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There’s a common misperception that a company has to be formed for a particular purpose. This is simply not the case.

The standard short form Memorandum of Incorporation under the Companies Act of 2008 states that “The purposes and powers of the Company are not subject to any restriction, limitation or qualification”.

This means that you could run a hotdog stand, rent out offices, and manufacture light bulbs, all in the same company.

So, you could have –

XYZ(Pty) Ltd trading as ABC (selling hot dogs)

XYZ(Pty) Ltd trading as DEF (flying aero planes)

XYZ(Pty) Ltd trading as HIJ (washing cars)

XYZ(Pty) Ltd trading as KLM (manufacturing light bulbs)

XYZ(Pty) Ltd trading as NOP (offering bookkeeping services)

All in the same company. Note that you do not put (Pty) Ltd after the trading name.

But would that be a wise thing to do?

It depends on risk and tax.

Let’s look at risk first. If you have three businesses in the same company and one of the  businesses fails, then the company could find itself in liquidation and bye-bye the other two businesses as well. Not good.

Then how about tax? Start-up businesses rarely make profits from day one. So, if you ran each business in a separate company and two were still making losses whilst one was profitable, the losses would not offset against the profit. The profitable company would pay the full 27% tax on its profits. If, on the other hand, all three businesses were run within the same company, tax would be paid only on the aggregate profit of all three. Much better.

So, which way to go? Generally, start all three in the same company and then consider splitting them out as each grows. There may be other good reasons for the split. I wrote an article on them some time back.

56 comments

  1. Hi Derek
    Thank you for you’re assistance
    I own cc- ABC and have a business account, not registered for vat, with low returns.
    I would like to open another business – DEF, which needs to be vat registered with higher returns.

    1. Will I need to pay vat for ABC?
    2. What would the tax be for owning 2 companies, compared to one?
    3. What would the best option be?
    4. How can you’re company assist me?

    Thanks
    Shree

    1. Hi Shree,
      If you conduct both businesses in the one company, then they will both have to charge and claim VAT so, depending upon whether you are selling to VAT registered companies or to Non VAT registered people and companies, then it may be better to have two companies.
      If ABC is a Small Business Corporation, then it will cease to qualify if you form another company with you as the shareholder. Best would then be to make your spouse (if you have one) the shareholder. They may then both qualify as SBCs, which would be great from a tax point of view.
      We can assist in all respects (company and VAT registration, bookkeeping, payroll, tax returns etc.), but the greatest way we can assist is for you to have meetings with me via Zoom. There’s never a charge and I invariably add value. It’s dead simple to book here https://harbourassociates.youcanbook.me/

  2. Hi Derek, if there are multiple companies “trading as” then what stops somebody else from actually registering a business under the same name with CIPC?
    For example, if XYZ (Pty) Ltd trading as ABC and DEF then would it not be possible for another person to start a company as ABC (Pty) Ltd or DEF (Pty) Ltd that would be registered and they can take ownership of the name and thereafter offer the same services.

  3. Terry Ndou

    Hi Derek,

    In terms of VAT; XYZ (PTY) Ltd T/A ABC has its own bank account and XYZ (PTY) Ltd trading as DEF also has its own bank account how does VAT work in that instance?

    1. Only XYZ (Pty) Ltd is registered for VAT. The bank accounts are both “owned” and operated by XYZ (Pty) Ltd. You can pay the VAT out of either, or both, of them. You might choose both if you are trying to keep account of each business separately.

  4. Good day. I recently registered a company ABC Holodings, with the aim of running hotdog stands, flying aeroplanes and offering other services. How do I go about ABC Holdings trading as? Do I have to register the T/a companies or just give them names and start advertising.

    1. Hi Clara,
      I apologise for the delay. I seem not to be receiving notificaions of comments for some reason.
      There is only one company with several trading names. You just go ahead.

  5. Hi Derek, thanks for all your advice, I always enjoy reading thourgh your Q&A’s. I have a quick question. I my company is a registered CC (Closed Corporation) and not a PTY LTD, does all your advice in the session still count? I can still have multple business “trading as” within the same CC?

  6. i love you guys and your order in your website and respond to your people that are the followers of you; it such a wonderfully thing now I’m starting to follow you guys in terms of knowledge in a business sphere and understanding more on you guys big up for a good work.

    1. Thank you Nkosinathi. And then I take over a week to respond to your comment! For some reason I did not get notifications of comments and have oonly checked today. Maybe you could say all that in a Google Review here
      You can click on it on our home page at the top of the Reviews.

  7. Hi Derek
    The Q’s and A’s are really helpful
    My question now is that I have a company, but I want to apply for a financial services license and I don’t, do I use the pty name or the trading as name to apply

    1. Hi Relton,
      Sorry about the delay. For some reason I did not receive notifications of comments.
      You will have to contact the FSB, but I’m pretty certain that you pply as the company (Pty) Ltd Trading as ……..

  8. HI, I’VE READ THE QUESTIONS AND ANSWERS, I’M LEARNING ALOT, NOW I NEED TO KNOW HOW DO I GO ABOUT THIS, I WENT TO REGISTER FOR NPC LAST FRIDAY, MY PROBLEM WAS THAT ONE OF THE PEOPLE I’M REGISTERING WITH ARE NOT LIKE MINDED, SO I ASKED THE GUY WHAT TO DO, HE ADVICED ME TO REGISTER AS PTY LTD, BUT NOW I NEED TO KNOW IF I’LL BE ABLE TO APPLY FOR FUNDINGS, OR DONATIONS? IF NOT IS IT POSSIBLE TO CHANGE THE FORMAT OF THE DOCUMENT FROM PTY LTD TO NPC? Or IS IT POSSIBLE TO USE THE SAME NAME AS THE FOUNDATION AND BUSINESS UNDER ONE MAME? I PAID R170 REGISTRATION FEE.

    CURRENTLY I DON’T HAVE FUNDS BUT BUSY PLANNING STRATEGIES ON HOW TO GENERATE FUNDS.

    1. Hi Mapaseka,
      I apologise for the late response. I have been hospitalised.
      1) Generally a (Pty) Ltd would not attract donations from anywhere. It can apply for loans from, for example, the Nationaal Empowerment Fund.
      2) The MoI of a NPC is completely different to that of a Pty.
      3) A Pty can convert to a NPC but an NPC cannot convert to a Pty.
      4) Two registered companies cannot have the same name. However, a Pty can have the same name as an NGO which has not been registered at CIPC as an NPC.

  9. Doffy Mingo

    Hi Derek

    if I am a company XYZ(Pty) Ltd (selling hot dogs) with directors 1 ,2 and 3
    is there a way to add directors 4, 5 and 6 to the portion of XYZ(Pty) Ltd trading as DEF (flying aero planes)

    Thank you

    1. Hi Doffy,
      No, You cannot appoint different directors to different businesses in the same company. If this is an issue, you will have to form a new company (our fee is R475)

  10. Theunis van der Stoep

    HI Derek,

    Thank you very much for the informative answers you have given thus far.

    I have a question which I believe you have not answered yet.

    In terms of bank accounts and bookkeeping, where does the trading as then fall?

    Does each t/a need a seperate account? Can the profits or revenue of one t/a be used to supplement or offset the other?

    For instance we have a PTY LTD thats registered purpose was to lease properties, we have now added a new revenue stream which sells Frozen Desserts. So we have opted for adding a t/a to our current PTY LTD.

    We currently only have one bank account, but we know which streams of revenue belong to each business.

    Can we for instance use profit from the one company to offset the loss from another?

    Thanks in advance.

    1. Hi Theunis,
      1) You do not need separate bank accounts. The only reason for having two is in order to make the bookkeeping easier (see below).
      2) Regarding bookkeeping, it may be beneficial to distinguish between the two businesses, but in the same set of books. Your bookkeeper will know how to do this. Do not try to apportion shared overheads between the two departments, rather only post direct costs to each and that will show you each of their “overhead contributions”.
      3) Profits and losses will set off for tax purposes as it is only the total taxable income of the company that gets taxed.

  11. Hi
    Can I offer multiple services in one company, for example. ( ABC company ) and the services are *Logistics *Security *Construction etc.. without having to register offering services as a company, but as a multiple services company?

  12. Hi Derek,

    I’d like to know if it’s possible to run 5 brands under 1 company?
    Would it be necessary to register a holding company, if so, how do I?

    Thanks for any advice that can be offered.

    Kind regards,
    Tristyn James Khourie

    1. Hi Tristyn,
      Absolutely possible
      XYZ (Pty) Ltd trading as ABC
      XYZ (Pty) Ltd trading as DEF
      XYZ (Pty) Ltd trading as GHI
      XYZ (Pty) Ltd trading as JKL
      XYZ (Pty) Ltd trading as MNO
      No need for a holding company.

      1. hey. the trading as …..
        has to be mentioned on cipc or just to the audiences?

        for example
        company Name: Neo holdings “Registered”
        services:
        Neo Media
        The Agency
        Travel Way
        how does it work?

        and for bank account do i use different account for each? if not won’t it make confusion using one bank account for different services?

        1. Hi Neo,
          You question is not altogether clear, but I think this is what you are looking for:
          Neo Holdings (Pty) Ltd trading as Neo Media
          Neo Holdings (Pty) Ltd trading as The Agency
          Neo Holdings (Pty) Ltd trading as Travel Way
          The trading name is not (cannot be) recorded at CIPC because they do not have the capacity. It (they) can be recorded at SARS, but with 3 trading namess it probably would cause overlaod and it is not necessary.
          You can have one or more bank accounts. Best is separate accounts to facilitate the bookkeeping, which you will presumably want to be divisionalised, so that you can see the overhead contribution of each business.

  13. Sandile Fulefu

    Hi guys.
    Is it Possible to Run Two types of businesses with One (LTD PTY) For Example: Transport And Security?

    1. Hi Sandile,
      Absolutely no problem. Is there something in my article that is not clear? Please let me know if there is so that I can improve it for future readers.

  14. Apostle MTN Mngomezulu

    Hi, I have a registered PTY LTD company now I have started in music industry and I want to use the same company as for music publishing. May you please guide me through what should I do hence I do the registrations myself.

      1. Apostle MTN Mngomezulu

        Thanks for the response it is paving my way to the right direction. The question is where do I add that trading as? Do I login to CIPC or there is a certain way to do that for instant my company is Royal Thulubheke Services PTY LTD and I would like to make it Trading as RTS music something like

        1. Hi,

          You do not register the trading as name anywhere.

          Your letterhead/website/invoices etc. will be headed
          Royal Thulubheke Services (Pty) Ltd
          trading as
          RTS Music
          Usually the company name as well as “trading as” are in small print and RTS Music will be in much bigger print.

  15. Hi There
    I have been working for IT rental business for 10 years now. and the same Business owner open up a second division which is a Disposal IT company which has it own name. I have been told although its 2 different business and two different services its one entity/Group. Im now required to work for the Disposal company. My question is it fair and legal for me now to do work for the Disposal business as i was told is one Entity

    Thank you

    1. If the two businesses are in one and the same company, then there’s no change from your point of view. You still have the same employer (the company).
      If you are now being told to work for another company, then your accrued leave and notice pay could be compromised.
      If you are being told to do different work, then whether this is fair depends on your employment contract.
      However, I am definitely not a labour consultant and, apart from line 1 above (of which I am sure), I cannot confidently give you a detailed answer.

  16. Hi,
    If one holding company has two trading names, are they considered as two seperate entities legally? Or just one legal entity?
    If they want to take legal action would it be in the name of the holding company, or in the name of the relevant “trading as” business?
    Thank you

    1. Hi Riana,
      A company is a legal entity (it is not a “holding company” unless it holds controlling shares in other companies). If it trades under various other names, it’s identity does not change. So the legal action will be against the company, not one of the businesses that it traded.
      Compare this to a person, Jack, who is a sole trader. He might do some gardening service trading as “Jack’s Gardens” and a bookkeeping service trading as “Jack’s Bookkeeping”. If someone wants to sue, they’ll sue Jack.

  17. Hi Derek , i hope you are well.
    I have a business which is a projects and services company which i operate a successful garden business, under this company however i want to open a T-shirt business as well as a African printed decoder and appliances which are so different from each other. How do I merge the two to make in order to it all simple as i want them to have different names from the parent company ,, how possible is that ?.

    1. Hi Khumo,
      The easiest way is to keep the one (Pty) Ltd company and then add “trading as” after the name, then below that the tradename (no Pty Ltd) in big letters.
      If you want to keep an eye on the profitability of each business and if you, we, or someone else is doing the bookkeeping, you may choose to open a separate bank account for each business and account for them as separate departments. If you decide to go that route, then, unless we do the bookkeeping, you will probably need to speak to me about how to do this properly as most people get it wrong. You can book a chat with me here https://harbourassociates.youcanbook.me/

  18. Hi
    I have a 2 registered companies and i want one to be the parent/holding company and the other to be the company use to deliver the products and services i sell (a consultancy). I have registered a provisional patent application under my name and under the one company i want to have as a parent/holding company i will be doing the same for future patent applications.

    -My question is do I need to have a parent/holding company setup or should i use the name of the second company as the under which the parent/holding company trades under?
    -What is the process of registering a trading name?

    1. Hi Zo,
      It seems to me that you are probably going in the wrong direction with your structure. You should probably set up a trust owning an investment company (the holding company) and the investment company owning the trading company. There are a number of really good reasons for this.
      I deal with them in Step 8 of my book “16 Steps to Wealth” which you can find here http://www.16steps.co.za
      Trading names cannot be registered. Trademarks can only be registered with CIPC by attorneys. You would use the same guys who are registering your patents.
      If you prefer to chat with me then by all means make an appointment here https://harbourassociates.youcanbook.me/ there’s never a charge, but I am only free for the next 3 days as my granddaughter will be visiting for 6 days from Friday evening.

      1. Thank you so much for the prompt response and advice!!! It has given me so much clarity on how to move forward.

  19. Thanks for the advice. My question is what do you need to do if you have registered a company and want to have multiple trading names under it?

    1. Hi Brian,
      Your letter head would typically be –
      XYZ (Pty) Ltd (in very small letters)
      trading as (in very small letters)
      Popsicle Manufacturers (in very large letters)
      You would have a different letterhead for each trading name.

        1. Milisa Bunye Qhayiya

          Hi, Derek. I have an Ngo and I want to open or register two other business which will offer services but now I want my Ngo and the two companies to under one holding company. How do I go about that.
          Thank you

          1. Hi Milisa,
            I’m not sure what you mean by an NGO. If it is not a company then your holding company cannot be its shareholder. If it is a Non Profit Company, then there’s no point because it cannot declare dividends to its shareholder.
            Also holding companies are usually more trouble than they are worth. The subsidiaries are required in terms of the Companies Act to produce Annual Financial Statements to International Financial Reporting Standards and to have them reviewed by a CA(SA). This all costs about R12 000 each and is of no benefit.
            Best forget the holding company.
            If you want to discuss your strategy or anything else with me, I suggest you book a no charge Zoom meeting. www.https://harbourassociates.youcanbook.me/

  20. Hi
    Thank you very much for the advise I will definitely
    Open a company and have multiple businesses on hand.
    Can you open a company for me. And for how much.
    Thank you. Rams kekana

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