Buying a "CC"

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What are all the things that need to be looked at when buying a close corporation?

Books including debtors and creditors
Tax is up to date?
Bank accounts
Staff, uif etc
Insurance
Rental
Phone, electricity etc

Anything else?
 
SARS and any other legislated dues (PSIRA, etc) must be up to date. Do you have an attorney lined up to assist?
 
If off-the-shelf then that should be enough.

If not I'd worry about litigation.
 
chrisc4290 said:
SARS and any other legislated dues (PSIRA, etc) must be up to date. Do you have an attorney lined up to assist?
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deweyzeph said:
Are you talking about buying a going concern or buying an "off the shelf" CC?
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A going concern. An attorney is involved yes. My brother is buying a place and I just want to make sure all aspects are covered.

With regards to SARS, what type of things are we talking about?
 
F1 Fan said:
A going concern. An attorney is involved yes. My brother is buying a place and I just want to make sure all aspects are covered.

With regards to SARS, what type of things are we talking about?
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With SARS the obvious things that spring to mind is whether or not the company is up to date with its income tax returns, provisional tax returns, VAT returns, PAYE returns, etc, etc. You don't want to touch a company that is in trouble with SARS.
 
If I was you I would not just consult an attorney but also an accountant (Either a Chartered Accountant or somebody else suitably qualified in the profession) who can assess the deal and information provided. An attorney is not always a financial expert.

The easiest way to find out if the CC is SARS compliant is request a tax clearance certificate showing good standing.

You can also request statements of account for VAT and PAYE, UIF and SDL. These statements of account will indicate what amounts are outstanding to SARS.

The first thing to look at is the annual financial statements and latest management accounts which show the performance of the company. You need to make sure that the figures reflected make sense especially in comparison to prior years and the sector in which it trades. The further back the information you can get the better.
 
F1 Fan said:
What are all the things that need to be looked at when buying a close corporation?

Books including debtors and creditors
Tax is up to date?
Bank accounts
Staff, uif etc
Insurance
Rental
Phone, electricity etc

Anything else?
Click to expand...


Make sure your sale agreement includes warranties by the seller regarding legal claims, tax claims etc such that if any claims arise, the seller will be held liable for any undisclosed claims which he was aware of at time of selling.

Depending on the type of business and certifications/supplier listings etc which the cc has - it may be better to buy the business out of the CC and use a new cc.
(ie. if buying a franchise eatery it wouldn't matter much to retain the existing CC - I'd rather buy the business out the CC and place into a new company, but a construction company with CIDB registration, listing on various gov supplier databases and ISO certification etc - it may be more practical to buy the CC as is)

Always worrying when buying a CC so having some idea of the reputation of those selling will help a lot.
Balance is just your proper due diligence which most of the posts above have covered (inquiry from their existing lawyers if there has been any action - often such a letter is done for audit purposes, can obtain confirmation of debtor balances from the large debtors, etc)
 
Hi,

Need some further advice please. Business was purchased with the use of a lawyer and an accountant. All paperwork is in order.

My question is, other than using an accountant, how can I go about paying the employees tax and UIF etc?

It's a small business but there is two staff members who would need to pay tax. How do I go about doing this?
 
F1 Fan said:
Anyone that can advise?
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It's pretty simple, you need to register with SARS for company income tax, and then you need to register for PAYE. Every month you deduct the necessary PAYE from your employees salaries and pay it over to SARS and also submit an a PAYE return.
 
deweyzeph said:
It's pretty simple, you need to register with SARS for company income tax, and then you need to register for PAYE. Every month you deduct the necessary PAYE from your employees salaries and pay it over to SARS and also submit an a PAYE return.
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When I spoke to the accountant, he seemed to suggest that SARS doesn't allow this as the tax may be calculated incorrectly?

And then uif, that is paid directly as well? How does the business then generate an IRP5 for example?
 
F1 Fan said:
When I spoke to the accountant, he seemed to suggest that SARS doesn't allow this as the tax may be calculated incorrectly?

And then uif, that is paid directly as well? How does the business then generate an IRP5 for example?
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I think it's time you got a new accountant. If your accountant doesn't know that employers are responsible for deducting tax from their employees salaries and paying it over to SARS then you are in serious trouble.

You need to have some sort of Payroll software. This will allow you generate payslips for your employees every month as well as generating IRP5's every year.
 
You need a new accountant.

You MUST register the business for Income Tax. Thereafter you must register for EMP using the EMP101 form or on SARS efiling. As your staff compliment is small, male sure you do not tick the box for SDL registration on the EMP101.

Every month you still then submit an EMP201 where you declare to dates the deductions made from your employees and then pay this over to SARS. This is also don't on the efiling website.

Every six months you will need to submit the EMP501 using the SARS Easyfile software. This software will also generate the IRP5s for your employees.
 
deweyzeph said:
I think it's time you got a new accountant. If your accountant doesn't know that employers are responsible for deducting tax from their employees salaries and paying it over to SARS then you are in serious trouble.

You need to have some sort of Payroll software. This will allow you generate payslips for your employees every month as well as generating IRP5's every year.
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Any suggestions for cheap payroll software?

He is a qualified CA so he knows what he is talking about. I just think he wants me to pay him a monthly fee to do the stuff. 3k a month. I'm trying to do it myself if possible.
 
F1 Fan said:
Any suggestions for cheap payroll software?

He is a qualified CA so he knows what he is talking about. I just think he wants me to pay him a monthly fee to do the stuff. 3k a month. I'm trying to do it myself if possible.
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Pastel has an online payroll program and charges monthly based on the number of payslips generated per month. Should cost you less than R50 pet month for 2 employees. I use it for some of my smaller clients.

Payroll for 2 monthly employees should be less than R500 per month including SARS submissions of don't by a third party.
 
You can do all of these yourself. You need to have a certified accounting officer appointed. This is someone that will keep an eye on the books and submit clearance to SARS that everything is in order. Also make sure your company by-laws are set up and agreed upon by all shareholders. This is the constitution of your company that determines who owns what percentage, how profits are divided, and who makes decisions.
 
Thanks for all the advise. Appreciate it.

@signates It's my brother's business. Just trying to help him out. Perhaps PM me your details and I'll ask him to get in contact with you?

The Online payroll software looks really good. Think it will do exactly what we require.

He has just registered for VAT as well. As I understand it, you can only start claiming after a one year period correct? Would it then be advisable to appoint an accountant or is this something you can calculate on your own as well?
 
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