Business licensing in Cape Town
This page is here to help give you a starting point to find out about some of the obligations that may apply to you if you decide to host Trips or Experiences on Airbnb. It’s for your information only and includes summaries of some of the rules that may apply to different sorts of activities, and contain links to official resources that you may find helpful.
Please understand that these information pages are not comprehensive, and are not legal advice. If you are unsure about how local laws or this information may apply to you or your Experience, we encourage you to check with official sources or seek legal advice.
Please note that we don’t update this information in real time, so you should confirm that the law has not changed recently.*
When am I a business?
You are likely to be considered to be operating a business if you regularly provide goods or services in return for money. If you just provide a Trip or experience as a once-off or irregularly, you are unlikely to be considered to be operating a business.
Examples of where an individual may be considered to be “operating a business":
- I am a professional cook and I make my living by organising pop-up dinners. My experiences and Trips will involve pop-up dining.
- I am a non-professional cook with a passion for food and my local area. I provide experiences or Trips involving cooking classes and guided visits of my area and the shops and locals I love. I do this on a regular basis and this is how I make my living.
- I am a professional part-time yoga instructor. I want to occasionally provide Trips or experiences which involve me providing yoga classes and introducing guests to some of the wonderful yogis I know. While I will be providing these Trips or experiences to guests occasionally, these activities will be similar to those activities which I provide regularly as a professional part-time yoga instructor.
Examples of where an individual may not be considered to be “operating a business":
- I provide an experience or a Trip as a once-off thing, or just a handful of times a year, mainly centred around local events that I love going to (and where I know the organisers and artists). This is not something I rely on to make my living: I am a freelance graphic designer by trade.
- I am a professional yoga instructor by trade and I make my living by running yoga classes in various locations. In my spare time, I love to cook healthy vegetarian meals and I have a passion for sharing this way of eating with people. I want to provide experiences or Trips on an ad-hoc irregular basis which will centre around healthy vegetarian and vegan eating and organic food markets only and will not include yoga classes.
The above scenarios are general, high level examples of when an individual may or may not be considered to be operating a business. There are no specific criteria which can be applied to determine whether the frequency with which you intend to provide the Trips or experiences would result in you being considered to be operating a business. Whether or not you might be considered to be operating a business depends on your individual circumstances; if you are unsure, you should seek advice from an accountant or legal advisor.
What if I am a business? Is there anything I need to be aware of when dealing with consumers?
Yes. If you are regularly providing goods or services to Guests (who are consumers), in exchange for money, it is likely that the goods or services would be considered to be provided “in the ordinary course of your business" (even if you do not think of yourself as operating a “business") and you will need to comply with the Consumer Protection Act 2008. This applies to all your dealings with Guests - including the information you provide Guests about your Trip or Experience, any transaction you enter into with a Guest to provide your Trip or Experience to them, as well as the Trip or Experience itself.
The Consumer Protection Act requires you to deal with Guests fairly and transparently and to ensure that you do not provide them with false, misleading or deceptive information: for example, by exaggerating what they’ll get as part of a Trip, by misrepresenting the price of your Trip or Experience or by failing to tell them in advance about any additional fees or expenses they may need to incur as part of an activity - e.g. if they need to pay for entry tickets to an event). It also requires you to provide safe and good quality good and services to your Guests.
You can find out more about the Consumer Protection Act on the National Consumer Commission website. If you are unsure about whether the Consumer Protection Act applies to you, or which provisions of the Consumer Protection Act apply to you, you should seek advice from an accountant or legal advisor.
Do any business registration / licensing obligations apply?
You can operate as a business in South Africa without having to obtain a “general" business licence.
However, you should always check whether specific licences or registrations are required in relation to the specific activities you would like to carry out or in relation to the premises in which you might be carrying these out:
- The Business Act 71 of 1991 (at Schedule 1) sets out a list of specific business activities for which the person conducting those business activities must obtain a “business licence" in relation to the premises at which these are provided. If you plan to conduct any of the business activities listed in Schedule 1, you should obtain a business licence from your local authoritybefore you start engaging in those business activities. You should be aware that Schedule 2 sets out certain types of business activities which are specifically exempted from the requirement for a business licence. It’s worth checking both schedules to find out whether either schedule applies to you. If you’re unsure, contact any Environmental Health office in the City of Cape Town.
- In addition, for certain kinds of activities, additional laws may apply which may require you to obtain a certificate or licence or to register with an authority before you provide or engage in those activities. You can take a look at our section on activity-specific licensing and safety requirements and should carry out your own research to find out what rules may apply to you. If you’re not sure, you can contact your local authority (the City of Cape Town) as a starting point, but you should also consult an accountant or legal advisor to find out what legal requirements may apply to you.
What legal structure could I choose to use?
There are different legal structures you can use to set up your business. For example, you could choose to be a self-employed sole trader (this is the status that would apply to you if you start running your own business as an individual without registering it under a formal legal vehicle), or you could set up a company, close corporation or partnership.
You can find out more information about each type of formal legal structure on the Companies and Intellectual Property Commission (CIPC) website. The Small Enterprise Development Agency (SEDA) also publishes information about the different types of formal legal structure you could choose for your business.
Is there anything else I should be thinking about?
You should be aware of potential criminal offences for failure to comply with business licensing or registration requirements, which may include financial penalties and the possibility of a custodial sentence.
In addition, depending on the particular activity you will be providing or organising, you may need to register, obtain licenses, or follow specific rules that apply to that activity. Our section on activity specific licensing covers some of the typical activities, but is not intended to be comprehensive. You should always check the position with the City of Cape Town and seek advice from a legal advisor.
You should also check what tax and accounting rules apply to you, and make sure you have the right insurance cover in place to cover all the activities you will be providing.Activity-specific licensing and safety requirements
Depending on the activity you will be providing or organising, you may need to register, obtain a licence, or follow specific rules that apply to that activity. This section covers some of the typical activities, but is not intended to be comprehensive. You should always check the position with the City of Cape Town or seek advice from a legal advisor.
*Airbnb is not responsible for the reliability or correctness of the information contained in any links to third party sites (including any links to legislation and regulations).