Xplorio Overberg


You have identified the perfect business opportunity, and you are eager to pursue it. But, you also want to do things properly and systematically, because you know very well how many businesses collapse due to lack of planning. Below is a very brief overview of some of the steps to be taken when you start a business (as opposed to buying an existing one): Make sure that you obtain and verify all the facts relating to the business, for example:

What permissions and licences are needed for your type of business? Will you be able to obtain these without much delay? With the aid of an accountant, have you prepared detailed costings and escalated them for future years? Realistically, after how many years will the business be able to meet your financial expectations, and do you have sufficient funds to carry it for that period?

Do the necessary background research, for example:

Who is your competition, and will you have an advantage over them? Who comprises your market, and are you sure it is big enough to sustain your business? Have you done market research in this regard? Who are the best suppliers, and will they be able to supply you in line with your operational parameters?

What legal entity will best suit your needs?

Make sure you discuss the following options in detail with a lawyer or financial advisor:


Advantages:   Simple to administer, no special registration requirements. The business is taxed at the same rate as the owner – which could be either an advantage or disadvantage.

Disadvantage: Business is not legally separate from owner and the owner is liable in full for the debts of the business. The business is taxed at the same rate as the owner – which could be either an advantage or disadvantage.


Advantages: Very similar to that of the Sole Proprietor, but with slightly more separation between the business and its partners.

Disadvantages: Very similar to that of the Sole Proprietor, but with a few more requirements, such as the need for a partnership contract; and a few more risks, such potentially being liable for the debts incurred by other partners.


Advantages: The Company is a distinct legal entity, separate from the shareholders, and continues to exist even if all the share-holders change or die.

Disadvantages: A company must be registered with the Companies and Intellectual Property Commission. Apart from this process, there are fairly onerous legal and financial requirements which demand ongoing com-pliance. The corporate tax rate is high (especially if Dividend Withholding Tax is also payable); but it will be lower if your business qualifies as a Small Business Corporation.


Once you have decided on the entity make absolutely sure that each and every agreement is reduced to a written contract, which was either drafted by a lawyer or checked by a lawyer. It does not matter how much you trust someone, people often forget or misinterpret the details, and you then end up with one person’s word against that of the other – a situation which could result in a messy and expensive court case!

Consult a labour law expert or lawyer in order to know and understand the labour law implications for your particular business.