1. Companies and intellectual property commission (CIPC)

Whether yours is a private or non-profit company, you have to register your business with the CIPC. This includes choosing a name for the business and reserving it for exclusive use.

2. Memorandum of incorporation (MOI)

Your MOI clarifies the rights, duties and responsibilities of all the company’s shareholders and directors.

3. Shareholders’ agreements

These agreements regulate the relationship between shareholders. They help to navigate unforeseen events, such as the death of a shareholder or when one wishes to exit, and keep processes professional.

4. Ordinary and special resolutions

Ordinary resolutions typically involve day-to-day operations, such as approving budgets. They often require a simple majority vote (more than 50%) of shareholders or directors to agree or disagree. Special resolutions, however, come into play when there are decisions that will have a big impact on the company, such as a name change. They require a higher majority vote – often as much as 75%. The exact percentage must be defined in your MOI.

5. Key-person insurance

As 75% of South Africa’s SMEs are family-owned and managed, key-person insurance is there to protect your business against financial loss in the event of death or disability. It’s a type of life insurance for anyone whose role is critical to the business.

6. Employment contracts

They are a must for any SME that employs staff. You need to decide whether an employment contract is permanent, fixed-term or contract, and have the right documentation in place.

7. Probation period

When you employ someone permanently, the appointment is subject to a probation period of three to five months. Use this time to evaluate whether their skills, experience and values are a good fit for the business.

8. Collaboration agreements

These agreements protect everyone involved. They outline responsibilities, determine how profits will be divided and set out procedures when one of the parties terminates the agreement.

9. Last will and testament

Everyone should have an updated will, no matter how much you earn. The important decision business owners must make is whether they want the business to continue (i.e. someone inherits it) or whether they want it to be sold so that the beneficiaries can inherit the money.