What kind of legal business structure would be best

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Geriatrix

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I'm heading out on my own and freelancing later this year.
Now, one of the issues my friends who freelance have is that they need salary slips for getting anything from new phones and car purchases. So my thought is to start a business and pay myself a regular "salary" to circumvent those problems.

What would be the best legal structure for me? CC? Company? Some other one I don't know about?
 
CCs aren't available anymore. Register a private company.

Salary is an issue....depends on your tax bracket. If its <28% then salary is better. Above, it makes more tax sense to extract the $$$ via dividend payments from the business.
 
HavocXphere said:
CCs aren't available anymore. Register a private company.
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I'll google that, thanks.
Salary is an issue....depends on your tax bracket. If its <28% then salary is better. Above, it makes more tax sense to extract the $$$ via dividend payments from the business.
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Hmm how does this work? Can I give myself a sub 28% salary and then top it up with more as I need it?
 
Effective tax rate of dividend is like 35.2%.. 28% tax plus 10% STC.

You can allocate a huge salary to urself staying below this limit...making use of travel allowances too if you travel to clients etc.

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You must also remember if you have private company...all the statutory requirements etc.. annual return fees. Audit or the new independant review fees.. accounting officer or auditor fees etc..

If you not that big..remain a sole trader for first.. keep accurate records of your books and seperate business bank statements. Most cellphone providers require latest payslip OR three months bank statements.. etc etc.. cant type too much..on the road..

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krono9 said:
Effective tax rate of dividend is like 35.2%.. 28% tax plus 10% STC.

You can allocate a huge salary to urself staying below this limit...making use of travel allowances too if you travel to clients etc.
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Crap. Forgot about STC. :(
 
krono9 said:
You must also remember if you have private company...all the statutory requirements etc.. annual return fees. Audit or the new independant review fees.. accounting officer or auditor fees etc..
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Yeah that sound like overkill...

If you not that big..remain a sole trader for first.. keep accurate records of your books and seperate business bank statements. Most cellphone providers require latest payslip OR three months bank statements.. etc etc.. cant type too much..on the road..
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Is a private company really my only option apart from sole trader? I'm also thinking of other things where having a salary slip would be more useful than bank statements.
 
Geriatrix said:
Yeah that sound like overkill...


Is a private company really my only option apart from sole trader? I'm also thinking of other things where having a salary slip would be more useful than bank statements.
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How willing are you prepared to risk all your assists with regards to personal liability? First answer that question then decide if running as a sole trader is worth it.
 
cbrunsdonza said:
How willing are you prepared to risk all your assists with regards to personal liability? First answer that question then decide if running as a sole trader is worth it.
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Not very. But are the sole trader and private company structures the only ones available to me?
 
hi guys, so did anyone arrive at a solution? I need the same thing.....now cc's are gone, wonder what else we can use, SARS really is screwing everything!!!
 
Also wondering the same thing. I've been a consultant for awhile now however I've expanded a lot and my income is not so little anymore.need ideas on how to minimise my risk and maximise my gains.
 
I looked into this and it seems like you have two options. Sole Trader orr Private company.
 
Mila said:
I looked into this and it seems like you have two options. Sole Trader orr Private company.
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Both of which appear to be meh. I looked into trusts too(thanks Ju Ju) but it's not quite right either. I know jack**** about companies and their tax laws though, need to study up on that when I have some time.
 
I believe there are three options:
1. Sole Proprietorship
2. Private Company
3. Business Trust
The only viable option for starting out is 1., but 3. can be used if you have someone that knows what they are doing.
 
I would suggest going to see your tax consultant if you have one. There are so many aspects for each and all have there advantages and disadvantages you need to find someone who can explain each one to you, private companies no longer need to be audited with the new companies act(some do, but in your case it shouldnt)

The other option is to go and buy a shelf CC, http://www.pty-online.co.za/, they still exist but i guess in the next 10-15 years or so will eventually be "phased" out. As i said its probably worth going to see someone who can advise you on the best options, because each has there benefits and some will better tax benefits than others, if you use a company there are certain thresholds where it becomes less efficient to pay yourself a salary, and rather declare a dividend even with STC.
 
Yes as from 1 April, dividend withholding tax comes into effect.

A private company now is very flexible and does not need to be audited, nor any need for special committees etc. There is also provision made to ride roughshod over most of the administrative provisions provided the only shareholder is the only director etc..etc..

The downside of a business trust is that in order for you to be protected (in case the poo hits the fan) is that it must be a true trust i.e. you give up ownership, possession and control of your assets - which is placed in the hands of trustees. Some people aren't prepared to accept this.

The reason for phasing out CCs is that regulation of a private company's affairs is made extremely simple (which was the benefit of going the CC route before).

If you want any specific advice, happy to assist.
 
Izzy, I want to start a private company, mostly as a holding company for assets and various adhoc work that I may do outside my main employment. Is that fine? and is it the best setup?
 
The Philosopher said:
Izzy, I want to start a private company, mostly as a holding company for assets and various adhoc work that I may do outside my main employment. Is that fine? and is it the best setup?
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Without the benefit of all relevant facts, I can't see a reason why not.

I assume you own the assets currently? If so, how are you going to get them into the company? Sale? If so, at what price? These all have tax implications.

As a business risk issue, I wouldn't trade/conduct business through your investment holding company. At no stage do you want your assets subject to attachment because of a business issue which arises.
 
Well so far I own 1 property which I would put into it. Surely if I invest cash into the company or property it would be the same transaction? Why would I need to sell it to the company?

Also business risk issue would not arise in my situation. However, I would still need to consider it.
 
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