[Question] Can my Pty Ltd own my Sole proprietorship? Or what are my options?

[Derickt]

Hi,
I've been running a Sole proprietorship(unregistered) for a while and decided to register it as a Pty Ltd for various reasons.

Problem is my name was rejected as being too close to another registered name (I disagree, but that is another matter) - So I had to register it under another similar name.

I cannot just change my name as I already have somewhat of a presence online and a few customers. So what are my options?

1. Do Pty Ltd 'trading as' Sole Proprietor? - I believe this will be a thing of the past soon, so I don't know for how long I would be able to continue doing this
2. Sell my Sole Proprietorship to my Pty Ltd and trade as '...a subsidiary of Pty Ltd'?
3. Can I appeal the name rejection?
4. The other company does not seem to be in operation (I can't find any info on it at least) - can I find out who the owners are and buy the name from them, or get permission from them to register my name - is this an option?
5?

Your advice would be greatly appreciated

Derickt

[Dave A]

When "converting" from a sole proprietorship to a Pty Ltd, normally the best way is to have the company purchase the existing business, in whole or in part.

Some things to consider:
* The value of the purchase need not be paid in cash - it could be transferred into a loan account which is paid out at some point in the future.

* Some fine print applies, but broadly if the company just buys the assets and liabilities of the company at book value per the financials of the sole proprietorship, the transaction is tax neutral. Start moving off that line and you head into cash flow effects arising from (particularly) capital gains tax.

*It's a good idea to run over the exact details with your accountant before making the change so that you are fully aware of your options and possible consequences any particular aspect may bring.

On the name / trading name registration problem - if you can get a written release from the owner of the name CIPC is concerned about, my experience is CIPC will allow you to register your desired name.

[WJVANTONDER]

Hi,
I've been running a Sole proprietorship(unregistered) for a while and decided to register it as a Pty Ltd for various reasons.

Problem is my name was rejected as being too close to another registered name (I disagree, but that is another matter) - So I had to register it under another similar name.

I cannot just change my name as I already have somewhat of a presence online and a few customers. So what are my options?

1. Do Pty Ltd 'trading as' Sole Proprietor? - I believe this will be a thing of the past soon, so I don't know for how long I would be able to continue doing this
2. Sell my Sole Proprietorship to my Pty Ltd and trade as '...a subsidiary of Pty Ltd'?
3. Can I appeal the name rejection?
4. The other company does not seem to be in operation (I can't find any info on it at least) - can I find out who the owners are and buy the name from them, or get permission from them to register my name - is this an option?
5?

Your advice would be greatly appreciated

Derickt

Hi Derickt

We are in the same boat more or less. I have been conducting business as a sole proprietor using a trade name. But the name I trade with was rejected by CIPC because of the word "Unlimited" used in the name.

Thing is I have been trading with this name and even have a bank account. Phoning CIPC is a mission so hopefully somebody here can help.

[Derickt]

Hi,
In the end, I kept the same website, but put a note on the website to state my new name, but that the website will stay the same. Got a new bank account under the new name etc. I also bought the domain for my new name and redirected it to my existing site.

Not sure if this is similar to your situation, but this is what worked for me in the end.

[WJVANTONDER]

Hi,
In the end, I kept the same website, but put a note on the website to state my new name, but that the website will stay the same. Got a new bank account under the new name etc. I also bought the domain for my new name and redirected it to my existing site.

Not sure if this is similar to your situation, but this is what worked for me in the end.

Pretty much. Cheers, for that.

The whole hoohah about company names is around the National Credit Act where you eventually won't be allowed to use a trading name at all. As far as I understand it that section of the Act is still not finalised but will be enforced from a date at least one year after the Act as it stands was gazetted (31 May 2011).

Any active trading name used before that date will be allowed to continue with that name. But like I say getting any info over the phone from the DTI and the CIPC especially can be a mission.

[Derickt]

Yeah, saw that as well, and thought about running as a 'trading as' for a while - in the end just went with a "my company name is this, but my website is this" approach - maybe one day in the future when I have the patience and the time I'll go through all the read tape and try and change my name to the original.