How to Start a Small Business in South Africa (2026): Registration, Tax and Funding
You can start a small business in South Africa with very little money, but the ones that last test their idea first, keep proper records and get the paperwork right. This guide covers what you must register, the 2026 SARS rules (including the new R2.3 million thresholds), permits, real funding and the cheapest business bank accounts.
Key takeaways
- A sole proprietor doesn’t register with CIPC. A company costs R125 to R175 on BizPortal.
- From 2026, VAT is only compulsory above R2.3 million turnover, and turnover tax covers businesses up to R2.3 million.
- Under turnover tax, the first R600,000 of turnover is taxed at 0%.
- Food and street traders need municipal permits, and funders check for them.
- Real funding includes the NYDA Voucher Programme and the Spaza Shop Support Fund. Never pay for a “guaranteed” grant.
In this guide
1Before you spend money: test your idea
Small businesses are the backbone of South Africa’s economy. There are more than 2 million SMMEs, but about two-thirds close before their fifth year (UNCTAD). The informal sector alone provides 21.4% of jobs (Stats SA, Q4 2025). Most businesses that fail run out of customers or cash, not paperwork. So start by checking that people will pay:
2Do you need to register your business?
Not always. SARS explains that a sole proprietor (one person trading in their own name) doesn’t register with CIPC. You declare the business income on your personal tax return. A private company, (Pty) Ltd, must register with CIPC and is taxed separately from you (SARS small business leaflet).
| Sole proprietor | Private company (Pty) Ltd | |
|---|---|---|
| Register with CIPC? | No | Yes |
| Cost to set up | Free | R125 without a name, R175 with a name reserved (BizPortal) |
| Tax | Business income goes on your personal ITR12 | The company pays its own tax. SARS registers it automatically |
| Good for | Testing an idea, side hustles, very small traders | Funding, tenders, corporate clients, and keeping business and personal money separate |
Company registration is done online at bizportal.gov.za. BizPortal advertises registration in one day, and lets you add a .co.za domain (R63.25) and register for UIF and the Compensation Fund for free. Businesses with turnover up to R10 million also qualify for a free B-BBEE certificate as an Exempted Micro Enterprise.
3Tax: what SARS needs from you in 2026
| Tax | The rule in 2026 | Source |
|---|---|---|
| Income tax | All business income must be declared. Sole proprietors with business income must also register for provisional tax and file twice a year | SARS |
| Turnover tax | A simple tax for micro businesses with turnover up to R2.3 million (up from R1 million). The first R600,000 of turnover is taxed at 0%. It replaces income tax, provisional tax and others with one return | SARS, SMME Connect |
| VAT | Compulsory once turnover goes over R2.3 million in 12 months, from 1 April 2026 (previously R1 million). You can register voluntarily from R120,000 | SARS, News24 |
4Licences and permits
- Business licence: municipalities require one for some activities, for example selling meals or running health or entertainment businesses (City of Cape Town).
- Food businesses: anyone who prepares, stores or sells food to the public needs a Certificate of Acceptability under Regulation R638. In Cape Town it takes about 10 working days and includes an Environmental Health inspection (City of Cape Town).
- Street and informal trading: you need a trading permit from your municipality.
- Liquor: selling alcohol needs a separate provincial liquor licence.
Rules and fees differ by municipality, so check with your local municipal business support office before you start trading.
5Funding and support for small businesses
| Programme | What it offers | Who it is for |
|---|---|---|
| NYDA Voucher Programme | Grants of R1,000 to R250,000 (Parliament, June 2026) | Young entrepreneurs. Check the current rules on nyda.gov.za |
| Spaza Shop Support Fund | Stock grants up to R40,000 and assets up to R50,000, or up to R250,000 as half grant, half interest-free loan, plus training (SAnews) | South African citizens running spaza shops in townships and rural areas. You need a municipal trading licence or permit |
| Township and Rural Entrepreneurship Programme (TREP) | Loans plus mentoring and compliance support (Eat Out) | Township and rural businesses such as bakeries and shisanyamas |
6Open a separate business bank account
Keeping business money separate from personal money is the simplest way to know whether you’re making a profit, and funders ask for business bank statements. Low-cost options in 2026 include:
- Capitec Business: R50 a month, with free local card swipes (Capitec, fees from 1 March 2026).
- FNB First Business Zero: from R0 a month for sole proprietors with turnover under R1 million (FNB).
Then keep every slip and invoice, and write down every sale. Our guide to bookkeeping and payroll explains how.
Start & Grow My Business: Foundations
Spot real opportunities, understand your industry and finances, write a business plan you can use to manage the business and approach funders, and market what you sell. It also covers tendering for work in the public and private sectors.
7Frequently asked questions
How much does it cost to register a business in South Africa?
Registering a private company on BizPortal costs R125 without a name, or R175 with a name reserved. A sole proprietor doesn’t register with CIPC at all.
Do I need to register my business to start selling?
Not with CIPC if you trade as a sole proprietor. You still need to declare the income to SARS and get any municipal licence or permit your activity needs, such as a trading permit or food Certificate of Acceptability.
Do I have to register for VAT?
Only once your taxable turnover goes over R2.3 million in a 12-month period, from 1 April 2026. You can register voluntarily from R120,000.
What is turnover tax?
A simplified tax for micro businesses with turnover up to R2.3 million a year. The first R600,000 of turnover is taxed at 0%, and it replaces income tax and provisional tax with one return.
How do I get NYDA funding?
The NYDA Voucher Programme gives young entrepreneurs grants of R1,000 to R250,000. Check the current application process and requirements on nyda.gov.za before you apply.
How do I apply for the Spaza Shop Support Fund?
Apply at spazashopfund.co.za. You need to be a South African citizen running a spaza shop in a township or rural area, with a municipal trading licence or permit and a SARS number.
Do I need a licence to sell food from home?
Yes. Anyone who prepares or sells food to the public needs a Certificate of Acceptability from the municipality under Regulation R638.
Build a business that lasts
Learn to spot opportunities, manage your money, write a business plan and market what you sell, on your phone, at your own pace. Finish with a certificate.
Start the business course for R199
Responses