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Friday, 16th August 2019

Back to Basics for Business Owners – Types of Companies

Small businesses are the backbone of the South African economy and a major contributor to our economic sustainability.

The registration process is a somewhat tedious experience for small business owners who already must fill a few shoes.

There are a few options when registering your entity:

Sole proprietorship

A type of entity where the owner also runs the business. There is no distinguishing between the owner and the company. All profits/losses are included in the tax return of the owner as the entity does not need to register with SARS or CIPC.

People may think that the administrative tasks of this type of entity is less than a company but to keep record in a meaningful way for a sole proprietor is a daunting task.

Partnership

The same as a sole proprietorship except for multiple business owners.

A partnership is also not a separate legal person or taxpayer. Each partner is taxed on his or her share of the partnership profits.

Company

A company is a separate legal entity with its own rights and obligations. A company needs to register with SARS within 60 days after registration with CIPC for an income tax number.

A director/officer of a company will be deemed liable to the same extend as a shareholder of the company.

 At Jacobs and Beukes Consulting (Pty) Ltd we prefer our clients to register a company not only for tax purposes but also for estate purposes. We like to plan for the bigger picture and not only for the current situation where our client find themselves.

Companies especially small to medium enterprises have tons of tax relief and the South African government has put a lot of effort into relieving them from a tax burden.