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Tax - South Africa In November last year (2015) I partnered…

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Tax - South AfricaIn November...
Tax - South AfricaIn November last year (2015) I partnered with a company (not Uber itself) in Cape Town where I purchased a vehicle to be used for the Uber Taxi service in Cape Town. The company operates the vehicle on a daily basis and pay me a monthly agreed percentage share of the revenue. They also appointed the driver and work directly with Uber.The vehicles monthly loan repayment, insurance, maintenance costs and vehicle tracker gets paid by me from the money I receive. However the money gets paid into my personal bank account and all payments related to the car gets paid out of the same bank account.It would be appreciated if you could please advise what the best course of action would be regarding registering a Pty Ltd company or continue operating it as sole proprietorship?What would the tax implications be of operating it as a sole proprietorship compared to registering a Pty Ltd, the tax benefits/disadvantages of both, deductions etc?I will give you a brief breakdown of the monthly receivables/payables at a later stage.Looking forward to your feedback.
Thanks
Submitted: 2 years ago.Category: Finance
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Answered in 1 day by:
1/26/2016
Financial Professional: bkb1956, Finance Enthusiast replied 2 years ago
bkb1956
bkb1956, Finance Enthusiast
Category: Finance
Satisfied Customers: 6,654
Experience: IRS Enrolled Agent, 20+ years of experience in tax preparation with associated finance experience.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

As to operating as a sole proprietorship (the simplest business entity),

  • There is one owner, who is entitled to all the profit
  • Company registration is not required by the Companies and Intellectual Properties Commission (CIPC)
  • Business name (the name under which you will be trading) must be registered with the CIPC, to meet the requirements of the Consumer Protection Act (CPA)
  • A Memorandum of Incorporation (MOI) is not required.
  • Sole proprietorships do not enjoy limited liability, i.e. there is no separation between the assets and liabilities of the business owner (the sole proprietor) and those of the business.
  • Sole proprietorships are taxed in the sole proprietor’s name, according to Personal Income Tax Rates.

As to personal company (Pty Ltd),

but are still suitable for start-ups:

  • The number of owners can range from one person to fifty.
  • A One-Man Company is a private company which has just one owner, and is also referred to as an owner-managed company. One-man companies are exempt from audit.
  • Company registration with the CIPC is required
  • Business name registration with the CIPC is required
  • A Memorandum of Incorporation is required
  • Annual returns must be filed with the CIPC to ensure that they’re in possession of the latest company information
  • Unlike sole proprietorships, private companies are separate juristic persons and enjoylimited liability, i.e. there is a separation between the assets and liabilities of the company and those of its owner(s)
  • Private companies are subject to Turnover Tax and Secondary Tax on Companies, and the owner(s) or owner-manager is/are subject to Personal Income Tax.

The following link contains excellent detailed information regarding the pros and cons of each:

https://www.intergate-immigration.com/sole-proprietorship-close-corporation.php

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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Financial Professional: bkb1956, Finance Enthusiast replied 2 years ago

Just following up with you to see if I can assist you further. If so, please let me know.

Best regards,

Barb

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