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Thread: Growing number of CC registrations

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    Diamond Member tec0's Avatar
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    Growing number of CC registrations

    The truth is there will be a growing number of CC registrations within this year. And I thought it wise to ask from the “knowing public” what do you need to start a CC what and more importantly how to manage you’re VAT. So please all experts; Care to share?
    peace is a state of mind
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    Five names in order of preference, register online,at CIPRO(Companies Office), submit your CK 7, name reservation on line. Wait a day to 5, for approval, and use the approved name, to finalise the CK1(Founding Statements),obtain Accounting Officers consent/letter, and you should have a CC, within a day to 2.

    Word of Caution, though. Much is made of the limited liability advantages of CC''s.(Not Liable for the CC's debts), but the "corporate veil" can easily be pierced if the CC, doe not conform to certain standards.

    Sometimes , retaining a Sole Proprietor or partnership can be benificial. A sole proprietor can for instance, derive benefits from his business assessed tax losses. This is not the case with a CC. The two units are taxed seperately.
    Sean Goss We all are scared, but only few are brave.
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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by sgafc View Post
    Sometimes , retaining a Sole Proprietor or partnership can be benificial. A sole proprietor can for instance, derive benefits from his business assessed tax losses. This is not the case with a CC. The two units are taxed seperately.
    Interesting point. On the flip side, a CC can carry forward an assessed loss to offset against future profits - an individual can't.

    Where (if there is one) is the dividing line where one is better than the other?
    The trouble with opportunity is it normally comes dressed up as work.

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    Quote Originally Posted by Dave A View Post
    Interesting point. On the flip side, a CC can carry forward an assessed loss to offset against future profits - an individual can't.

    Where (if there is one) is the dividing line where one is better than the other?
    No, and individual CAN offset taxes against assessed losses, so can a CC.
    Mr X trading as Z Enterprises(Sole Trader) can offset Z Enterprises Losses against his personal income. He however cannot offset CC losses against personal Salaries/income.

    Its not a matter of what is better. Decisions to form CC's Ptys etc, are informed by size, owners and investments concerned, and off course, individual choices.
    Sean Goss We all are scared, but only few are brave.
    www.sgafc.co.za

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by sgafc View Post
    No, and individual CAN offset taxes against assessed losses,
    But only in the same tax year, I thought. My understanding is you can't carry a loss into the next tax year and offset it there as an individual - as a CC you can.
    The trouble with opportunity is it normally comes dressed up as work.

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    Diamond Member tec0's Avatar
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    Thanks this is looking good! Well now need to know now if you are just beginning and you want to do business with suppliers why then is a CC the only way to go?

    or is it...
    peace is a state of mind
    Disclaimer: everything written by me can be considered as fictional.

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    Junior Member RogerH's Avatar
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    Hi, the reality is that CC's are being phased out - I am not even sure if one can register one at the moment (there have been mixed messages from DTI and CIPRO) - you can probably get your hands on one "off the shelf". Secondly most of the benefits of CC's are going to become irrelevant with the New Companies Act - members will pretty much be treated as directors, and the auditing/independent review parameters will benefit everyone in a small company (owner director scenario)... however there are some interesting twists in the New Act since it is pretty much changing the landscape of business in South Africa...

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    Diamond Member tec0's Avatar
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    Now that is really interesting, however is just another way for government to keep dabs on the income of businesses or, perhaps allowing for more marketing opportunities. Also if you don’t mind me asking what changes will we see.

    One more thing thanks for your post it is really good stuff.
    peace is a state of mind
    Disclaimer: everything written by me can be considered as fictional.

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    Diamond Member tec0's Avatar
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    Sometime this year new close corporations (CCs) will no longer be registered when the new Companies Act comes into effect.
    The good news, however, is that existing CCs will not be scrapped but will have to adhere to both the new act and the current Close Corporations Act.
    Associate partner in Shepstone & Wylie Attorneys, Claire McGee, says the new legislation will have a profound effect on the way business is done in South Africa, and in particular, on the future of close corporations (CC’s).
    No new close corporations will be registered, and existing companies will not be permitted to convert to close corporations. The Companies and Intellectual Property Registration Office (CIPRO) will continue to process and implement any applications for incorporation or conversion which it has received, but not processed, by the date when the new Companies Act takes effect,” she says.
    Date Posted: January 7th, 2010
    Source Ok... this will be an interesting development. However would it be possible to still trade with just a VAT number? Or will this system to be “killed” Secondly anybody know the date that was mentioned in the article?
    peace is a state of mind
    Disclaimer: everything written by me can be considered as fictional.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by tec0 View Post
    However would it be possible to still trade with just a VAT number?
    If you as an individual is registered as a VAT vendor, that'll continue. You'll continue to trade as a sole proprietor, blissfully unaffected by all the Companies Act changes. (Personally I think it's a bad idea to register for VAT as a sole proprietor, but perhaps that's another discussion).

    As for the changes in the Companies Act, there are interim arrangements which ensure continuity when it comes to CC's. It's not like your legal entity is suddenly going to disappear - at least not for now. A CC has to have an accounting officer and I'm sure said accounting officer will guide the members of the CC through any required changes.

    I'm also quietly wondering just how "profound" the effects are going to be. When it comes to "changing the way business is done" in South Africa, I'm inclined to think the Consumer Protection Act is going to be of far greater significance.
    The trouble with opportunity is it normally comes dressed up as work.

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