Business Startup Guidelines

[WebNexus]

Hi all,

I have been creating websites as a hobby and due to how unsatisfying my current job is I want to take it more seriously and start a business around it. This is the link the to my business for review.

I have a degree in finance so I know the difference between a CC(now none existent as a type of business entity as far as i know.), a sole prop and a private company. But as with most things in life the theory is completely different to the practical side of things.

So the questions I would appreciate assistance with are:
1-Can I conduct business as a sole prop and not register a private company.
2-Do i have to register anywhere like CIPC.
3-I find the devil is in the detail. Are there any mistakes readers of this forum has made in their own experience that they can share with me.

Any info you guys can give me would be greatly appreciated.


Thanks guys!

 

[Purply]

Afiak you can still buy an already registered cc, that will be the easiest.

 

[CamiKaze]

Google Shelf Warehouse. They can help you with a CC.

 

[WebNexus]

Would you recommend operating as a cc over a sole prop? Are the registration fees and need for your books to be audited worth the effort?

 

[Greig Whitton]

I have a degree in finance so I know the difference between a CC(now none existent as a type of business entity as far as i know.), a sole prop and a private company.

CCs still exist, you just can't register new ones.

1-Can I conduct business as a sole prop and not register a private company.

Yes.

2-Do i have to register anywhere like CIPC.

Not if you are operating as a sole prop.

3-I find the devil is in the detail. Are there any mistakes readers of this forum has made in their own experience that they can share with me.

Marketing trumps everything else. Service, admin, financial management, etc. are obviously important but marketing is the only business function that directly drives the growth of your business. Above all else, make sure that you have a solid marketing plan. You will be operating in a very competitive industry, so how will prospective customers hear about you and why should they pick you over everyone else?

Would you recommend operating as a cc over a sole prop? Are the registration fees and need for your books to be audited worth the effort?

CCs have plenty of advantages: limited personal liability; perceived credibility; access to grant funding; etc. Obviously they have disadvantages too. The same is true of sole props and companies. Pick a business entity that best fits your needs. I would recommend starting off as a sole prop first.

 

[deweyzeph]

Do not use a CC, even an off the shelf one. A limited company is the way to go now, so why bother using an antiquated legal entity that is being phased out?

In any case, one of the advantages of using a CC or limited company is that SARS is a lot less stringent on expense allowances when using a limited company (or CC) than when running as a sole prop. If you are running a sole prop I can almost guarantee you that SARS will audit your tax returns every year paying very very close attention to your expense claims. A limited company allows you to keep your personal tax affairs and your business tax affairs separate.

 

[WebNexus]

Thanks for the detailed feedback Greig.

 

[minty203]

It doesnt make a difference. Private companies and CC's are governed by the same laws nowadays. I prefer a CC, because there arent share certificates. But if you a one man show, then you will be the only director on a company and it doesnt make a difference anyway. Cost wise a pty ltd is cheaper, I mean initial costs. Yearly annual returns are the same for both.

CC's people sell at a premium because you cant form new ones.

BTW, I'm also in finance and do websites as a hobby on the side Just basic websites.

And remember, dont leave your full-time job, until you are certain you can make a decent living out of your side business.

 

[WebNexus]

Thanks for the info minty203.

Will send you a pm to find out more about your experience.

 

[Padraic Hosting]

Good luck with your new venture!

 

[KingBel]

Get yourself a proper accounting package. and ask an accountant to review your books from time to time.. don't rely on a cash flow analysis to tell you whether the business is viable or not. Get a professional opinion.
Make sure that you speak to a tax consultant regarding your various options with regard to tax i.e. do you register for turnover tax etc.
As a one man show, issues like PAYE will be much simpler..

This sounds like common sense, but do some worst case scenarios to see if you can survive in a lean month.. and for how long.
Establish a strict cut-off point (a point at which you will let bygones be bygones and close up shop). The worst thing you can do is hold onto the hope that things will get better, and dig yourself deeper into a hole.

In a web design business, establish points of communication and payment with your clients from the offset (establish critical path points). You may end up with a scenario where the client is unhappy with your attempts and the project gets pushed out for months on end (with you only having a deposit, that you spent already, to show for it). It's easy to lose your patience, or commitment to a project when this occurs.
Best option (IMHO anyway) would be to create predefined web design packages with relevant pricing models and then if the client wants changes to that, you charge them per hour over the original package price.

Nowadays, most companies, regardless of your company setup, will insist on personal surety, so don't sign up for an higher purchase/rental agreements unless you can guarantee that you will have retainer work for that entire period (even then I would still recommend that you stay away from those agreements)

and last but not least, never ever skip paying creditors or the taxman in a lean month because you can just catch up when you are more cash-flush.. it's a dangerous game to play, and can get you into very messy situations.

 

[deweyzeph]

Don't forget as well that if you have a CC or Pty Ltd and more than 80% of your income comes from 1 client the taxman will consider you to be a personal services company and you will find yourself in deep trouble when it comes to claiming expenses. Personal service companies are very limited in the expenses they can claim and by law your 1 client who more than 80% of your income comes from has to deduct PAYE at a rate of 28% from any money they pay you.

 

[WebNexus]

Get yourself a proper accounting package.

Planning to use Instant Accounting by FNB. Its free and I bank with them.

Make sure that you speak to a tax consultant regarding your various options with regard to tax i.e. do you register for turnover tax etc.

This is what I meant by the devil is in the detail. thanks for this info. Will check it out.

This sounds like common sense, but do some worst case scenarios to see if you can survive in a lean month.. and for how long.

I plan to have atleast 3 months of operating expenses saved up for this event.

Establish a strict cut-off point (a point at which you will let bygones be bygones and close up shop). The worst thing you can do is hold onto the hope that things will get better, and dig yourself deeper into a hole.

Agreed

Best option (IMHO anyway) would be to create predefined web design packages with relevant pricing models

Have a look at this link. Let me know what you think about the structure of the design packages. Its just a example of how I do website weddings, but the same principle applies to all other websites.

Nowadays, most companies, regardless of your company setup, will insist on personal surety

I did not know this. Ill do a bit of research since to be honest I have no idea what it entails exactly.

and last but not least, never ever skip paying creditors or the taxman in a lean month

Yip, good business practice.

Thanks for the great feedback KingBel, much appreciated!

Don't forget as well that if you have a CC or Pty Ltd and more than 80%

I did not know this. Thanks deweyzeph!