Shelved CC alternative?

[sterne.law@gmail.com]

Perhaps another issue, non tax related.

the obsession with cc is understandable, it was always an excellent business vehicle, until the surety side kicked in. none the less forming a private company is easy and the running thereof is not much different from a cc, particulalry where there is a single shareholder.
For a typical small start up, there is not much difference. There is no audit obligation, tax structures/benefits are the same, and the legalities are pretty much the same. Your standard memo of incorporation allows for flexibility and doe snot place too much onus on strict procedures for decision making, meetings etc.

[Dave A]

so why go through the extra paper work, because you think you are going to be paying less tax?

Because you'll only be paying 28% at most on undistributed profits. And that can be a big deal in a growing business where you're typically having to finance growth in working capital out of taxable profits.

The other reason to incur the extra paperwork is it gives you options as to in which hands the "distributable" income is taxed.

[Justloadit]

Because you'll only be paying 28% at most on undistributed profits. And that can be a big deal in a growing business where you're typically having to finance growth in working capital out of taxable profits.

The other reason to incur the extra paperwork is it gives you options as to in which hands the "distributable" income is taxed.

...and the receptor of the funds must declare this along with their earnings to SARS. If they never earned an income from the company, and are receiving the profits, this must still be declared, and if it is below the respective thresholds, then they may pay less tax if they rather earned it as income rather than having paid the 28% at the company level.

6 of one and half a dozen of the other.

We are debating here with out knowing the values involved. The decision here should be based on the actual amount of profit made or income earned. The thresholds on the tax brackets govern the decision to be taken. We are trying to make a one decision fits all.

[Dave A]

The decision here should be based on the actual amount of profit made or income earned. The thresholds on the tax brackets govern the decision to be taken. We are trying to make a one decision fits all.

Certainly not my intention

I agree that situations may differ, and what is best in one situation may not be best in another.
And of course tax is not the only factor to take into consideration.

[Newretailer]

Also remember if your turnover is under R1 million a year, you can register for turnover tax, with a very low tax rate. You cannot claim any deductions and cannot register for VAT though, so you need to work out if it will be worth your while.

[mbsmit]

Hi there,

Tax is charged at a flat rate of 28% not 29%. Perhaps the CIPC should do some more marketing. Seems like very few people know about the changes!

Regards,
Mr Smit