zombie, Author at Harbour & Associates

Only beneficiaries can receive benefits from a trust, so it is important to know who can and cannot be beneficiaries. Beneficiaries can be defined by name. For example, “David Marks, Peter Jones, Sally Abrahams” etc. Or as an identifiable class of people. For example, “Any child born of or adopted by David Marks”. Another Trust can also be a beneficiary and again this could be defined by Trust name and number or by identifiable class such as “Any trust of which David Marks is a beneficiary”. A Company or CC can be a beneficiary. This could be defined by name…

You formed a NPC thinking that it would never accumulate profits, but now it sits with Retained Earnings and you can’t declare dividends. Can you convert it to a Pty? The straight answer is No. This conversion is not allowed in terms of Schedule 1(2)(1)(a) of the Companies Act of 2008. So what must you do? There are two issues How to extract the Retained Earnings and How to restart as a (Pty) Ltd company These can be dealt with in the following way – All Directors and employees of a NPC are entitled to reasonable salaries or earnings. You…

You hear about Bitcoin, then you must also hear the word blockchain. Ever wonder what the heck it is? I like to think of it as a new Internet of events. The events are the blocks and the sequence is the chain. Hence blockchain. It was adapted by Satoshi Nakamoto, the unidentified person or group of people who enhanced it for Bitcoin. Let’s take a simple example – On 12 July 2008…

In theory, yes you could, but in practice that would be a very silly thing to do. Perhaps the best way to illustrate this is that about 15, maybe 20 years ago, I studied trusts very carefully and wrote a trust deed template for use with all future clients. That template has served me well, but because trust case law keeps changing, the requirements of the Master of the High Court keep changing and because I keep thinking of subtle but important little tweaks, I am constantly changing the template. Now if I, recognised as one of the country’s…

We always recommended an independent professional trustee. Now it is a “must have” The reason for the recommendation dates back about 12 years to the Badenhorst vs. Badenhorst case. The Badenhorsts were getting divorced and Mrs wanted 1/2 of Mr’s assets. He didn’t have any – they were all owned by a living trust that he had set up previously. Mrs Badenhorst took him to court and won the case. The judge said that Mr Badenhorst’s trust only had his brother as the other trustee, they never discussed the trust (i.e. there were no minuted meetings), Mr B bought and…

The absolute minimum cost is represented by the CIPC fees which are R50 to reserve a name and R175 to register the company. However, it is much easier to pay a little more and get professionals to do the job. They do it all the time so get the job done right first time and therefore more quickly than you would yourself. Typically their fees would be a total of R1 980 and these will often include a few extras, which themselves have value. Harbour and Associates, for instance, for R1 980 offers the most extras and these include –…

In a word, No! So what do we mean by the Asset Protection function of trusts? One important function of a living trust is to protect assets from your creditors if you should be bankrupt, or even if you should be attacked by your creditors. There are three important things to remember – 1) The trustees must never sign surety for any of your personal debts, because the firewall would break down for that creditor. 2) If the creditor is on the trust’s side of the firewall (such as when the trust takes out a bond), then the related assets…

There are a few simple mistakes that people make when writing their wills. Here they are – 1) Don’t write a joint will with your spouse. Rather two separate wills. 2) Leave everything to your spouse so that your R3,5m Estate Duty allowance passes to him/her. 3) Then, if you die simultaneously, leave everything to your living trust, so that your trustees can look after the beneficiaries in accordance with their needs from time to time. 4) Never bequeath money to a minor, because the money will have to be deposited in the Guardian’s Fund. Rather…

I have a client with a property portfolio of just short of R500m. He has been enslaved by his bank and SARS. Here’s how – Government departments only want to rent property from black owned enterprises, so, in the early days, my client was able to buy commercial properties from white owners, negotiate 10 year leases with Government departments and then take those leases to his bank for finance. The bank would then discount the future rental income to present day values and grant a facility for that amount of money. So initially the money received from the bank exceeded…

I often get asked “If assets are owned by my company, are they protected from my creditors?”. The answer is usually no. Why? If you own the shares in the company, then the shares are assets in your name which can be attacked by your creditors. If they get your shares, they get the assets. So no protection there. If, on the other hand, you own shares in two companies, the creditors of the one company cannot attack the assets of the other company simply because you’re the shareholder of both. The “Limited” in (Pty) Ltd means that the shareholder’s…

I write a free will for anyone who buys a trust from us and one for their spouse as well, but I never write a joint will for both of them. Why? Jane and Trevor had a joint will leaving everything to each other when the first died and then the entire estate to their two children in equal portions when the second died. After Jane died, one of their children had a serious road accident and was restricted to a wheelchair. The other was making a stash as a businesswoman. Trevor died and the estate…

If you’re not asking yourself this question, you don’t live in South Africa! Even the JSE’s own share value took a dive this week because of a significant fall in turnover. So, what to do? Yes, we are all in it together. This is probably not your fault, but you can’t just blame the economy. It is your responsibility to ensure that your business survives despite the economy. Look around you. What did Standard Bank do in May and June 2019? They closed over 100 branches! Why? To cut costs, that’s why. So, step number 1. Re-calculate expected…

I often come across situations where the directors of a company are at war with each other. Accusations and denials fly like bullets. There is relief available in law. I owe this entirely to Telfer & Associates Inc, but felt that it is so valuable that I simply had to pass it on. I’ve snipped the crunch lines below, but if you want to know more, I suggest that you contact them directly 011 267 2600 or queries@telferinc.co.za. Just mention from where you got the lead. As Telfer & Associates point out, it is…

Now that SARS has established their monthly penalties on outstanding Annual Tax Returns, they have moved on to VAT returns. They are still only imposing monthly penalties on what appear to be randomly selected dormant (and of course, active) companies. They are now moving on to impose administrative penalties on outstanding VAT returns. This is upping the ante hugely as VAT returns are due every one or two months and the minimum penalty is R250 per month per outstanding return. So if there are say, 6 returns outstanding, the penalty will be R1 500 each month until they are…

I guess the first thing is to ask yourself “Why do I want to start a business?”. To get rich? Forget it! Freedom? Forget it! To make a living? Sounds good! To satisfy a dream? Also good! Sure, some people in business actually do get rich. But I haven’t met many in the last 30 years or so that I have been with Harbour and Associates. And freedom? Freedom is going to work 8 hours a day, 5 days a week, leaving about 55 hours a week to enjoy other things and that’s not including the 13 public holidays when…

Free business plan templates are readily available online. They are there to draw you in to buying business planning software, graph generators, financial templates, depreciation templates, SWOT templates and lots more. Don’t go there! Why? Well, scratch a little deeper. I’m looking at one right now that offers 500+ free business plans. There’s a picture of a happy artist and his quote “I just wrote my first business plan in 24 hours using ….. (the name of their software) and it’s beautiful and complete”. There’s a sidebar that says “How to Write a Business Plan in 30 Minutes”. Then they…

Last week I explained opportunity costs. Let’s take a look at another cost, called a sunk cost. We’ll take the same example as before. You are self employed and have booked a two week cruise at a cost of R80 000 plus airfare of R10 000. Just before your holiday is about to start, you get an offer to present a series of seminars on the health benefits of gluten free food products, which is what your company makes and sells. The organisers, Discovery Ltd, will pay you R120 000 for the seminars, plus you reckon…

An opportunity cost is the cost of a benefit which is forfeited as the result of choosing not to do something. Let’s take an example. You are self employed and have booked a two week cruise at a cost of R80 000 plus airfare of R10 000. Just before your holiday is about to start, you get an offer to present a series of seminars on the health benefits of gluten free food products, which is what your company makes and sells. The organisers, Discovery Ltd, will pay you R120 000 for the seminars. If you decide to continue with…

Yes! And hurry! On 29 November 2019, SARS changed the game for dormant and shelf companies. After the flurry of uncertaintly, we are now fairly sure of SARS’ intentions, although they have only been applied erratically. 29 November 2018 SARS issues a statement to the effect that they will be imposing administrative penalties on all companies, with outstanding tax returns, including those that have not traded. 26 January 2019 SARS posts final demands on some companies (but not others) efiling profiles to submit their outstanding returns up to 2017, giving 21 business days to do so.

Author: zombie

Who can be a beneficiary of a trust

How to change a NPC to a Pty company

What is Blockchain?

Can I form my family trust myself?

Does my trust need an independent professional trustee?

What does it cost to register a company?

Can a trust prevent bankruptcy?

10 things to remember in your will

How the bank enslaved my client in a Debt Trap

Can a company protect my assets?

Why a joint will is a bad idea

How can I save my business?

How to liquidate your company when the directors are at war

SARS now imposing monthly penalties on late VAT returns

What is the best way to start a business?

Why a free business plan is a waste of time.

What is a sunk cost?

What is an opportunity cost?

Must my dormant or shelf company submit tax returns?