Thinking of how to start an online business in South Africa can somewhat be a tiresome yet interesting venture. You are expending all your energy towards generating revenue to make a profit while at the same time dealing with the legalities and unforeseen challenges. However, before you can even think of starting a business, you need to follow some procedures and sort out a couple of requirements. For example, if you want to start an online casino business in South Africa, you can read about what you have to do on https://www.softswiss.com/knowledge-base/start-online-casino-south-africa/ so that you don’t get lost.
If you are not really careful, you might end up falling into a trap that might cost you a lot. For instance, if you do not make all the considerations that you are required to make as you apply for an online gambling license South Africa has to offer, you might find yourself going back and forth with the law. And be sure that this will cost you some valuable resources.
Well, this article will be expounding on the legal and financial considerations you need to take when starting an online business, with some bit of emphasis on online gambling business in South Africa.
Legal requirements for online businesses in South Africa
The first thing you need to set right before you can start your business is the structure. Depending on your business, you can either be a sole proprietor, a partnership or a company. You should know that each business type varies in degree of responsibility in terms of compliance, tax position or exposure to liability. Ensure that you have set the structure right before you can even think of moving forward.
The next thing you need to do is to get a permit. In order to obey the law, a business has to have all the required licenses, registrations, and permits to have legal authority to work. For example, if you want to operate a gambling business in South Africa, here are the licences that you would require:
- National gambling license
- Provincial gambling license
- Online sports betting license
- Online casino license
- Tax clearance certificate
However, there are a number of things that you should also consider when thinking of how to get a gambling license in South Africa. Some of the gambling license requirements in the country include the gambling license cost, structure of your business, technical compliance, advertising and marketing restrictions as well as ongoing audits.
Financial planning and tax considerations
There are three types of taxes that an upcoming business should look into before stating. These are turnover tax, employee taxes and VAT. But what exactly are these taxes?
Turnover tax
The SARS introduced this type of tax to make it easier for small businesses to meet their obligations. For your business to qualify for this, you have to be having an annual turnover of less than R 1 million.
Well, this tax system works for:
- Sole proprietorships
- Partnerships
- Companies
- Co-operatives
- Close corporation
And just so you know, when you register your company with SARS, you place yourself in an advantageous place, for instance, you can get tax deductions.
VAT (Value-added-tax)
If your business will be making more than R 1 million, then registering for this tax is a must.
Employee taxes
A big part of running a startup is making sure that you are compliant with the relevant employee laws and taxes.
The business must comply with:
- Registration for employee taxes. These taxes include PAYE, UIF, SDL, and WCOMP.
- Payroll processing is in line with the currency legislation.
- Medical aid registrations as well as pension fund figures.
Avoiding common legal pitfalls
Well, despite it being a thrilling experience, opening a business in South Africa might have some nitty-gritties that when you overlook, it might sink your ship. Unfortunately, so many people make these legal mistakes, which end up leading to financial losses, legal disputes and even business collapses.
Here are some of the common issues.
Not protecting intellectual property (IP)
Let’s face it. In South Africa’s competitive market, your intellectual property as a startup is quite vital. It’s actually your most valuable asset. However, many entrepreneurs neglect to protect their IP, whether it is a brand name, product or creative work. If you do not protect your IP, then your competition has a good chance of copying your ideas, branding, or worse, someone registering your IP as their own. This would be devastating.
In order to protect your IP in South Africa, you should:
- Register your trademarks
- Use NDAs
- File patents
- Copyright original works
Not using contracts to formalise business relationships
The South African legal system values formal contracts, yet many entrepreneurs seem to neglect them. People are not formalising their business deals with contracts, and that’s where everything goes wrong. Even though verbal agreements may work, sometimes they tend to backfire, leading to confusion, disputes and even litigation.
For example, if you are a gambling company and are working with partners, customers or partnering with game developers like SOFTSWISS, you should be having a written down contract. This contract should include:
- The scope of work
- IP ownership
- Terms and conditions of payments
- Mechanisms for dispute resolutions
- Timelines
Without a proper contract, it is easy for misunderstandings to arise and lead to legal disputes. You don’t want your startup to lose valuable resources because you forgot or overlooked a formal agreement. These contracts give you legal protection and set clear expectations and boundaries for all parties.
