It’s quick to form a company these days – about a week. But there are still some benefits to buying an existing shelf company rather than registering a new company.

Benefits of buying an existing shelf company:

1. Time constraints due to tenders

You might need a company NOW. This would typically be when you want to submit a quotation or tender and the customer will only buy from a registered company.

2. Specific company needs

You may need a company with a particular registration such as VAT, Importer/Exporter and cannot wait while the registration goes through. Some shelf company vendors promise ultra quick registrations (VAT is a classic), but what they don’t point out is that they can’t submit the application until you have complied with all requirements. In the case of VAT, compliance will take you at least about three weeks, probably a lot longer. Even COID can’t be done until you have opened your company bank account. CIDB takes about a month, as does Import/Export.

3. Aged company

You may just want an old registration number so that it looks as if you’ve been around for a while. We can go back to 2011, but of course, like old wine, the price goes up dramatically with age.

4. Tax Cuts

Old shelf companies (in this case we go back to 2010) are also very useful in that you and your spouse can each make donations totalling R100 000 per year without paying Donations Tax. If you bought a 2011 shelf company, you could donate R100 000 each in tax years ended 2011, 2012, 2013, 2014, 2015, 2016, 2017 and 2018 and a last one on 1 March 2018 (the first day of the 2019 tax year). That’s R1,8m if you both do it. You would then owe the company R1,8m and it could buy R1,8m worth of your assets with the debt. If your trust owns the company, you’ll have shifted R1,8m out of your personal estates into a trust haven. You’ll need an old trust and it’s a bit tricky, but well worth the investment of time and money, especially as my meetings come free.

Need expert advice about starting your company?

Contact us today or set up a free meeting with our CEO, Derek Springett to discuss your options. We have been offering expert business advice and services since 1971. You can also visit our online store to see our list of tender ready shelf companies for sale.