How to register your company
How to register your company
When you start a company, you will need to consider what type of company you want to start. There are financial and tax implications with each type of company entity you can register in South Africa.
Here’s are the different company entities you need to consider:
You may have heard at some point someone referring to a Closed Corporation (CC). This type of company entity was recently phased out by the government and you can no longer register a CC.
These are the other types of business entities available to you based on The Companies Act 2008:
- Sole Proprietor: A Sole Proprietor trades under his/her own name as an Individual. There is no separation of assets and liabilities between the business and the individual. This person is personally liable for any debts and assets accumulated through the business.
- Private Company (PTY) Ltd: Must be managed by at least one Director and must have at least one stakeholder but no more than 50.
- Personal Liability Company – Inc: These are business entities in which both current and previous directors may be held jointly liable for debts and liabilities during their time in office.
- Public Company (Ltd): Issues shares to shareholders and are listed on the stock exchange. They are liable to their shareholders.
- State Owned Companies (SOC): These businesses are owned by government or a municipality, think Metrorail or eThekwini Electricity.
If you’re starting a small business and want to grow it on your own, it’s wiser to start up as a Sole Proprietor until you get to the R350,000 profit mark, then re-evaluate. This is because when you register as a company, you pay higher taxes and incur more costs because you’ll need to get your company audited. After R350,000 profit, it may make more sense to register as a company because you will save on taxes.
It’s important to work with a professional accountant when you’re thinking of registering as a company so that you can make informed decisions.