A Guide To Registering Your Business
The prospect of the administration involved when setting out to start a business can be a daunting one, but more importantly you should carefully consider the type of business you start as it will have both cost and legal implications down the line.
All companies might be businesses, but not all businesses are in the legal sense, companies. It’s an important distinction, with several implications for business owners.
Many small and service-oriented businesses choose to operate as sole proprietors; it’s the simplest kind of business structure, and does not need to be registered. As an owner you would be the sole proprietor, and can trade under your own name, with no separation between personal and business assets and liabilities. This means that as a sole proprietor you benefit from all the profit and assets accumulated through the business, but you are also liable for any debt that the business incurs.
A private company is its own legal entity that is separate to the owner. Therefore by choosing to register a private company, you, as a business owner, take less risk than if you were trading in your own name as a sole proprietor. A registered company can also trade in the formal business sector and bid for government tenders.
A private company is eligible for numerous tax benefits/deductions such as business expenses, auto expenses, medical aid, office space and lower income tax rates. Smaller private companies do not pay audit fees. Together with the savings that can be made through tax and VAT, private companies often end up being the cheapest and most suitable legal format for a business. Private companies can have one or more directors, so decisions can be made quickly. There is also no need to publish financial accounts, therefore intellectual property can be safeguarded.
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