[Question] Can a PTY Ltd use Trading As...?

[SamanthaLeigh]

Hi Forum,

I have been running a sole prop business for the past 2 years. I have done a million rand turn over in this last financial year and so now need to register for VAT.

My accountant has strongly urged me to NOT register as a VAT vendor in my personal capacity, but to rather register my company as a PTY Ltd and then register the company as a VAT Vendor. That is all fine and well.

The problem I have run into is that the name I have been trading under as been rejected by the CIPC and I have been told that a PTY Ltd cannot trade under any other name other than the one that they have registered - according to the new Consumers Act - is this true?

The internet has been incredibly conflicting. Some people say you can't, some people say you can but be prepared to be sued if the name you are trading under ever finds you!?

Please help!

[HR Solutions]

Yes you can - we are a PTY trading as Human Resource Solutions and have been for 13 years

[padjakkels]

Why should you not register as a VAT vendor in your own name? Any reasons?

Sent from my SM-A700F using Tapatalk

[Greig Whitton]

I have been told that a PTY Ltd cannot trade under any other name other than the one that they have registered - according to the new Consumers Act - is this true?

Not quite. Legally, you can't trade under a business name that you haven't registered (the relevant legislation is Section 79 of the Consumer Protection Act). However, you can register a business name that is different from the name of your company.

For example, let's say you register a company called "Joe Smith (Pty) Ltd." but want to trade as "Joe Smith Widgets". Legally, you can't trade as "Joe Smith Widgets" until you register "Joe Smith Widgets" as a business name. Once you do, you can trade as "Joe Smith Widgets" or as "Joe Smith (Pty) Ltd."

[HR Solutions]

Don't agree with that. As I said we have had it for a long time and its ok with SARS , it's ok with the registra and the auditors etc etc

[Dave A]

Don't agree with that. As I said we have had it for a long time and its ok with SARS , it's ok with the registra and the auditors etc etc

And you have been doing it since before the inception of the Consumer Protection Act, therefor you are exempt from the new requirement referenced by Greg above.

Samantha's position is different as she would only be commencing with a t/a situation now.

[HR Solutions]

Ok I now understand

[Andromeda]

Not quite. Legally, you can't trade under a business name that you haven't registered (the relevant legislation is Section 79 of the Consumer Protection Act). However, you can register a business name that is different from the name of your company.

The whole issue of registering trading names at CIPC has never been implemented and the whole Chapter 4 of the CPA is therefore problematic. As it stands, SARS and banks will allow trading names as was done in the distant past.

In connection with SamanthaLeigh's post, I would definitely accept the advise of her accountant if I were her. 2012_06_05_Registration_trading_names.pdf

[SamanthaLeigh]

Why should you not register as a VAT vendor in your own name? Any reasons?

Sent from my SM-A700F using Tapatalk

Hi there,

He says not to register as a VAT Vendor in a personal capacity because it will follow me for life. So if I ever want to leave the industry I am in (which is film) and decide to start selling crocheted blankets (for example), then I am going to have charge VAT on all the blankets I sell. And he says to de-register as a VAT vendor is a extremely lengthy and complicated process.

That's why he advised me to register as a PTY so that we could register the company as a VAT vendor.

[SamanthaLeigh]

Not quite. Legally, you can't trade under a business name that you haven't registered (the relevant legislation is Section 79 of the Consumer Protection Act). However, you can register a business name that is different from the name of your company."

So the last conversation I had with the accounting firm that is helping me is to see if the name I want has been registered by anyone else. He says if it HASN'T been registered by anyone else then I can Trade As with that name knowing that no one else can register it (because we couldn't).

So would that be legal? Knowing that I am trading as with the name that cannot be registered because the CIPC will reject anyone who tries to do so?

[SamanthaLeigh]

The whole issue of registering trading names at CIPC has never been implemented and the whole Chapter 4 of the CPA is therefore problematic. As it stands, SARS and banks will allow trading names as was done in the distant past.

In connection with SamanthaLeigh's post, I would definitely accept the advise of her accountant if I were her. [ATTACH]6547[/ATTACH]

Hi Andromeda,

Thanks so much for the attachment. It was very helpful! I see the letter was written in 2012 - has nothing been implemented since then?

[Dave A]

Knowing that I am trading as with the name that cannot be registered because the CIPC will reject anyone who tries to do so?

I'm trying not to let my imagination run away with me.
I'd assumed the issue was it was too close to another name already registered, but that sounds way more interesting.

What reason did CIPC give for not registering the name?

[wynn]

It must be possible to use the name you want to as a description on your stationery, advertising etc. keeping the trade name tiny and the description large
eg.
Joe Bloggs Pty (Ltd)
Film Agents and designers.

[Richard S]

As far as the vat is concerned, that is my experience. I tried to cancel my registration after about 8 years of not trading but have discovered in the last week that I am still registered. I suspect that it will die with me. Perhaps.

And as far as using a 'trading as' name I think your accounting firm's reasoning is spot on. I would simply use the name and in the unlikely event that there is ever an official complaint you can apologise and modify it. But this would be highly unlikely unless you called your business Clicks or ABSA or something in that vein. By the time anyone cottons on you will hopefully have a data base you can email with your new details (advertising opportunity) and publish an apology via a press release(s). (advertising opportunity)

It is easier to apologise than get permission and there is minimal chance of repercussion.

Just my opinion, after 30+ years in business. Having said that, if your product or service lends itself to Wynn's suggestion, that's a solution nobody can object to.

[SamanthaLeigh]

I'm trying not to let my imagination run away with me.
I'd assumed the issue was it was too close to another name already registered, but that sounds way more interesting.

What reason did CIPC give for not registering the name?

Hahaha! Not as interesting as your imagination Dave - sorry! The name I want to register is Casting 101.

The CIPC says that there are too many conflicting names with 'Casting'. My accountant also just explained to me that the word 'Casting' is probably too close to a function, which apparently the CIPC reject automatically.

The company doing my registration for me has double checked and no one has registered the name Casting 101 so I will now happily register another name but Trade As Casting 101 knowing that no one should be sueing me!! As it was mentioned earlier, it is easier to ask for forgiveness than permission.

Thank you everyone for your advice and expertise! I now feel confident going forward with this! You've been a massive help!