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Thread: Can a Private company own a CC

  1. #11
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    Quote Originally Posted by Soundinmind View Post
    Good day everyone,

    Im in the process of opening more companies and would like most of them to full under the same group, however they'll have different names. Is it possible for a Private company to own CC? or is there a better way?

    I know that a CC cant own another CC and as a member of a CC I cant own more than one CC unless I want to pay heavy taxes.

    What can I do???

    Here is a list of the business types:
    - Distribution (Import/Export)
    - 2x Retailer (Sales of products)
    - Productions (Event sound hire)

    Im going to own other small business in the future, such as a coffee shop but I wont join it with these as its not in the same line.
    - - - - -

    Hi there, Kindly pop me an email on dmodibedi@gmail.com, as we will be able to assist you in this regard, not only will we assist, but FYI - we have successfuly gone passed that stage. CHA Group has about four more companies with different names & functions - ect... alternatively call us on 0861 111 242 - Dennis

  2. #12
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    i am trying to understand what you guys mean....

    i am sole prop of a company which is registered with vat.

    i aslo started and am a working director of a cc which i started a couple of years later which does similar work to the above company... but the cc is not registered with vat as i dont buy materials in the cc...i only charge out labour.

    is this legal?

    my plan for the furure is to register the cc with vat and take over most of the work (the big comapnies and commercial work which require vat registration) from the sole prop.

    the sole prop will carry on operating and do small jobs in the domestic line where people dont want the comapany to be vat registered.

    is this a smart move or do you think i am wasting my time and money and should rather just operate one comapany.

    let me also put you in the picture as to why i am doing this...

    my plan is to build up the cc...and everyone i employ will get shares and become members...then eventually i will sell my shares to other members....or just stay in the company as a silent member

    what are your thoughts?
    Last edited by murdock; 05-Jan-11 at 07:31 AM.

  3. #13
    Junior Member dcs's Avatar
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    Hi Murdock,

    I am trying to understand:

    i am sole prop of a company which is registered with vat.
    I assume you are trading as a sole prop and are registered for VAT, not as (Pty) Ltd. There should be no problem charging labour to clients from the cc, but then presumably you charge the clients separately for materials (inclusive of VAT)? If you do not, then you must sell the materials inclusive of VAT to the CC. The tax benefit goes to the customer as there will be no VAT on the labour. I suspect that this would be breaking the law as the intention of the cc is to reduce tax (VAT) and the transaction is not at arms length. The way it would be legal is if the sole prop sold the materials to the cc at a profit and paid the VAT. The cc then pays for the materials inclusive of VAT.

    The net effect is to remove the VAT charge on labour. I suspect that if this is the primary reason for what you are doing, it is illegal.

    Your plan is to register the cc for vat and deregister the sole prop for VAT. I think you are going to hit the same problem until such time as you are no longer a member of the cc or are a minority member of the cc.

    I think what you are doing is probably illegal and adds a whole lot of administrative overhead. I reckon you should rather have a chat to your accountant as to the best way forward.

    David

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    Dave A (05-Jan-11)

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    Gold Member Mark Atkinson's Avatar
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    Quote Originally Posted by Dave A View Post
    Smile and wave, guys - question answered and thanks for the contributions.

    B
    Peacekeeper Dave to the rescue!

    Edit: *Excuse the troll, I didn't see the 2 following posts.
    Last edited by Mark Atkinson; 05-Jan-11 at 03:37 PM.

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    Dave A (05-Jan-11)

  7. #15
    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by murdock View Post
    is this legal?
    I'm inclined to agree with David - SARS might well see it as avoidance.

    My thoughts are I'd rather have the cc than the sole prop. (which is effectively you in your personal capacity) registered for VAT and would divide activities to suit. You'll also need a presentable reason as to why the operations are split across seperate legal entities, particularly if one is registered for VAT and the other isn't. The easiest defence is different ownership interests...

    You should probably also take a close look at whether having two companies is actually worth it as you could end up missing out on some fairly substantial small business tax breaks. Unfortunately to qualify for them all owners/members must be natural persons (ie not companies or trusts) and may only have a significant shareholding/interest in just that one business.
    Last edited by Dave A; 05-Jan-11 at 10:09 PM.

  8. #16
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    let me try that again

    sole prop .....registered as a vat vender.....charge customers vat....electrical contractor....sell and charge customers for labout and materials including vat

    cc ....am a working member....not registered for vat....electrical consultant....no materials used or sold to customers only hours rate hence the decision not to register for vat.

    i need to get to the bottom of this because it is on the top of my to do list for this year....do i stay as a sole prop and registered with vat as i have done for 20 year or do i move everything over to the cc and the register the cc for vat and include both services in one company?

    my thoughts are dont break something which has worked for so long...

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