure that human rights are not violated by anyone (including business). Below are some of the general compliance that South African businesses are expected to adhere to:
Tax compliance (SARS, VAT Act)
- First and foremost, the business enterprise must be registered with SARS for tax purposes (to be taxed on the income that it makes), secondly, if the business is an employer it must register itself as such and as an agent of government required to deduct employees’ tax from the earnings of employees and pay the amounts deducted over to SARS on a monthly basis. Thirdly, if applicable, a business may register for VAT in terms of the VAT Act.
The Occupational Health and Safety Act
- The government requires business that employ people to provide a work environment that is safe and without risk to the health of employees.
Skills Development Levy (SDL)
- Employers must pay 1% of their workers’ pay to the skills development levy every month. The money goes to Sector Education and Training Authorities (SETAs) and the Skills Development Fund to pay for training.
The Compensation for Occupational Injuries and Diseases Act (COIDA)
- This Act seeks to ensure that employers are duly covered to provide compensation for disablement caused by occupational injuries or diseases sustained by employees in the course of their employment, or for death resulting from such injuries or diseases.
Unemployment Insurance Fund (UIF)
- Employers must register with Department of Labour to ensure that their employees are appropriately covered when out of employment.
- Depending on the type of company you register, it may be required to be audited on an annual basis.
Financial Intelligence Centre Act (FICA)
- If your company will be engaged in the financial services, estate agents, insurance, etc you are required to comply with this Act in order to combat money laundering.