shelf company Archives

We form and sell shelf companies, so I guess that it is not surprising that we occasionally get a call from someone who wants to sell their dormant company to us. The answer is always “No”. Why? Because we do not know for certain that the company was always dormant. It could have some nasty skeletons in the cupboard. Sure, we can check on its tax and CIPC status, but that’s about all. Companies are often asked to sign surety against a dept of the shareholder and that is the scarey one because it would be impossible to trace.

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…

Yes! And hurry! On 29 November 2019, SARS changed the game for dormant and shelf companies. After the flurry of uncertaintly, we are now fairly sure of SARS’ intentions, although they have only been applied erratically. 29 November 2018 SARS issues a statement to the effect that they will be imposing administrative penalties on all companies, with outstanding tax returns, including those that have not traded. 26 January 2019 SARS posts final demands on some companies (but not others) efiling profiles to submit their outstanding returns up to 2017, giving 21 business days to do so.

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…

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…

I have an attorney friend and client who was about to buy a residential property for rental and quite rightly wanted it to be owned by a company within a trust. The problem was that he didn’t have a trust yet and in those days we didn’t have shelf trusts. He needed to sign the deal straight away and asked my advice. I advised him to sign the deal on behalf of a “company yet to be formed”, then form the trust, then form the company with the trust as the owner. He didn’t take my advice and ended up paying…

We form a lot of trusts and never cease to be amazed at how the founders let them fall asleep. It is a common misperception that once you’ve paid for something you can forget about it. We find this with trusts, wills, bookkeeping, tax returns and a whole bunch of the services that we offer. You need to understand that when you form a trust or buy a shelf company, that’s only the beginning. But we even have great difficulty just getting our clients to the point where we can actually form their trust or change the directors of their…

We often get requests for a shelf company with an import/export licence. I can understand why, the application to SARS is a nightmare. We’re doing two applications right now. Each one is 1/2cm thick! That’s even worse than a VAT application. And I doubt that the documents will be accepted, even though this is our second shot at these particular two. The trouble is, as usual, SARS keep moving the goal posts and to make things worse, not all of the consultants at SARS agree on where the goal posts are, so one will reject your documents because of one…

It often happens that a trust owns investment property that would be better held by a company which is, in turn, owned by the trust. This is because companies pay 28% Income Tax whilst trusts pay 45%. So, how do we give effect to this without incurring a lot of tax? Fortunately, s42(2) of the Income Tax Act comes to our rescue as far as CGT is concerned. Provided the property was held for investment and not trade (that is, not with the intention of selling it at a profit) and provided it is transferred to the company in exchange…

Quick pick – Form a new company Shelf company VAT registered Non-profit company (NPC) For a professional practice (Inc) Public company (Ltd) Or read more – Ordinary (Pty) Ltd Companies If you can wait about two weeks, let us form a new company for you with the name of your choice. If you need a company urgently, then buy a shelf company and we will change the…

shelf company

Can I sell my dormant company?

What is the best way to start a business?

Must my dormant or shelf company submit tax returns?

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?

Shelf companies serve a very useful purpose

Double Transfer Duty Trap

Don’t let your trust or shelf company go to sleep

Import Export licences for shelf companies

Transfer of fixed property from a trust to a new company to be owned by the trust

Companies – How and what to Buy