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South African Company - (Pty) Ltd.
The Private Company (Pty) Ltd remains the most popular choice for many small business owners when it comes to registering a business.
The distinctiveness of a Private Company:
The name of a private company must end with the words ‘(Proprietary) Limited’ or ‘(Pty) Ltd’.
A Private Company is preserved by law as a separate legal entity and must register as a taxpayer in its own right.
It has a life separate from its owners with rights and duties of its own.
The owners of a Private Company are the shareholders.
The managers of a private company may or may not be shareholders.
A private company may not have an interest in a Close Corporation.
The maximum number of shareholders is restricted to 50.
Advantages of a Private Company ((Pty) limited)
Life span is continuous
Shareholders have limited liability
Act only imposes personal liability on directors who are knowingly part of the carrying on of the business in a reckless or fraudulent manner
Ease of transfer of ownership
Easier to raise capital
Adaptable to both small and large businesses
Not required to file their annual financial statements with the Registrar of companies, thus, they are not available to the general public.
There are several benefits and advantages involved when a (Pty) Ltd comes to life.
A small Business is able to get numerous Tax Benefits / Deductions if registered as a Pty.
It is important to hire a Tax Practitioner to assist you with these Tax Submissions at year-end.
It is however your responsibility to make sure you keep all your receipts. Some benefits follow:
Auto expenses (car related deductions)
Donations / Charity
Home Office Space
All business related expenses
Legally Official and Formal:
A registered Pty becomes a formal entity which can trade separately from its owners.
As a business entity (with its own name and bank account) you can then apply for Tenders, sign Contracts and trade internationally (for Imports and Exports you need a permit).
Less Risk Involved:
A Pty is registered as a separate entity, meaning that you (as the Owner / Director / Shareholder) takes much less risk than when you are dealing under your own name.
Saves You Money:
The Private Company (Pty) has replaced the Close Corporation (CC) business registration format.
You do NOT pay any audit fees until you become a massive business (please refer to the Companies Act).
It is currently the most inexpensive and suitable legal business format for an entrepreneur who wants to start a business.
This business format allows you to start and stay small or grow to a massive enterprise.
Pty’s are also eligible for Tax and Vat related deductions.
Start with 1 or more owners:
A Private Company needs one or more Director(s) to start. It can operate its business immediately after incorporation.
A Private Company is required to perform lesser legal formalities as compared to a Public Company.
It enjoys special exemptions and privileges under the Company Law.
Therefore, there is greater elasticity of operations in a Private Company. For example, in most cases no auditing is required.
In a Private Company there are a lesser number of people to be consulted.
If the Directors are also the Stakeholders of the Private Company, there is no law preventing them to make decision quickly.
Protecting IP (Intellectual Property):
A Private Company is not required to publish its accounts or file several documents.
Therefore, it is in a better position than a Public Company to maintain business’ trade secrets or Intellectual Property (IP).
Best Financial Reporting Standards:
Much less of a Financial Reporting obligation is required for Private Companies than other company format or the ‘old’ Closed Corporations format.
Private Companies are more liquid in its share allocation and can consist of more than 50 shareholders.
If you would like to register a Pty please contact us online!
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