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Thread: differences between having a CC (which I've had since 2009) and trading as a sole proprietor or free

  1. #1
    Full Member Gaynor's Avatar
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    differences between having a CC (which I've had since 2009) and trading as a sole proprietor or free

    Hi all.
    What are the essential differences between having a CC (which I've had since 2009) and trading as a sole proprietor or freelancer?
    I registered a CC as I understood I would be able to register for tenders with government entities.
    Can one do that as a sole proprietor or freelancer too? I am the only person in the business.
    I'm considering letting the CC deregister and honestly I have no brain for tax and its workings and I'm also looking for a good tax consultant who can help me (as mentioned in another post). But what I need is the simplest registration possible - so any advice as to what it is, I would be grateful. I'm so doff with it all I'm not even sure I'm posting in the right forum.
    Warm Regards,
    Gaynor Paynter
    083 442 4689
    We type and write it right.

  2. #2
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    I can't give too much insight on getting government tenders as a cc. I see no logical reason why a sole prop should not be able to tender, but I have heard that this is an issue, and bureaucracy does not always follow logic.

    Some extra info here:

    The main reason to create a cc or company is so that more than one person can own the business and its assets. It can also be useful to separate your private finances (liabilities and assets) from those of the business, and can make things less complicated when it comes time to sell the business. However these benefits come at a cost in terms of registration fees, accounting fees, annual returns and some admin time.

    The sole prop is as simple as it gets. Just trade as yourself. There is no registration required (that happened automatically when you were born and given an ID number).

    Both options require tax to be calculated and paid.

  3. #3
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    We do a lot of Government tenders and you have to be a CC or Pty to register on the database.

    As of 1 April 2016, all companies wishing to tender on Government contracts must be registered at the Central Supply Database run by National Treasury. This is a much easier process as having to register with each individual provincial treasury. They are linked to CIPC and SARS wich make registration a breeze (took me about 20 min).

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  5. #4
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    If you not interested in government tenders and not in a risky industry, I would say just operate as a sole prop but a keep your business and personal expenses separate with a separate bank account. When your business grows bigger, you can perhaps justify the additional expenses that are associated with companies (ie financial statements, returns etc).

    With both options there are taxes to be paid.

  6. #5
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    It's always easier to operate as a cc or Pty keeping your business separate from your personal affairs. It gets more risky and complicated if you as an individual are registered for VAT.
    I would advise to keep the cc but keep all your structures straightforward and simple.

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