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Company Formation South Africa
South Africa offers various structures when deciding on the best company formation for your businesses needs.
The initial choice for your company formation is important as it defines such things as tax treatment, liability issues, the ability to capital raise and obligations to SARS (South African Revenue Service). Crucial items that will affect your every day business.
The below gives you a brief insight into the main company formations but professional advice should always be sort.
Offshore branches – for foreign companies wishing to set up operations in South Africa.
Offshore branches are suitable for companies who wish to establish operations in South Africa which are subsidiary of the foreign owned entity. In forming your company as an offshore branch it negates the need for complex exchange control requirements when transferring company funds out of South Africa, as well as simplifying the tax liabilities. The suitability of an offshore branch as your company formation very much depends upon the company’s individual situation and business objectives. Selecting this option incorrectly can mean a higher tax liability.
Sole Proprietorship
The most basic of business structures and is akin to being self employed. Liability remains with the individual and no shareholding can be apportioned to third parties.
Close Corporation
Classified as a separate legal entity, this type of company formation is most suited to small to medium sized enterprises that would typically have the members (akin to shareholders) working within the company. Individual members to have limited liability and investment can be sort by attracting members.
Accounts do not need to be audited meaning less accountancy costs.
Foreign entities can open up a close corporation from which to run their South African operations, but it should be noted that the members must be individual persons and that another company cannot own a close corporation.
PTY Ltd
As the name suggests, liability is limited and ownership is via the issuing of shares. Particularly suited to larger organisations, companies requiring the ability to raise funds and companies with a large amount of shareholders.
Often this is the best option for foreign businesses that need shareholding to be owned by the foreign company and not individuals.
Accounts must be audited annually and signed off by a chartered accountant which will add to the accountancy fees levied against the company.
Company Formation - Expert Help
As part of the International Gateway Group, Intergate is able to provide expert assistance to guide you through the choices and importantly the implications of which company formation would best suit your organisations. Please see the link below to contact us with your requirements and to find out more about our services.
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