Trading as a sole proprietor or company?

[atom0101]

Hi all,

I wanted to start a small import business, it is still in its idea stages and will probably be a 1 man show . So I wanted to find out from the people here in terms of which is a better option now that CC is no longer available to be registered?
I am more towards the sole proprietor route because then I don't need to appoint a CA to sign on a certificate so that I can register a company and I won't need them to audit my books every year (this is probably gonna charge quite a bit), and since it is a one man show, i don't see why a company is necessary for now beside the fact that a company make it sound more professional. Or is there any other benefits in trading as a company which I am not aware of? Please enlighten me if this is the case.

The main disadvantages I see for trading as a sole proprietor is that they can sue me for my personal assets if something goes wrong, but usually what are the risks related to this? I mean since I will have to pay for my suppliers and clearing agents to get the stocks, those are the only debtors that can sue me, and I can't exactly get my stocks if I don't pay them. Or are there other instances where one can get sued as a wholesaler / retailer?

I would really appreciate it if someone can advice me as to whether sole proprietor or company is the way to go!

And if you have some tips as an importer, please feel free to share them with me! I am always open to knowledge!

Thanks all!

[Axis]

Better to go as sole trader until you see how the business goes. Also trading as sole trader keeps you from making reckless decisions as you are responsible for everything.
I've been doing it for years and see no need in changing. You can even open a bank account under the sole trader name. I also pay cash for all the supplies I need so I don't have accounts to worry about.
If your business grows then look at registering.

[KalMaverick]

Aren't you able to buy a shelf CC?

I know a friend bought one recently.

[JustAsk]

You can't register CC's anymore.

Best way is to start a private company.Don't use these online companies to do that for you,its easy to do yourself.

Register at www.cipc.co.za
You can do everything from here online.
Register a private company,it cost R225 online.
You must reserve a name.Name reservation online cost R50.
Name reservation takes up to 3 months,there's a huge backlog,and to register your company takes about a week.
The good thing is,you can start trading under your company number,while waiting for the name reservation.

* You don't need an accounting officer anymore
* You don't need to audit the books,but you must keep a reasonable bookkeeping system
* You can't use "trading as" anymore.
* You must use Pty Ltd after your name
* You can start a company with only 1 person.Tip:you create say 1000 shares of which you own them all.
* Voluntarily VAT registering only after a monthly turnover of 50k,after 1million its required by law.
* With name reservation don't use words like GLOBAL,HEADQUARTER,INTERNATIONAL in your proposed names as it will be rejected.The good thing is the online system
will check your name against "illegal" words

EDIT: Don't find comfort in the limited liability of cc's or companies.Most of the time,when things go bad,you can be held accountable fully for the debt

[HavocXphere]

Dude....for anything cross border you want all the legal protection you can get. These things can & do blow up in your face in ways you don't foresee so sole proprietor is a really bad idea unless you're selling lemonade at the side of the road.

[atom0101]

but what exactly does "limited liability" applies? it is kind of vague, under what kind of situations can ppl sue me even with this 'limited liability from a company?

[Mr Feesh]

but what exactly does "limited liability" applies? it is kind of vague, under what kind of situations can ppl sue me even with this 'limited liability from a company?

one of the things is if you have signed surety

[HavocXphere]

but what exactly does "limited liability" applies? it is kind of vague, under what kind of situations can ppl sue me even with this 'limited liability from a company?

It means the liability of the shareholder is limited to his/her investment in the company. i.e. You can lose the value inherent in the shares but no more. So if the company goes belly up then it doesn't nail the owner. There are exception to this, but for now the only one you need to know about is what Feesh said...if the company gets a loan and you sign surety in you personal capacity then if the company dies the bank first tries to recover the loan from the company assets & then the shortfall from you personally.

[Ponelopele Unlimited]

My business used to operate as a Cc and now I have positioned it to operate as a sole propietorship. How to are maintain confidence from my existing clients and future clients that I am still a legitimate enterprise. Can the real experts advice in this regard as too much labour and economy related legislation and regulations are threatening the role and impact of sole propietors. I want to grow as a sole propietor both as an independent consultant and a social entrepreneur.

"Sole propietorship is South Africa's last hope to tackle poverty and unemployment"