Aiming to be a complaint business is the right thing to do. But as an entrepreneur who is either a first-time business owner or entering a new industry, you might not know where to start. This article takes a closer look at the burning questions that SMEs have, as well as advice on which licenses to obtain.
What is the Difference Between a Business Certificate and a Trade License?
It is easy to confuse the term ‘business license’ and ‘business certificate’. But these are not the same. Although the terms business license and trade license can be used interchangeably, a business license is the document that states a business is legally allowed to operate a particular business.
Trade licenses are specific to certain types of businesses. The Business Act 71 of 1991 classifies businesses that must obtain licenses in one of three categories: Sale or supply of meals or perishable foodstuffs; Provision of certain types of health facilities or entertainment, and; Hawking in meals or perishable foodstuffs.
Under the first category, any kind of food – from takeaways and restaurants to perishable food – is included. Perishable food is anything that isn’t shelf-stable (think fruits and vegetables that can go off, versus biscuits that can stay in the cupboard for months).
Under the second category, the following businesses are included:
- Turkish baths, saunas and health baths
- Massage or infrared treatments
- Male and female escorts
- Three or more slot machines and electronic games
- Three or more snooker or billiard tables
- Nightclubs and discotheques (where live or loud music is played)
- Cinemas and theatres
- Adult premises.
The third category, hawkers of edible goods or food vendors, is expected to also apply for such a license.
Licenses are vital for these businesses because of the high risks involved for members of the public. Risks such as food poisoning from a food vendor or other dangers that accompany gambling parlours.
If you intend to open a business such as the above mentioned, you must apply for a trade license through your local municipality.
A business certificate, on the other hand, is a completely different document. It is the same document you acquire when you register a business. All formal businesses are expected to have a business registration.
When registering your business, you indicate what type of company you are. This has nothing to do with the type of service or product you sell.
The governing body through which you obtain business registration is the Companies and Intellectual Property Commission (CIPC).
Is a Business License the Same as a Certificate of Acceptability?
The Certificate of Acceptability (COA) is something completely different from a business license. Establishments that handle, sell, or prepare food items also need to obtain this certificate. It assures buyers that the business complies with the health and safety regulations of the Foodstuffs, Cosmetics and Disinfectants Act 54 of 1972.
Businesses across the entire food value chain need to adhere to this regulation. They include:
- Commercial Food Businesses: Restaurants, cafes, coffee shops, and takeaways.
- Retailers: Supermarkets, convenience stores, and spaza shops.Food Processors: Factories, catering companies, and industrial kitchens.
- Informal Traders: Food vendors, hawkers, and spaza shops.
- Transportation: Vehicles used to transport food, including refrigerated trucks.
- Home-Based Businesses: Any food produced at home for sale, like homemade goods or meal kits that are made with the intention of being sold.
What are Some Industry-specific Permits?
Depending on the industry in which you operate, there are industry-specific permits and licenses that you need to obtain.
If you start a legal firm, for instance, the founding lawyer needs to obtain a valid Fidelity Fund Certificate (FFC). It is issued by the LPC and will entail a once-off fee of R 1 000. Additionally, you must complete a certified legal practice management course, as required by Rule 27.9.
If you are an e-hailing business, you must ensure that you have the right driver’s permit that allows you to transport civilians. This is also applicable to shuttle services.
Tourism operators, especially those operating in KwaZulu-Natal, must register with the Department of Economic Development, Tourism and Environmental Affairs. Tour guides need to have a certificate that states they are registered with the Department of Tourism.
If you research your industry and you are not finding any information about the certification or permits you need, investigate the different types of accreditation you may need. This can be anything from a personal trainer getting certified, to a
Food establishments, distilleries, shabeens, or liquor stores need to apply for a special liquor license that allows them to sell and distribute alcohol.
If you are a healthcare provider opening your own business, you have to apply for a Medical Practice License.
Similarly, a financial advisor or broker needs to obtain a Financial Services Provider License before they can run their own practice.
What Other Certificates, Permits or Licenses are Required of Entrepreneurs?
A few other certifications, licenses and permits that are unavoidable include:
- Tax Compliance Certification. You can obtain this from the tax regulator, SARS, once you have registered your business.
- Health and Safety Compliance Certification. This certificate confirmst hat you comply with South Africa’s Occupational Health and Safety Act. In your company records, this should be accompanied by a health and safety policy.
- B-BBEE Compliance Certification. As a part of the Broad-Based Black Economic Empowerment Act, the certificate ensures that the business has completed a B-BBEE scorecard in order to obtain its level rating.
- Compensation for Occupational Injuries and Diseases Act (COIDA). This certificate proves that employers intend to protect their employees in the case of work-related injuries or diseases. Your COIDA certificate is issued by the Compensation Fund.
The above information should guide you in the right direction in becoming a compliant business that adheres to all of the necessary permits and licenses. However, ensure you research your particular industry, because each industry differs, and some have stricter regulations than others. Take particular note of the above information that applies to every business, such as your business registration, tax compliance and health and safety certificates.
