If the firm is a sole proprietorship, the proprietor must complete the necessary application forms, giving particulars of the business, and pay the prescribed fees.
Only one certificate is issued in respect of sole traders as stated in the Estate Agency Affairs Act of 1976.
The sole proprietorship is a simple, informal structure that is inexpensive to form. Sole proprietors can conduct business under their own name. If you wish to operate under a trade name, then you’ll have to “register” that name. Contact Cipro for details.
In a sole proprietorship you’re personally liable for all obligations of the business, including debts incurred in the operation of the business, as well as for the negligent acts of your employees. As sole proprietor, you’ll have to report your business income and expenses on your individual tax return.
What this means for the finances of the business
Any profit made by the sole proprietorship will be taxed at the individual rates as set out in the tax tables issued by SARS. As a sole proprietor, operating a business of this nature you would be liable to register as a Provisional Tax Payer. If the business is run as a CC or PTY the business would currently be taxed at 28% per annum.
Can a sole proprietorship employ staff?
There is nothing stopping you employing staff and still trade as a sole proprietorship. However, you would have to register with SARS to pay PAYE.
You would have to deduct PAYE monthly from salaries and pay over the relevant amount to SARS each month.
If the turnover falls into the criteria of VAT regulations, the sole proprietorship would also have to register to pay VAT. It’s only compulsory to register for VAT if the turnover of your business is R1 million or more in any 12-month period
Estate Agents must have a Fidelity Fund Certificate
If you deal with other people’s money, i.e. collecting rent or dealing with the sale of properties, you will have to register with Estate Agency Affairs Board (EAAB). According to the law, estate agents who do not have a valid Fidelity Fund Certificate when they facilitate a property deal are not entitled to commissions earned.
Up until 2005 anyone wishing to become estate agent had the option of either being a candidate for 12 months or writing the Estate Agency Affairs Board’s (EAAB) examination. After July 2008 the EAAB introduced new regulations that both new and existing estate agents will have to comply with.
One of the changes was that agency owners must hold a valid Fidelity Fund Certificate which is their licence to operate in the residential market and to earn commission.
In order to qualify for a Fidelity Fund Certificate, the applicant must hold an EAAB recognised qualification in order to apply for a full status Fidelity Fund Certificate.
The Estate Agency Affairs Board issues the Fidelity Fund Certificate to the estate agent concerned and only on the issue of these Fidelity Fund Certificates, may such estate agent commence operations. The Fidelity Fund Certificate is renewalble annually.
How to register with the EAAB and obtain a Fidelity Fund Certificate
In order to register a firm, a person must be a registered Principal Estate Agent, as prescribed by the Estate Agents Act, 1976.
An Estate Agent may not use a name which is identical or similar to the name of an existing estate agent who has been issued with a Fidelity Fund Certificate or whose Fidelity Fund Certificate has been suspended, has lapsed or has been withdrawn.
It is important that before incurring any expenditure with registering a company you should first ascertain from the Board whether a proposed name is acceptable and has not been reserved in any way for any firm by the Estate Agency Affairs Board.
The new firm must open and keep one or more separate trust accounts with a bank, irrespective of whether or not the firm will handle trust monies. The new firm has to appoint auditors and the auditor must be a person registered with the IRBA.
The auditor must audit all the estate agency books of an estate agent including the trust ledgers and trust accounts.
Documentation required registering as a Principal Estate Agent:
Sole Proprietor
- Copy of your ID
- Auditor’s Letter of confirmation that they will be representing the firm for the submission of annual audit reports.
- Bank Letter of confirmation that the Trust A/C has been opened for the Firm
- Firm application form
- Application form for the Principal
- Cheque or proof of payment of R1 270.00 for each principal
- Renewal fee R855 per staff member
Close Corporation
- Copy of your ID
- Auditor’s Letter of confirmation that they will be representing the firm for the submission of annual audit reports.
- Bank Letter of confirmation that the Trust A/C has been opened for the Firm
- Firm application form
- Application form for all acting members/directors
- Company registration certificate (CK1 documents)
- Resolution form/letter for a member
- Cheque or Proof of payment of ±R1 270 for each principal
- Renewal fee ±R855 per staff member
Partnership
- Copy of your ID
- Auditor’s Letter of confirmation that they will be representing the firm for the submission of annual audit reports.
- Bank Letter of confirmation that the Trust A/C has been opened for the Firm
- Firm application form
- Application form for all acting members/directors
- Letter of partnership agreement between the partners
- Cheque or Proof of payment of R1270.00 for each principal
- Renewal fee R855 per staff member
Company (Pty) LTD
- Copy of your ID
- Auditor’s Letter of confirmation that they will be representing the firm for the submission of annual audit reports.
- Bank Letter of confirmation that the Trust A/C has been opened for the Firm
- Firm application form
- Application form for all acting members/directors
- Company registration certificate (CM29)
- Cheque or Proof of payment of ±R1 270 for each principal
- Renewal fee ±R855 per staff member
Qualifications
The EAAB is presently flexible in terms of qualifications in order to operate an Estate Agency. The criteria will change as soon at the NQF Level 5 qualification is fully up and running. At the present time a person can qualify for registration as a principal estate agent if they have passed the previous Board examination or if they hold a qualification that is seen as equivalent to the NQF Level 5 qualification.
Interns
Newcomers who want to register as non-principal estate agents must apply to the EAAB for registration as “intern estate agents” (in exactly the same way they would have done for registration as candidate estate agents under the old system) in the service of an estate agency.
In this case an ‘intern fidelity fund certificate’ is issued by the EAAB. The intern is then required to complete the full internship year during which time it’s highly recommended that the take all the steps necessary for the attainment of the Further Education and Training Certificate.