The easiest way to take advantage of B-BBEE is to be an Exempted Micro Enterprises (EME). According to SARS, 95% of economically active businesses already qualify to be EMEs, they just don’t know it.
What do EMEs have to do to be B-BBEE compliant?
EMEs don’t have to DO anything to comply with B-BBEE requirements, they automatically do so by virtue of the fact that they have an income of under R 10 million per year.
And EMEs also automatically qualify as a B-BBEE level 4 contributors, and some even as level 1 or 2.
Why would you want to be a B-BBEE level 4 contributor?
When you are a B-BBEE level 4 contributor, companies that do business with you can claim 100% of their purchases from you as “BEE procurement” in their Enterprise and Supplier Development element.
Big businesses (those with an annual income of R50 million and more) need to buy from businesses with a verified B-BBEE status to comply with one or more of their Scorecard elements. That’s how they maintain their own B-BBEE status and get preferential treatment when they do business with government and other corporates.
Mineral Resources Minister Ngoako Ramatlhodi told the Mining Indaba delegates: “To have a mining licence in South Africa, a company has to be 26% black-owned and make efforts to procure at least 40% of goods and services from black-owned suppliers.”
First published in SME South Africa
Generic Scorecard Element
|Ownership P||25 points|
|Management Control (incl Employment Equity)||15 points|
|Skills Development (int & ext black dev) P||20 points|
|Enterprise and Supplier Development (ESD) P||40 points|
|Socio-Economic Development||5 points|
Does my business qualify as an Exempted Micro Enterprises (EME)?
If your business’ income is below R10m (or it is less than a year old), you automatically qualify as a B-BBEE level 4 Exempted Micro Enterprise.
If your business’ income is below R10m AND your black shareholding is above 50%, you qualify as a B-BBEE level 3 EME. 100% black shareholding gives a you level 1 status. That makes you even more attractive to your big business customers.
Small businesses with more than R10m income, need to undergo a full BEE audit to qualify for QSE (Qualifying Small Enterprise) status.
How do I get a B-BBEE certificate for my business?
As of 11 Oct 2014, EMEs no longer need a B-BBEE certificate from a verification agency. You only need an affidavit certifying your total annual income and level of black ownership. If you do want a certificate, visit SANAS for a list of B-BBEE Verification Agencies (or search for B-BBEE certificate on the internet)
So, what are you doing to help big companies be good citizens while taking advantage of your business’ B-BBEE status?
Click here if you want to discuss how we can help you with B-BBEE.