General Business

I have been puzzled by the fact that we are still selling a lot of shelf companies. After all, it only takes a few days to register a new company and the cost is R610 compared to R4 240 and upwards for a shelf company. As the sales are online, we don’t get to ask the question. I can only assume that they want an old company so that they appear to have been in business since its registration. What really does make sense is to buy one with an import or export licence if that’s what you need as…

According to the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 2022, the Directors of every company are required to submit a return of the Beneficial Owners (usually the shareholders) of their company to CIPC. Then they only have to submit another if, and when, the beneficial ownership changes. At this stage, I am not convinced that CIPC will only impose this obligation once or will require a new Beneficial Ownership along with the submission of every annual return. We’ll have to wait and see whether or not they get it right. In the meantime, however, they have…

You are thinking of going into business. You haven’t really made up your mind but you figure you may as well register a company in the meantime. Bad decision! We register hundreds of companies, and it is truly sad to learn later just how many of them never even started trading. The usual message is “Hi Derek, you may remember that you registered a company for me back in 2018. It’s never traded, so I didn’t submit tax returns or any of that stuff. Now SARS has hit the company with Administrative Penalties totalling R35 500! I’m not sleeping at…

It may seem a bit crazy. Here are the numbers: New company registration fee incl VAT R610 Of that SARS gets VAT of R80. CIPC gets R50 to reserve the name. CIPC gets R125 to register the company. That leaves R355 for us. And for that we provide: Free bookkeeping for the first 6 full months. Normal cost excl. VAT R2 810 B-BBEE Affidavit/Certificate. Normal cost excl. VAT R790 Derek’s book “16 Steps to Business”. Normal cost excl. VAT R410 (R470 incl VAT) Unlimited Zoom meetings with Derek. Priceless! Total value R4 010 excl. VAT and excl. Derek’s time. Are…

People used to buy shelf companies for a number of reasons: They needed a company urgently and couldn’t wait while CIPC went through the tedious registration process. It now takes about a day to register a new company at CIPC. They wanted to back-date the sale of the company (for R100) to their trust followed by backdated donations to the company. It is now compulsory to submit a Beneficial Ownership Return to CIPC and also in the company’s Annual Tax Return to SARS. This discloses who the shareholders are, so the change of shareholding can no longer be backdated. They…

It is very important to manage any loan account that you have with your company, because this can save you paying unnecessary tax. Loans to a company by you These can arise from: Money you spent on behalf of the company before it was registered. This is something that is frequently neglected. Your assets, such as computers, printers etc. that the company now uses. You should sell them to the company and credit your loan account with the sale price. Money you lent to the company when it was short of cash. Your after tax salary, for which the company…

Let’s say that one company has two businesses. There are two shareholders and each runs one of those businesses. The reason they chose this structure is that although different, each business generates leads for the other, so there is good synergy. Is there any benefit in keeping two sets of books, one for each company? Not in my view. The reason is that there are bound to be shared costs and if you have separate books, then you have to split those costs. This is a trap that is quite common. The difficulty is that you have to decide on…

I have yet to form a trust of which at least one of the trustees is also  beneficiary, so the answer is an unequivocal “Yes”. “But hang on”, you say, “I snipped this from the CIPC website when I was trying (yes, I’ve also tried) to submit my trust’s Beneficial Ownership return” – So now CIPC is changing the law relating to trusts. Absolute nonsense! But said with such authority, one wonders who in their right mind at CIPC could come up with that one.

Sure, we only charge R475 to form a company, and R175 of that goes to CIPC in fees. Maybe that’s why so many people don’t think twice about registering a company. What they don’t consider is that if they do not use the company, then these are the costs – Two nil provisional tax returns each year at about R650 each Nil Annual Tax Return at about R700 Or R200 every month per return SARS Administrative Penalty for non-submission CIPC Annual return about R1 000 Once off declaration of beneficial owners about R1 000 And then the whammy – Cost…

My regular readers will have noticed that I’ve made a couple of mistakes lately. Firstly regarding trusts having to register for tax (a whopper), and secondly, by cutting and pasting a lease and missing out the important cancellation clause. This brings me to a fundamental in management that few people adopt. I make it quite clear to my staff that they are allowed to make mistakes. I’m not talking here about sloppy work, I’m talking about genuine mistakes arising from lack of knowledge or experience. If they do make a mistake, they know that they can come…

So many people register a company with us and then do nothing with it. Is that a problem? Most definitely. SARS is imposing a penalty of R200 each month for every Income Tax return that is outstanding by companies. They appear to be particularly targeting dormant companies. To avoid this, you will either have to submit nil returns yourself or pay someone else to do them for you. CIPC imposes a much smaller penalty of R50 for late submission, but they will de-register your company after a few years of non-submission. You can submit the returns yourself or pay someone…

For over 20 years, we have been hearing that Government is working hard to make it easier to do business in South Africa. Huh? It would be ridiculously simple if just one reasonably intelligent, well informed, person spent just one hour thinking about it. He or she would come up with the following for any company whose turnover is less than R20m. Eliminate annual CIPC returns. They are a complete waste of time and money and achieve nothing. Saving about R1 000. Eliminate provisional tax returns. Collect all taxes from the Annual tax returns. Saving about R1 000 this would…

If you are starting a business you have to consider whether to continue as a sole trader or to register a company. In favour of a sole trader – You already have to submit a personal tax return. If you remain as a sole trader, then you still only submit your own return, but if you register a company, then you have to submit one for the company as well. A company has to submit two annual returns to CIPC and pay their small fee. If you don’t do it yourself you will need to pay for the registration. Currently…

So many people plan to form a company without knowing what the differences are. So, here we go – Shareholders are the owners of the company. They have no say in how it is run and the only decision they make is who they appoint as the directors. Directors are appointed by the shareholders to run the company for the benefit of the shareholders. There are two types of director – Executive directors are employees of the company and earn salaries Non-executive directors are not employees of the company. They sit on the Board and receive directors’ fees. They take part…