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If you want to start a Construction Company in South Africa or want more jobs for your existing construction business, then this guide is for you!
Getting the documentation to start your business and win Tenders and Contracts in South Africa can often be very confusing. We lay out all the most important construction company documents you will need to start a Construction Company in South Africa. No matter how far you are in the process of your Construction Company registration, this guide will help you to identify everything you need.
Our Compliance Specialists have been assisting entrepreneurs all over South Africa to start their Construction Companies. We break down everything you will need to register a Construction Company and to apply for Tenders and Contracts.
The following documents are the most important documents you need to ensure your South African construction business is compliant:
If you’re starting a new company or have an already established business that you’d like to take to the next level, officially registering your business is important as it ensures that you, as the owner, are safeguarded.
If you haven’t registered your business as a Pty Company, you must submit your business tax to SARS with your personal tax. This basically means that your income and debts are linked to your business and vice versa. Therefore, should your company get into financial trouble, you will be held personally liable in your personal financial capacity.
If you officially register your company, then your business will become a separate legal entity; and, in most cases, you will be protected should your company get into financial trouble.
There are many different Company Structures, each with their own set of legal, taxation rules, asset, and debt liability. However, the most popular structure in South Africa is a Pty Limited Company.
Regardless of what industry you’re in, all companies need to be registered at the CIPC.
You can register directly via the CIPC’s online portal (https://eservices.cipc.co.za/) or ask your accountant to assist if you have one.
The fast and easy way to do it is by calling our Toll-Free number 0800 007 269. We have over 50 Company Registration Specialists who will assist you to register your company at the CIPC, within 1 working day (please verify with your consultant).
Unless you, as a business owner, earn under the tax bracket stipulated, you must pay tax according to SARS. Anyone who earns below this bracket will be deemed tax exempt.
Therefore, in order for SARS to establish the bracket in which your company would fall into, you, as the employer, would need to register for PAYE (Pay As You Earn) and pay these taxes directly to SARS on a monthly basis on behalf of your employees.
SARS will confirm the taxable deduction from your employees’ earnings, which you are then able to subtract from their payments due to SARS. They can claim them back form SARS during the tax season.
The Law requires all South African business owners to register for TAX and PAYE. As long as you keep to date with SARS, your chances of winning a Tender or Contract will greatly increase!
You may also be requested to register for UIF (Unemployment Insurance Fund) or even SDL (Skills Development Levy) during your PAYE registration.
Although this is not a requirement for all, the SDL is based on whether your company expect salaries to exceed R500 000 over a 12-month period. The SDL contribution allows your employees to engage on further training. You will, however, have to be registered for UIF prior to obtaining an SDL number.
A UIF contribution would be 1% of the employee’s salary paid to the Unemployment Insurance Fund, and the employer will match that amount by another 1%. This amount is then available should the employee loose their job and allow limited financial assistance whilst the employee finds a new job.
You will need to register a profile on the SARS E-filing portal.
The Department of Labour is where you would need to register for UIF after you have registered for PAYE on the SARS Portal.
The first general Company Compliance that you need to get in order are the documents like Pty Registration (or whatever other company structure you prefer), SARS registration notice and Employer registration to enable you to legally trade and employ staff. You can see our Company Registration packages available here.
Thereafter, if you are looking to apply for Tenders and Contracts in both private and government sectors, you will need to look at Construction Industry-Specific Compliance.
Breaking down compliance into two parts makes it easier to understand what you need to start a Construction Company in South Africa and why you need it.
You can just scroll down to the part you’re interested in.
Please note that this merely sums up the most important company documentation that Construction Companies in South Africa need to trade legally, and to be eligible to win bigger Tenders and Contracts.
Construction Tenders and Contracts allow a select few documents that will be accepted. Below follows the list of Compliance Documents.
A Letter of Good Standing is the proof that you have registered for COIDA and have paid your contribution to the Compensation Fund after obtaining your assessment fee.
Should an employee be injured whilst on duty, an employer will be required to file for a Workers Compensation Assessment (WCA) whereby the employee will be paid out for any losses obtained during the period for which they were unable to carry out their day-to-day duties. Such pay-outs will include losses for any regulated overtime.
As the employer, you will need to put forward an amount yearly in anticipation should you find yourself in a position where an employee is to be compensated – this is, in essence, the amount paid to the Compensation Fund and protects the company from medical bills.
Please note this really is an oversimplification and the Commissioner of the Fund must approve any claim and determines what the compensation will be based on your employee’s incident and his or her income prior to the incident.
Although a Value Added Tax (also known as VAT) Registration is not mandatory, it may be beneficial to companies who wish to Tender in the construction sector. Should your company have an annual turnover of more than R1million, you would then be legally required to register for VAT. If not, and should you meet the requirements, you are also able to do a voluntary registration.
A voluntary VAT registration will mean more paperwork, as you would need to provide SARS with adequate information as to why the VAT number is required. Having a VAT number makes the company more susceptible to Tenders or Contracts, as your perspective clients will be able to benefit for it as well.
You will need to register for VAT (you can read more about that right here: https://www.sars.gov.za/types-of-tax/value-added-tax/) at SARS, however, our SARS experts can assist you from the comfort of your home.
Often confused, a BEE certificate and a BEE affidavit are not the same. A BEE affidavit would be for companies that have not exceeded 10 million in turnover over a 12-month period. Whereas a BEE certificate will be applicable to companies who have exceeded 10 million within 12 months and/or trade in the Construction or Transport sectors.
It is for this reason that many Construction tenders will require a BEE certificate. But this is also dependent on the tender requirements.
However, if you are like many South African businesses, with a turnover of less than 10 million – a BEE Affidavit will also serve its purpose. and have it signed by a Commissioner of Oath, and it will be valid for 1 year.
Much like CSD, your CIDB registration is your entry point into any Construction Tender or Contract. You will not be considered for any construction tender should you not be registered and comply with the South African law (Act 38 of 2000.
CIDB ensures that the Construction standards in South Africa are the same across the board. And as such, preventing underqualified persons from carrying out unethical practice in the construction industry.
The easiest way to do a CIDB Registration is to simply call us Toll Free on 0800 007 269 (free to dial from Cell phones and Landlines).
Here’s a link to a CIDB application form: https://www.westerncape.gov.za/Text/2005/1/formcrs_p1.pdf
The NHBRC (National Home Builders Registration Commission) will open many doors for those who are looking to Tender and Contract within the construction sector, but it is not mandatory to be registered with the NHBRC.
The Site itself acts as a housing database whereby construction companies are listed for respective clients, contractors, or tender opportunities in South Africa. You will also be able to apply for building loans.
Have a look at this helpful link: NHBRC Registration
To increase your chance even more at winning a Tender bid, registering for the MBSA (Membership of the Master Building Association) is always a good idea! Although this is not always a requirement, it does reflect good on the company and is often associated with accredited Construction companies.
You can find out more about the MBSA right here: https://www.masterbuilders.org.za/building-contractor/membership-benefits