Step-by-Step Guide to Starting a Construction Company in South Africa (2024)

Have you ever dreamed of turning your building skills into a successful business?

Well, now is a great time to GO FOR IT – the construction industry in South Africa is growing, and with the right plan, you can make decent money with a construction company.

BUT before you grab your hard hat, there are a few legal steps you need to take to make sure your business operates legally and to protect yourself (and your future clients).

A lot of construction companies end up having to shut down because they aren’t compliant, or they get into big trouble and have to pay out a lot of money.

Luckily, this can be avoided if you follow all the rules when starting out.

Here is EVERYTHING you need to know about starting your own construction company in South Africa in 2024:

Step 1: Register Your Company with the CIPC

To make your business official, you'll need to register it with the Companies and Intellectual Property Commission (CIPC).

We’d recommend registering a Pty Ltd Company, as it has a LOT of benefits.

When you register, you’ll get a registration number and important documents you NEED to have to be allowed to operate. It is one of those things you just have to do.

Registering is important because it allows you to:

• Open a business bank account
• Enter into legal contracts
• Employ staff
• Tender for government projects

Registering a business can seem like a big and scary task, and you might want to put it off even though you know you have to do it - but you don’t have to stress so much about it!

Here is a helpful online service designed to make the registration process quicker and easier and help you get everything you need done in one place, including:

• Reserved company name
• Company registration certificate (COR14.3)
• Income tax registration number
• CIPC filing fees
• Free B-BBEE affidavit
• Share certificates for all shareholders
• Business banking account

Quick Hack: You can check if your business name idea is available with this FREE Company Name Search.

Step 2: Get a Tax Clearance Certificate

A tax clearance certificate is used by departments to make sure you’re compliant with SARS

You’ll need it if you want to:

• Apply for tenders
• Apply for funding
• Import and export goods

You can get your tax clearance certificate sorted out online, quick and easy.

Step 3: Meet B-BBEE Requirements

B-BBEE stands for Broad-Based Black Economic Empowerment, and the South African government uses this program to encourage inclusivity in the business world.

There are different requirements, all depending on your company's size, but when you first start out, you’ll likely qualify as an Exempt Micro Enterprise (EME).

This means your company earns less than R10 million a year and you need a B-BBEE affidavit, which is a simple document stating your B-BBEE level.

You can check your B-BBEE level and get your affidavit for free online.

As your business grows, you’ll need to get a B-BBEE Certificate, which works the same as a B-BBEE affidavit.

Step 4: Register with the CIDB

The CIDB (Construction Industry Development Board) is a professional association for construction companies.

Registering with the CIDB means you can:

• Work on government projects
• Bid on tenders
• Have an edge over your competitors

It also has a lot of other benefits for your business.

The CIDB puts businesses in different classes.

“What are the different CIDB classes?”

GB - General Building
CE - Civil Engineering
ME - Mechanical Engineering
SB - Asphalt Works (supply and lay)
SC - Building Excavations, shaft sinking, lateral earth support
SD - Corrosion protection (cathodic, anodic and electrolytic)
SE - Demolition and blasting
SF - Fire prevention and protection systems
SG - Glazing, curtain walls and shop fronts
SH - Landscaping, irrigation and horticulture works
SI - Lifts, escalators and travellators (installation, commissioning and maintenance)
SJ - Piling and specialised foundations for building and structures
SK - Road markings and signage
SL - Structural steelwork fabrication and erection
SM - Timber buildings and structures
SN - Waterproofing of basements, roofs and walls using specialist systems
SO - Water supply and drainage for buildings (wet services, plumbing)
SQ - Steel security fencing or precast concrete

Step 5: Get a Letter of Good Standing

A letter of good standing verifies that you're registered with the Department of Labour's Compensation for Occupational Injuries and Diseases Act (COIDA).

Here's why it matters:

• Compliance: Shows that you're compliant with labour laws and worker safety regulations.
• Get Tenders: Most tenders require a Letter of Good Standing as part of the application process.
• Protection: Both you and your employees will be protected in case of accidents or illnesses on-the-job.
• Follow The Law: It is a legal requirement from the moment you hire your first employee.

It is quick and easy to register online for COID, and to renew your letter of good standing (you’ll need to do this every year).

Step 6: NHBRC Registration (Optional)

Registering with the NHBRC (National Home Builders Registration Council) shows your clients that you follow building regulations and safety standards for homes.

It isn’t compulsory, but it CAN give your company an advantage through:

• Showing you care about quality and safety which will attract clients.
• Dispute resolution services from the NHBRC if you face any problems during a home building project.

It can seem confusing at first, but it is actually quite simple, here is a guide to help you.

BONUS Step: Register with the CSD to Get Noticed

The CSD (Central Supplier Database) is the government’s list of businesses that qualify to work with them.

A CSD registration number (MAAA number) is required to complete a CIDB registration.

Registering increases your chances of getting noticed for tenders, and it will help you to get contracts with the government.

“Great! Now I know how to register…”

“...but how do I get jobs?”

Here’s where to find construction jobs in South Africa:

Government Tenders:

If you’re registered with the CIDB (see Step 4), you can apply for government tenders.

You can find them on the National Treasury website – here you can browse tenders by industry, province, and closing date.

You can also check the website of your local Department of Public Works or Infrastructure for tender announcements.

Private Tenders:

Construction Industry Publications:

Here are some popular publications that advertise construction tenders:

• Construction Week Africa
• SA Builder
• Building and Engineering Review

Online Tender Aggregation Platforms:

These are platforms that gather tenders from different sources and show them to you in one place.

Here are a couple of options:

• Tender Board
• SA Tenders

Some platforms may require a subscription fee to access the full tender listings.

You could also try…

Networking:

At Industry Events:

It can help you a lot to attend trade shows, conferences, and workshops related to your construction niche.

Here are some places for you to find these events:

• Construction Southern Africa(Events section)
• SA Institution of Civil Engineering (SAICE) (Events calendar)

Construction Industry Associations:

Joining an association allows you to connect with other professionals and potentially find project leads.

Here are some associations to get you started:

Master Builders South Africa (MBASA)

South African Forum of Civil Engineering Contractors (SAFCEC)

LinkedIn:

How to find construction jobs on Linkedin:

• Connect with architects, engineers, project managers, and other industry professionals.
• Join relevant construction groups.
• Actively participate in discussions.

Subcontracting:

Contact Established Construction Companies

Research construction companies in your area working on larger projects.

Reach out to them directly and express your interest in subcontracting opportunities.

Contact Potential Clients Directly

1. Decide on Your Target Market – are you focusing on residential renovations, commercial construction, or something else?
2. Create a website that showcases your company's experience, qualifications, and past projects and use social media to connect with potential clients.
3. Provide free consultations to potential clients to demonstrate your expertise and build trust.

Now…

Let’s get BUILDING!

Good luck with starting your construction company, and remember – if you have any questions or need any assistance with your registration, feel free to reach out to our Support Team – we’re here to help!