If you’re about to start a business, one of the wisest things you can do is consult a lawyer. Getting all the i’s dotted and the t’s crossed will go a long way in ensuring success. Our legal expert, David Dadic gives start-ups six tips on legal basics

  1. Before starting up a business, you need an entity from which to trade. With tax and statutory implications, it really does make sense to consult with an expert on which type of business vehicle will best suit your needs.

Close Corporations are no longer an option in South Africa for newly registered businesses, although exiting CCs can still operate. So, the most common choices are as per the following:

  • Public (name ends in ‘Ltd’) orprivate (‘Pty Ltd’) company
  • Personal Liability Company (‘Inc’)
  • Partnership
  • Business trust
  • Sole proprietorship


  1. You’ll also need to decide if you should buy a shelf company, which is a company already registered, or if you should register a brand new company. It is cheaper to buy a shelf company, but that’s not the only difference – there are advantages and disadvantages with both options, so get the right advice about which suits your needs best. Speak to your lawyer as well as your accountant.


  1. It’s imperative to have a strong agreement – it doesn’t matter how much you trust your new partner or employees, good agreements make for good business relationships. Even if you never look at the agreement again, you’ll have the peace of mind that you’ve looked at every eventuality, thought it through and have come up with a way of dealing with them. Fine-tune all your business relationships well before you begin.


  1. Other agreements you’ll need, depending on your type of business, include service level agreements – how you are going to service your clients; credit agreements – if you are going to offer lines of credit to your clients or customers; and if you’re thinking of franchising, you’ll need to set up franchise agreements. Depending on the nature and structure of your business, there are numerous agreements you’ll want to have in place.


  1. Also consult with your attorney in terms of agreements given to you to sign by other parties – such as your lease agreement for office space. There’s a lot of legalese that goes into contracts, so even if you’re confident you can understand the agreements, it’s always best to make sure you know every implication of what you’re signing.


  1. There are numerous legal aspects to running a business, in terms of staff – ensure you are up-to-date with all the regulations regarding tax, PAYE, UIF, VAT, as well as issues like Health and Safety Regulations.