You have to consider the impact on the various taxes and levies you are liable for when deciding on a business legal entity.
The type of business entity that you operate under has a huge influence on your tax liabilities. You have to consider the impact on the various taxes and levies you are liable for when deciding on a business legal entity. It is therefore important to do your homework before deciding whether you want to conduct your business through a:
By definition a sole proprietorship is a business with only one member, the owner, who must be a natural person. A partnership must have at least two and no more than 20 partners (owners). The partners may be natural or legal persons.
Sole proprietorship and partnerships are not separate legal entities. They are merely the names under which businesses operate. The sole proprietor is personally liable for all debts of the sole proprietorship, while partners are jointly and severally liable for the debts incurred in the name of and with the blessing of the partnership.
Similarly, sole proprietors are taxed on the profits of the business. Partners are taxed on their shares of the partnership income, which are added to their other incomes. Both partners and sole proprietors are provisional tax payers.
A close corporation (CC) must have at least one, but no more than 10 members. Members must be natural persons, or legal persons who represent natural persons in an official capacity.
A CC is a legal entity. Since May 2011 no new CCs can be registered, but all CCs registered at that date may continue. Profit belongs to the CC and is distributed pro rata according to members' interest. Similarly, debts are those of the CC, not the members'.
A CC is required to keep certain accounting records and to undergo an accounting survey by the accounting official. A CC is a separate tax-paying entity.
A private company may have an unlimited number of shareholders. Shareholders may be natural or legal persons. A private company is a legal entity registered with the Registrar of Companies. A company is owned by the shareholders and managed by the board of directors. The profit belongs to the company and shareholders become entitled to a portion of the net profit as soon as a final dividend has been declared. The debt of a company is the company's, not the shareholders'.
Don’t get caught flat-footed with a hefty tax bill at the end of your first year in operation. You are required to comply with a number of laws when starting your own business. Ignorance will not be entertained as an excuse if you don’t, so ensure that you know which of the following taxes you are liable for:
You’ll find the relevant information as well as registration and payment documents available for download at the SARS website
As an employer, you are responsible for registering employees with the Department of Labour, and further responsible for payments towards their unemployment insurance and workers’ compensation. These contributions are:
You’ll find the relevant registration and payment documents available for download at http://www.labour.gov.za/
In all likelihood, your entrepreneurial venture is based on an original idea - your intellectual property. This refers to all creations or products of the human mind that can be used for commercial gain.
While it may not always be possible to patent your idea, there are various ways of protecting your intellectual property: