DEAR Mr Godsell, I read your article on job creation, "50 million wealth creators" (February 5), and wish to explain why, in my opinion, jobs are not being created, and will not be created in any great number. I am an accountant and business adviser based in a small town. I wish to explain a scenario that happens on a regular basis to people that hold similar positions to me.

A hypothetical businessman, who has a very good idea for a new business venture, approaches me to advise him on all the legal requirements he needs to adhere to when he starts his business. I inform him as follows:

• It will take between six months and a year to do all the registrations needed before business can commence;
• He will have to register as a taxpayer and comply with all the tax laws. The cost to do so, and the cost of preparing and submitting all returns, will be for his account. There are severe financial penalties and additional interest for mistakes and non-compliance;
• He will have to register as a VAT vendor, which can only happen three months after the business has commenced, as three months of bank statements are a requirement. The cost to do so, and the cost of calculating, preparing and submitting all returns thereafter, will be for his account. There are severe financial penalties, possible fraud charges, plus additional interest for late payment, mistakes and non-compliance;
• He will have to register as an employer for PAYE, UIF and Skills Development Levy. The cost to do so, and the cost of preparing and submitting all returns thereafter, will be for his account. There are severe financial penalties, possible fraud charges and additional interest for late payment and non-compliance;
• He will have to register for Workmen's Compensation. The cost to do so, and the cost of preparing and submitting all returns thereafter will be for his account. There are severe financial penalties, and additional interest for mistakes, late payment and non-compliance;
• He will in all probability receive a form from the Department of Statistics not long after he has commenced business, which he will have to complete on an annual basis and to return at his cost.
• He will have his company audited if his employees plus other factors exceed 350 points. This will result in substantial cost;
• It is highly likely that he will, in the not-too-distant future, have to register with the National Health Department and pay a levy to them for each employee to fund the proposed National Health Scheme. This levy could be substantial;
• I will also have to inform him that there is lobbying by the local government authorities for a local business tax for the municipality. He must factor this into his business cost as it may become reality in the near future;
• It would be remiss of me not to point out that the uncertainty resulting from the call by certain sections of the ruling party for the nationalisation of farms and mines is creating difficult economic conditions which is not conducive to new business;
• He will have to comply with the Employment Equity Act if his employees exceed 50 and turnover exceeds the determined amount for his business sector. Penalties can be up to R500000;
• He will have to comply with BEE requirements, which will be difficult as a start-up business. He will find it difficult, if not impossible, to trade without a BEE rating. New proposed legislation seems to include jail sentences of up to 10 years if it is found that he may be fronting;
• His staff will probably belong to a trade union which will try to dictate how much employees must earn, their employment and working conditions, etc. The last start-up business in the town which had substantial employees closed shortly after it started because of issues with a militant trade union;
• He will be included in the bargaining council applicable to his business sector, which will determine the wage rate applicable to his staff and he will have to pay this whether viable or not;
• He will have to comply with the strict conditions enforced by the Department of Labour. Proposed changes to legislation could include jail time for failure to comply.

Needless to say, once being made aware of the requirements needed to run a business and employ people, very few people decide to proceed , which is the reason jobs are not being created and will not be created. Furthermore, businesses that do have employees try their best to have as few as possible, especially so as to remain below certain thresholds applicable to the various legislation.