Starting Your Own Business – The Concept

Starting your own business

Do you have a dream to start your own business? Do you wonder how business owners got to where they are? Then this is for you.

With a pandemic and hard lockdown hitting us, a lot of us have become unemployed and find it hard to acquire new employment. So, some of us resort to starting our own businesses to generate income for our family.

There are a few basic steps to start with:
1. Work on ideas, then do your research.
2. Setup a strategy, this is your personal “How-to” guide on how you are going to get started.
3. Setup pricing, calculate your time and effort, materials / cost of goods, etc.
4. Budgeting and Funding Capital.
5. Analyse whether you should register your business or trade as a sole proprietor.

Let’s break these steps down:

1. Brainstorm and Research
Have a look at your own interests and pick a few that YOU feel passionate enough about to convert into an income.
Now that you have some ideas, do market research. Look at your competitions website, social media pages, etc. Also request feedback from your community and social media contacts.

2. Strategize
Drawing up a business strategy is to your own benefit. You don’t want to just “wing it”.
Write down what materials / goods you require, how much time and effort it takes, how you are going to market your product, which sales channel you need, what bookkeeping software you will need, what delivery options you can offer, etc.

3. Pricing
Now that you have a plan, let’s do some costing.
What is your time worth?
How many items can you make / pack at once?
What is your cost of goods?
What does packaging cost you?
What is a reasonable profit margin for the items you are selling?

4. Budgeting
How much capital will you need to get started? 

Which items do you require?
What packaging do you require?
How much cashflow will you require?

5. Analyze whether you should register your business or trade as a sole proprietor.

There are benefits to both being a sole trader and to registering a company. The below information is a guideline, but whether you choose to register or not is up to you.

Sole Traders:

1. A sole trader is a business that is owned and operated by one individual.
2. There is no division between the business and its owner as an entity.
3. You don’t need to register with the CIPC
4. You need to register with SARS to receive accurate tax returns.
5. You can trade under your own name, or a trading name.
6. All legal and financial liability falls to you as the owner.
7. First Tax Bracket: 1 – 216200 = 18% of taxable income

Companies:

1. A Company can be owned and operated by one or more individuals.
2. The Company is identified as its own entity.
3. You need to register with CIPC
4. You need to register with SARS for business taxes
5. You can trade under the registered company name or a trading name.
6. Legal and Financial Liability of the company and its owners are separated
7. Tax Brackets differ from the Tax Type you register for. I will use Small

   Business Tax and Turnover Tax as examples:

            i. Income Tax for Small Businesses: 28%
            ii. Turnover Tax: 1 – 335 000 = 0% (up to maximum R1m turnover)

So, what are you waiting for? Get those ideas running and work on your strategy!
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This content belongs to Kami Kind Enterprises.
Some of the information contained herein is freely available on the internet for further research. This post is not for distribution purposes and serves as a guideline to our clients.