General Business

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…

The cheapest way is to form the company yourself as the only cost is the R175 fees payable to CIPC. The problem with that is that you still have to produce the share certificates, share register, obtain a tax clearance if needed and a B-BBEE affidavit if needed. It’s our 50th Anniversary so, for fun, we’ve dropped our fee to R475 which includes the CIPC fee, so we get R300. And you get the share certificates, share register, a tax clearance and a B-BBEE affidavit. Other service providers are currently charging about R2 000, which is our normal fee. But…

Despite my having written an article stating that you cannot change an NPO into a normal company, somebody booked a meeting to discuss how she could do exactly that. She was a “no show”, so I never found out what it was all about. But it almost certainly meant that she did not understand the difference between the two types of company. There’s just one difference – an NPC cannot distribute dividends to its shareholders either in cash or in kind. Now, how many private companies declare dividends? I’ve known about 10 in all of my 36 years with…

I have had some informative experiences recently regarding the price sensitivity of our products. It’s our 50th anniversary, so, I used that as an excuse to drop our price for company registrations to R175. Just enough to cover the CIPC fees. The reason that I did this was a realisation that we make our money from servicing companies with registrations, bookkeeping, payroll, returns, B-BEE affidavits and a host of other services. So why not just give them away and that way we increase our potential client base for our other services. We were inundated. I had to stop the special…

Have you noticed that SARS claim to be only 25 years old? It’s on their website when you log in. And here’s Harbour and Associates celebrating 50 years – And still many people don’t know that we are accountants! So let’s put the record straight. Here’s what we do – Financial statements with or without review Formation of trusts Formation of companies Personal and company tax Bookkeeping Payroll VAT B-BBEE affidavits Company secretarial Registrations Wills Business plans But, most of all, what we do is stand by you. I’ve been meeting people at no charge for something like 10…

We recently formed a company for someone. He wanted the name Bidvest S…….. (Pty) Ltd. I can’t say what the S…….. was but it described the kind of business that he was in. The computer at CIPC would not see a conflict because there are so many Bidvests (52 at the last count) that it would interpret that as meaning that no-one had exclusive title to the word. The name was approved by CIPC and we went ahead and completed the company registration. Shortly after that he was complaining to us that the name Bidvest was a Trademark and they…

Last week I talked about a client who is building his company on bad business instead of good business and I briefly mentioned some performance ratios that he needed to achieve in order to get things on the right path. So, if I know nothing about his particular industry, how can I tell him what he should and should not be doing? The answer is in the ratios. There are very few different types of business. Let’s take a look. Service companies. Their costs are almost entirely salaries and rental. Manufacturers. Their material costs are the highest of their costs,…