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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 may well qualify as a Small Business Corporation (SBC) which has very significant tax advantages.

4) The company can be owned by a trust, which has significant advantages as it grows in value, although it won’t qualify as a SBC in this case.

5) The allowable tax deductions are clearer for companies as your personal affairs will not be included in the company tax return, whereas a sole trader submits one tax return only which includes their personal affairs and those of the business.

 

Need help with your Investments?

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