Harbour & Associates

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…

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 –…

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…

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…

I have already discussed whether a trader should trade through a company, but what about a service provider? A service provider is a business that supplies services rather than goods. Should it be a company? If the services are provided mainly (80% or more) to one client, then the company may well be classified as a Personal Services Company, in which case the client must deduct PAYE from all invoice payments. This often discourages the client from doing business with you. However, the same would be true if you sold your services…

If you are a small supplier of goods, you may be wondering whether would be better to trade through a company. The answer is usually “Yes”. The first question I ask is “Are you providing a service or supplying goods?” If you are supplying goods, then the answer is usually yes, rather trade through a company. Why? 1) Your customers will probably respect a company more than a sole trader. 2) Companies are taxed at 28%, individuals at from zero to 45%. You can balance your salary in such a way that the total tax is minimised. 3) The company…

It now only takes about a week or so to form a new company, so why buy one off the shelf? The main reason for buying a shelf company is its age. We have them aged as old as 2010 and never having traded. You may want an old registration number to give the impression that you’ve been in the business a long time, or you may want to back-date some kind of transaction, such as the company’s ownership by a trust and that clearly can’t happen before the company and trust were both registered. That’s…

We form hundreds of companies for clients with the result that, because meetings with me are free, I get to talk to hundreds of entrepreneurs. It is quite clear that many of them do not understand the distinction between a company’s promoters, shareholders, directors and employees, so here’s a guide. Now, I’m not going to get technical, so if you’re studying for an exam, go to the Companies Act for the full story. I just want to offer a simple explanation that everyone can understand. The Promoter(s) form a new company at CIPC by choosing a name…

It is almost certainly more tax effective to use your own car for business and submit a travel claim against a travel allowance rather than drive a company owned car. Because your travel claim is limited to your travel allowance, you will need to make sure that the allowance exceeds your estimated travel claim. If you keep a record of actual expenses paid by yourself, you may claim those expenses, but most of us claim the Deemed Travel Expenses which you will find here. You will need to select the year that you are interested in. Employers…

Most contracts state that in the event of a dispute, it must be referred to arbitration, usually by an advocate. This can be very expensive. A far better alternative is mediation. Here’s how it works – The two processes are very different. The easiest to grasp is arbitration as it is clearly defined by the Arbitration Act. Anyone can be an arbitrator as long as all parties to the dispute agree upon whom it should be. The arbitrator determines the procedure and his or her job is to hear evidence from all parties, consider the facts and the law and…

The Consumer Protection Act requires that all contracts with consumers be written in plain language, but this should apply to all legal documents. The first problem is that attorneys spent years at university learning all sorts of Latin expressions, known as “legal Latin”. having learned it, they naturally want to use it and, hopefully, impress their clients with their legal nouse. Wikipedia lists about 400 of them under List of Latin legal terms. To give you a few common examples – ante = before bona fide = in good faith contra = against de facto = true in…

We were on ISDN, but have since tried fiber, microwave fiber and LTE in different locations. Here’s what we found… Testing your upload and download speed. If you want to test speed with any of your connections Google “Speed test” and choose any of the options – they all work and are simple to use. There’s a perception that we download more than we upload, so often your download speed will be significantly higher than upload. However, if like me, you work on your office server from home via Teamviewer, they are equally important. PING speed is in ms (milliseconds)…

When we supply a new company registration or a shelf company for sale, the offer frequently involves 6 months’ free bookkeeping, followed by a health check. Why the health check? Because many new companies start badly and need urgent corrective action in order to survive… Here is a classic example of why your company needs a budget: During the Christmas break, we did the books for the first six months of a specialised food supplier company. I noticed that every so often they would lend a few thousand rands to the company and…

There’s a lot of confusion about the meaning of Annual Returns to CIPC, Annual Tax Returns and Annual financial Statements, so let’s try to clear this up. Annual Returns to CIPC CIPC is the Companies and Intellectual Property commission. Every company and CC must submit two Annual Returns. One confirms the Directors (of companies), Members (of CCs), auditors, company secretaries with contact details of all of these together with the Registered Office Address. The other is a Financial Accountability Statement. An annual return fee is also payable (anything from R100 to R4 000). The return is due from the anniverary…

You are starting a new business. Presumably you are serious about this and want the company to succeed. You see that FNB will register a company for free, or, whilst most websites offer companies for around R2 000 (with varying free extras), some websites offer them at ridiculouosly low prices. Hey! You might save yourself R1 000! Really? Here are some of the things that can go wrong… and probably will if you buy a cheap shelf company. Why you shouldn’t even consider registering a cheap shelf company online: The company gets registered with no name and ends up being…

Some of our competitors sell at significantly lower prices than us, whilst others have taken our prices as their benchmark. We needed to understand whether our product is price sensitive and if so, to what extent. That would enable us to decide whether to sell a bare bones product at the lowest price that we would be interested in, or whether to continue selling a product rich in extras, but at a higher price. You might have the same problem, so this is how we tackled it. Firstly, we decided on our lowest price. In our case, we could take…

General Business

How to change a NPC to a Pty company

What does it cost to register a company?

How can I save my business?

How to liquidate your company when the directors are at war

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?

Should I provide my services through a shelf company?

Should I trade through a shelf company?

Should I buy a shelf company or register a new company?

Promoters, shareholders, directors and employees

Should I drive a company car?

Mediation as a means of settling disputes

Keeping contracts simple

ISDN, fiber, microwave fibre and LTE (5G)

Why your new business needs a budget

Annual Tax Returns, Annual CIPC Returns and Annual Financial Statements

What can go wrong if you buy a cheap shelf company or company registration?

Testing price sensitivity of your product

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