Deciding Whether You Should Register As Close Corporation Or A Propriety (Pty) Ltd

While starting a business and registering the same, the owners have to initially make a decision on whether they want to register it as a close corporation (CC) or as a Proprietary (Pty) Ltd company. There are a couple of tips can be considered if you are in such a fix.

How to decide:

If the business has an individual ownership then the ideal method is to go for a sole proprietorship. But if multiple owners are involved in the business, then it is best to consider the options for a close corporation or a proprietary limited company.

Advantages the entities offer:

Both close corporation and (Pty) Ltd have their own merits. Both have an advantage of limiting the liability. This means that in case of dissolution of the company, the liability will be adjusted by using assets of the company only. This helps in protecting the private assets of the owners.

 

Another advantage is the tax incentive, which is offered by various countries. In case of decease of any of the owners, the entity of the company still continues. It also provides flexibility for new as well as existing partners to make purchases and sales while within the company.

Differences between the entities:

A close corporation is normally useful for small businesses. Though the (Pty) Ltd has features very similar to that of a close company, there are still some differences between them.

One of the main differences is the number of members involved in the ownership of the company. Close corporation can only have a maximum of ten members, whereas (Pty) Ltd can have around fifty members in it.

 

Another major difference is that when the (Pty) Ltd requires an annual general meeting to be convened, the same is not compulsory for a close corporation.

 

Also a (Pty) Ltd company should necessarily produce an audited financial statement at a particular time. But for a close corporation this is not mandatory.

Things to Know about Company Registration

If you are serious about your business, then you should register it officially. Those who are planning to initiate a start up should first decide certain basic details about their companies. You should be ready with a nice name for the business and should be clear about the objective for starting your business.

Before Registration

In order to register your company, you should have a list of your business managers, the business operations plans, the name of the business owner and the company secretary, if possible. The next step would be to select the type of  company registration you want. You would need to hire the services of a professional accountant, open a business bank account and register for VAT (Value Added Tax).

Choosing a Company Name

If you have all these things ready, you can go ahead with the registration of your company and carry on with trade. Choosing the company name is perhaps the most difficult task. You can either choose a name that goes with your type of business or if you decide to buy a registered company, then you won’t have to worry about the name.

Registering a Limited Liability Company

You might decide to start a limited liability company. You will get a professional symbol and a legitimacy mark for your business. Scammers and non-serious business persons often do not register their business, thus, separating their intent from that of genuine business persons.