South Africa legislation requires that certain types of businesses own a valid business or trade license. These businesses include restaurants, coffee shops, bars and even health and wellness spas.
Due to trade licenses not being a requirement for all new businesses, it can be easy to fall on the wrong side of the law before you even start seeing profit margins.
Before we get to the frequently asked questions surrounding trade license and how they can affect your SME, let’s answer this fundamental question:
What is a business license?
A business license allows business owners to establish specific types of businesses in specified areas. Moreover, the license also ensures that your business and business premises meet all building regulations, as well as public safety and health requirements. It goes without saying that trading without a valid license is unwise as it is a punishable offence.
However, most businesses do not require a business license, but specific kinds of companies are not permitted to trade without the appropriate trade license in accordance with the Business Act 71 of 1991, which governs it. These businesses include:
Health clinics, spas, saunas, and public baths
Massage parlours, laser and ultraviolet treatment centres
Any business with three or more vending or slot machines
Places that serve food provide take-aways or transport meals.
How does one apply for a business license?
Any and all applications have to be completed and submitted to the appropriate licensing departments. Your application has to include the following: copies of company documents, ID documents of members, the manager’s ID and once-off payment fees.
How is the success of your application determined?
Once your application has been submitted, the licensing department sends out a report to the other relevant municipal offices. Your application has to comply with all relevant laws, including:
- Health and Safety
- Applicable to the requirements for food premises and the transport of food
- Noise and air pollution
- Applicable to the control and prevention of noise and air pollution
- Building Control Unit
- Applicable to building authority in compliance with the National Building Regulations and Building Standards Act, 1977
- Urban Planning Unit – Applicable to land use rights
- Public Safety and Emergency Services – Applicable to public safety.
How long are trade licenses valid for?
Trade licenses and applications are non-transferable in the case of a change in ownership or in the event of moving from a new premise to another. Moreover, trade licenses can be withdrawn or suspended if you’re found to be not complying with endorsements. Once you’ve received a trading license, you are subject to possible routine inspections.
Tips for applying for a business license:
1. Always know whom you’re dealing with. Depending on where your business is based, you will either deal with a metropolitan council, a local town municipality or an area district council. Regardless of your situation, you will be dealing with the licensing office or licensing department in your city or council.
2. Get your facts straight. Before setting off to stand in line, call your local council to confirm whether your business requires a business or trade license as well as where you can acquire the required information and application forms
3. Be sure to check for any additional requirements. It’s a wise move to ensure that you check whether your business requires any other permits or certificates.
4. Know the by-laws. Business and trade license requirements are governed by the National Business Act and apply countrywide. Permits and certificates, on the other hand, are commonly issued per local authority by-laws, and these by-laws often differ from municipality to municipality.
5. Obtain proof. Ensure that the licensing department issues the correct evidence of application and payment fees before leaving their offices.