Should I open up a PTY or just trade as myself?

[MisterBigglesworth]

Hi,

Searched a bit and found info...but still not sure on which is better, to open up a PTY or just trade as myself? As below from SARS, and found in another thread:

http://www.services.gov.za/services...ces/Tax/valueaddedtax/registrationofvat/en_ZA

Registration:

http://www.sars.gov.za/ClientSegmen...ax/Pages/Register-and-Deregister-for-VAT.aspx

Should you be unsure with the paperwork, ask a bookkeeper, accountant etc. to assist you, the registration however must be done by you, the representative.

The freelance work I do doesn't come near R50k in a year. The amount of money talked about in links above, not close. I mainly do the odd jobs for family, friends, close acquaintances. I was approached by someone to join a venture as the developer, so taking a net profit % on sales. Thats all fine...but he mentioned to me why not open a PTY to make things easier (for who, him/me?).

So it got me thinking, it wont be a cash cow...but who knows, maybe one day. Should I just keep going like I am currently as basically trading as myself on a personal scale or open a PTY and do all my freelance work etc through it.

If I make R20k a year via freelance work thats a lot...and this new venture wont make cash for some time and when it does...it wont be much either. Am thinking its not worth opening a PTY...am I correct?

 

[Shoaybd]

Trade as yourself i think. PTY will come will expenses. If you do start making money it wont be hard to create a PTY and move things into it.

 

[kdub]

Trade as yourself. Its so much easier, so much less admin, especially as you aren't making millions.

 

[MisterBigglesworth]

Ok thought so, thanks for confirming this.

 

[steaklassie]

I would register a PTY if you want limited liability. It may cost a little more but you get some peace of mind. Check: http://businessowl.co.za/business-articles/sole-proprietorship-versus-pty-ltd/

 

[deweyzeph]

The other benefit of a PTY LTD is that you are technically an employee of your PTY LTD and not self-employed. So when you apply for credit, a home loan, sign a lease, etc you can legitimately claim that you are employed and not self-employed and you will be able to provide payslips to prove this. Being self-employed can often be the kiss of death when it comes to applying for credit.

 

[RanzB]

The other benefit of a PTY LTD is that you are technically an employee of your PTY LTD and not self-employed. So when you apply for credit, a home loan, sign a lease, etc you can legitimately claim that you are employed and not self-employed and you will be able to provide payslips to prove this. Being self-employed can often be the kiss of death when it comes to applying for credit.

I got the impression that he was employed somewhere are freelances for extra cash.

 

[deweyzeph]

I got the impression that he was employed somewhere are freelances for extra cash.

Still, if he decides to freelance full-time then having a PTY LTD will be very beneficial. But I agree, if you're only freelancing on the side in addition to a proper full-time job then having a PTY LTD is probably not worth the effort.

 

[Saajid]

I would register a PTY if you want limited liability. It may cost a little more but you get some peace of mind. Check: http://businessowl.co.za/business-articles/sole-proprietorship-versus-pty-ltd/

Agreed. But this doesn't really apply to the OP, because he isn't running a capital intensive business, won't be taking out loans in the business name, etc. He is basically rendering a service.

 

[HavocXphere]

PTY is better if you think there is a risk of getting sued etc.

However, there is tax legislation in place making life difficult for those that create a PTY just to channel their contracting work via it.

Agreed. But this doesn't really apply to the OP, because he isn't running a capital intensive business, won't be taking out loans in the business name, etc. He is basically rendering a service.

No if you want to buy a car / whatever.

 

[MisterBigglesworth]

Yeah have a full time job, and do some simple dev jobs when people need help. Is an in frequent thing. Wont be needing credit etc, and with the work I do...really little risk of being sued etc. Think I will keep trading as myself and if things do change, I will move from there.

Thanks everyone