Four REASONS why a PTY is the Company format used by most people:
1. Tax Benefits
As a Small Business, you are able to get numerous Tax Benefits / Deductions if registered as a PTY. Note that a Tax Practitioner will need to assist you with these Tax Submissions at year-end. We have affiliate branches all over the country (more than 80 branches) who can assist you after registration. It is however your responsibility to make sure you keep all your receipts. Some benefits follow:
- Auto expenses (car related deductions)
- Medical Aid
- Donations / Charity
- Home Office Space
- All business related expenses
2. It is official and formal (Government Tenders / Contracts / Imports or Exports)
When registering a PTY you become 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).
3. Less Risk
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. Please refer to the Companies Act.
4. Save 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 or business man / woman 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.
Here are more advantages of the Private Company (PTY) business format:
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.