Registering a company for freelancing/consulting work

InTheWild said:
thanks, so yeah currently I have multiple clients, and it's all remote work.
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Also think about the fact you would need an accountant to draft annual financial statements which might be a few grand


Edit: "compile" annual financial statements
 
dontcryforme said:
If it is not just one client and if you do not render services on the client's premises, you are not a PSP.
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This is only one of the ways you get classified as a PSP.

A related problem with both SBC and turnover tax / micro business classification is that professional services are excluded. (e.g. accounting, engineering, education, consulting, financial service broking, etc)

FAQ: What are the requirements for a micro business to qualify for turnover tax? | South African Revenue Service

A natural person (sole proprietors and partners in a partnerships) or a company (including a close corporation and a co-operative) may qualify as a micro
www.sars.gov.za www.sars.gov.za

Tax legislation is not stupid. They've been closing loopholes for decades. So there is no magic trick where you can go from being a sole-prop consultant to a one-man-business consultant and suddenly pay a lower tax rate, without also doing something dodgy.
 
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InTheWild said:
Yeah an option, but that kind of gives me the vibes of Aunty Sally's Rusks at the local farmers market.. :X3:
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InTheWild said:
Ok, but what happens if you have clients that would rather do business with a registered business? These cases I have come across.
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So I think you might be conflating a couple things here.

First there's no reason a sole prop can't look super professional with smart branding and a good trading name. You can even have a VAT number in your personal capacity, but trading-as. So, many clients won't even realise you are not a company.

But nevertheless if clients are hesistant to do business with a one-man band that might be more because they are concerned about execution risks i.e. you getting hit by a bus, and not the corporate structure per se. IMO if they're being smart, they should prefer a sole-prop to a single-employee-company for legal reasons. But more than either of those they might prefer to work with a team of 5+ people with inherent redundancy so that if one guy goes awol the project can still be completed.
 
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no need to open a "company" just do it all as a sole prop no real tax benefit in a company more admin more costs etc, you get all the same tax allowances etc.

Ill do a super simple example.

Company earns 100 you have to pay salary of 100, zero profit no tax

You now earn that 100 as a salary and pay for it as you would have if you had no company
 
Tomtomtom said:
So I think you might be conflating a couple things here.

First there's no reason a sole prop can't look super professional with smart branding and a good trading name. You can even have a VAT number in your personal capacity, but trading-as. So, many clients won't even realise you are not a company.

But nevertheless if clients are hesistant to do business with a one-man band that might be more because they are concerned about execution risks i.e. you getting hit by a bus, and not the corporate structure per se. IMO if they're being smart, they should prefer a sole-prop to a single-employee-company for legal reasons. But more than either of those they prefer to work with a team of 5+ people with inherent redundancy so that if one guy goes awol the project can still be completed.
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Ah ok that also makes sense, thanks for the detailed response, much appreciated!
 
Old thread, but here’s what I learned over the past year. I moved from invoicing in my own name to a (Pty) Ltd after three clients required formal procurement and an SLA. There was more paperwork at first, but it disciplined my pipeline. I turned to Unit4 so I wouldn’t drown in spreadsheets: from one place I can see what’s being delivered, who’s working on what, when I invoice, and what’s outstanding. Interestingly, DSO dropped as well - I get paid faster - because invoices go out clean and on time.
 
RedViking said:
I had a company and still trying to close it. An absolute pain in the backside. In South Africa I will hope to never have one again.
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We really are not small business friendly.
 
ENIAC said:
Old thread, but here’s what I learned over the past year. I moved from invoicing in my own name to a (Pty) Ltd after three clients required formal procurement and an SLA.
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Bit weird. Corporates I guess? Just following policy, even if it puts them in a worse position. Why can't they enforce an SLA against an individual? Now they have to go via a structure that actually just protects you from them, while adding no value for them (since there's nobody else actually responsible for execution).

ENIAC said:
There was more paperwork at first, but it disciplined my pipeline. I turned to Unit4 so I wouldn’t drown in spreadsheets: from one place I can see what’s being delivered, who’s working on what, when I invoice, and what’s outstanding. Interestingly, DSO dropped as well - I get paid faster - because invoices go out clean and on time.
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I would call this a side-effect more than a cause. Discipline and workflow optimisation are independent of incorporation. But if the admin of incorporating inspired those things then that's great. Probably not uncommon that it works that way.
 
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