Sole Proprietor

found photo: business leaders

“A sole proprietorship, also known as a sole trader or simply a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor’s. This means that the owner has no less liability than if they were acting as an individual instead of as a business” (Wikipedia).

See more on sole proprietors here:

How many trading names can a CC use?

As long as the trading name is registered you can use more than one trade name for a CC or Pty. Best though to keep separate bank accounts and sets of books to monitor performance – this would also lead to one per unit/tradename.


  1. What does “CC” stand for? In South African law “CC” stands for “Close Corporation”, a registered juristic entity much like a simplified company.
  2. What does “PTY” stand for? “PTY”, usually used in conjunction with “Ltd”, thus “(Pty) Ltd”, stands for “(Proprietary)”. “PTY” representing “Proprietary” means “private ownership”. This illustrates one of the main features of PTY LTD Companies: that is, their shareholders are not publically declared, only their directors. Thus the ownership is private.
  3. What does “Ltd” stand for? “Ltd” as used in the designation of a private or public company, for example, either “Bilkovo (Pty) Ltd” or “Bilkovo Ltd”, stands for “Limited” and refers to the limitation on the liability of company shareholders and directors.
  4. What are the abbreviations for “Close Corporation” in South Africa’s 11 official languages? Click here for these abbreviations.
  5. Where can I get good Accounting help? Selecting an accountant is much like selecting a surgeon. You can’t be too careful, and there are both good and bad ones. You don’t have to know how to paint to recognise a good artist. Luckily the same is true for accounting: You don’t have to know accounting to evaluate a good accountant. If you can get by with doing or getting your books done throughout the year (this is by far the cheaper option) and need good year-end tax-saving accounting work, we recommend you visit the Accountkeeper site and contact them first.
  6. Where can I find the CC Act – the law about CCs? Here on our site – produced and maintained by us.
  7. Where can I find the PTY Act – the law about Companies? Try here.
  8. How do I sign contracts in the CC/PTY’s name? One of the main reasons for acquiring a CC/PTY is to protect yourself from liability. When signing all official CC documents such as credit applications, contracts and leases, remember to write the CC name and number next to or under your (the member’s) signature, e.g.[your signature] Member for Kembul CC Reg.No.2006/012345/23 otherwise you can be held personally liable. Since suretyship clauses can override this, where possible delete and initial clauses attempting to bind the member as surety. For your PTY LTD Company, try a signature stamp like this:[your signature] Director for Kembul (Pty) Ltd Reg.No.2006/012345/07 OR [your signature] Director for Kembul (Pty) Ltd, Reg.No.2006/012345/23   The layout is not really important. The wording is.
  9. What is an Association Agreement? An Association Agreement is an agreement between a Close Corporation and its Members. Usually a CC will not have an Association Agreement if there is only one member. What is the point of making an agreement between you and a CC represented by you? It is your mind agreeing with your own mind. However, if you want to have your relationship with the CC formalised and in black and white, it appears that you could enter into an Association Agreement with your wholly-owned CC. Typically, an Association Agreement is entered into between a CC and its membership when the member count exceeds one. Various matters can be dealt with in an Association Agreement, such as who does what (management issues), insurance policies on each member’s life in case of death, etc.
  10. Should I enter into an Association Agreement? If you are a 1-member CC, don’t waste your time. If you want insurance on your life, go out and get it – obviously if the CC can afford it. It is best with certain important decisions to pass a members resolution, e.g. with the CC purchasing a car, but a 1-member CC Association Agreement seems to be a waste of time. If your CC has more than 1 member, it is highly recommended that you have an Association Agreement. This will help you, for example, to know how to value your co-member’s interest (share) if he/she wants to sell. Otherwise, if there is no formula or stipulated amount, there could be big arguments about it.
  11. When should I and my future co-members enter into the Association Agreement? After you purchase / register your CC. The reason for this is that you cannot effectively and legally enter into an agreement with a CC that either does not exist, or of which you and your associates are not members. If you are worried about not achieving agreement with your co-members after your purchase / registration of your CC, then it is submitted that you should not be going into business with such people! After all, it’ll be a fresh empty CC. What is there to lose, and what is there to argue about?
  12. Where can I find a sample Association Agreement? Over here.
  13. What are Articles of Association? Articles of Association are the variable rules by which a private company, a PTY LTD Company, governs its affairs. Such rules cover issues like, sale of shares, running of meetings, directors duties, etc. Standard Articles are appended to the Companies Act. They may be amended but they must not conflict with the requirements of the Act.
  14. Where can I view the Articles of Association used for PTYs sold by eCC? Here. You can view them, but copying or printing is prohibited.
  15. Where can I find information on eCC and its staff? Here.
  16. What about opening a bank account? Although it is not illegal, most CCs/PTYs will operate with at least 1 banking account. In other words, strictly-speaking it is legal to operate your CC/PTY without a bank account, but it is probably not very practical. How do you effect a payment to a supplier 1000 km away if you only deal with cash? As stated, it is not compulsory, but it is viewed as sound business and accounting practice for a business (a CC/PTY) to operate a bank account.
  17. When can I open my CC/PTY bank account? You can only open a bank account in South Africa for a CC or PTY once you have received the final CC/PTY document with your name registered on it (exceptions and conditions apply). You must be prepared to wait the following periods for your final document so you can open a bank account, when purchasing a CC/PTY from eCC: 3 weeks – New CC 4 weeks – New PTY 2 weeks – Shelf PTY These are the best realistic times.   You need to budget for these times, although they may vary. But don’t let others fool you that these times can be shortened. Usually such inexperienced people mess up their attempt to be quicker with the result that the whole process is actually delayed.
  18. How shall I bank while waiting for my final CC/PTY document? Firstly, it’s best to get your CC/PTY registration on the go ASAP, so that you are not put out by the wait for final documents. If however, you have to handle CC/PTY funds before getting the final papers, you can: a) Adjust your current banking account to, say, J Buthelezi t/a Kilnor, “Kilnor” being the name of your CC or PTY. This way cheques made out to “Kilnor” will be more easily bankable. Then when your final document arrives, you open Kilnor CC’s or Kilnor (Pty) Ltd’s own bank account, and carry on banking there. b) Ask for payments to be made out to your name as a temporary measure, while you await your business bank account. c) Ask for cash and give a receipt. Remember, however you handle it, all CC/PTY funds must be accounted for properly as “income”, etc in the CC’s/PTY’s books.
  19. What are the pros and cons of a CC or PTY? Everything in life has pros and cons. All good things have limitations. The aim is to IMPROVE your overall position by taking a certain action. The question therefore is: Will a CC/PTY IMPROVE my overall position? Pros † Can pay less tax – if you and your accountant know what you’re doing. † Can limit your liability. † Can protect from sequestration. † Can improve public image. † Can boost personal motivation. † Can stimulate business. † Can make more money. † PTY – conceals ownership. Cons ‡ You need to follow the rules of running a CC/Company – laid out in the CCs/Companies Acts – not difficult if you understand how – we help you to understand and so can your accountant/lawyer. ‡ PTY – annual audit fee can be somewhat higher than annual fee for CC/Sole Proprietor – this is mostly regarded as being well worthwhile for the benefits experienced from the “Pros” above. For more Pros and Cons, see our Comparison Table.
  20. How does a CC or PTY protect me from loss of personal assets? If the car you use for CC purposes is in your name (not in the CC’s name) and the CC hires the vehicle from you, and the CC is unfortunately liquidated (say, because the government changed the law which made your kind of business inoperable, and you were unable to pay creditors), the CC’s creditors will not be able to take your car. This applies to other assets in your name, like your house, bed, etc. That is, assuming that you did not sign surety for the CC’s debts. If the car is in the CC’s name and the CC is liquidated, you will lose the car. You need to try keep yourself clean (as unencumbered as possible), because if your estate is sequestrated, you will lose your car and your CC!
  21. How does a CC or PTY protect me from risk factors such as public liability? If you are doing a garden landscape through your CC, Glitzy Garden Landscapers CC, and your quote, contract, etc are all in the name of the CC with registration number, etc, then if, by accident, one of your workers, say, reverses into your client’s child, killing the child, then the client will only be able to sue and claim from the CC. If the CC is being operated as a trading shell (completely legal) and you have all your backactors, graders, cutters, ploughs, trimmers, etc, NOT in the CC’s name, then the client can sue the CC (the client can’t sue you – the contract is with the CC) for millions of dollars/rands, get maybe a few dollars/rands from the CC bank account, and that’s all. The client can even liquidate the CC; you will probably only lose a little money; you will need another CC for the next day’s trade; then you carry on with your business through another CC with all your assets (equipment, etc) in tact. This is legal and quite ethical. Accidents happen, and why should you suffer unnecessarily for an accident. After all, you did not wish it or do it on purpose. If you did not operate through a CC or PTY, the client suing you would mean your estate would be sequestrated and you would lose all your personal assets, house, boat, bike, bed, the lot! With your CC/PTY you don’t lose anything! And that, dear reader, is the power of the CC! And PTY!
  22. How can a CC or PTY make me more profit? Firstly, the impact of the organising effect of registering/incorporating your business often results in improved image and greater productivity for both owner and business. This usually leads to more profit being made. Generally, as a registered entity, it is easier to deduct various expenses which the revenue service might otherwise dispute, such as a portion of your rent for business purposes, etc. More deductions like this means more money in your pocket.
  23. How can a CC or PTY help me pay less tax? Generally as a registered entity it is easier to deduct various expenses which the revenue service might otherwise dispute, such as a portion of your rent for business purposes, etc. More deductions like this means less tax and more money in your pocket. Also, see our Comparison Table for the tax efficiency of CCs and PTYs.
  24. How do you write a Business Plan? With a lot of effort, concentration and know-how. It is not just a matter of placing a bunch of facts on paper. A good business plan requires certain qualities – accuracy of information and figures, clear presentation and wording, market and business insight. Click here to get help with a Business Plan.
  25. How do I issue a CC member certificate? After acquiring your CC, print our free sample certificate, fill it in and sign it/get it signed.
  26. How do I change the name of my CC or PTY? To change your CC’s name, use our handy online application form. To change your PTY’s name, email your request to us giving all relevant details about your PTY.
  27. How do I change the purpose of my CC or PTY? To change your CC’s purpose, use our handy online application form. To change your PTY’s purpose, email your request to us giving all relevant details about your PTY.
  28. How do I change the members of my CC or PTY? To change your CC’s members, use our handy online application form. To change your PTY’s members (shareholders), email your request to us giving all relevant details about your PTY.
  29. How do I change the directors of my PTY? To change your PTY’s directors, email your request to us giving all relevant details about your PTY.
  30. How do I change the registered addresses of my CC or PTY? To change your CC’s registered addresses, use our handy online application form. To change your PTY’s registered addresses, email your request to us giving all relevant details about your PTY.
  31. What is the difference between a CC and a PTY? Try this for a start. Then if you’d like more, this.
  32. How do I get official registration info on ANY South African CC or PTY? Here.
  33. What should I know if I will base my South African CC or Pty in another country? Here are the basics.
  34. How can I get regular info about tax, business, CCs and PTYs? By joining our newsletter.
  35. How do I place a link to eCC on my website? Here’s how.
  36. How do I get to your offices? Here’s a map.
  37. How do I check if a name is available before ordering a CC or PTY? We can check for you.
  38. What if I need a Shelf CC but don’t like the name? You can do a simultaneous name change application with the purchase.
  39. How can I order a CC or PTY? Online or by fax. See our Orders page.
  40. How do you mail a CC or Pty? By email/Speed Servicing of documents.
  41. How long does it take to get a CC/PTY? See our delivery timing graphs.
  42. Do you accept cheques/checks? No. We require payment in advance by credit card, cash or internet transfer only. We do not allow cheques.
  43. Can I appoint my own Accounting Officer / Auditor? Yes. For New CCs/PTYs, this can be done on purchase; for Shelf CCs/PTYs, this may only be done after receipt of final documentation.
  44. What do I get with my CC or PTY? The following.
  45. How does the Special Power of Attorney (“POA”) for PTYs work? The Special Power of Attorney is not a blanket Power of Attorney; that is why it is termed “Special” – it specifically authorises us to ONLY prepare and register a PTY for you. We have been doing this kind of careful confidential work for over 20 years and you, in any case, get the final registered document to prove we did the right thing with your information! With a New PTY, the POA is compulsory – without it the PTY cannot be registered.
  46. How do you justify your prices? Very easily. We’ve carefully studied the service and pricing of our competitors over more than 10 years. As a part of this research, we pose as clients of our competitors and make proper and full purchases from them. Overall, the results are encouraging for us but embarrasing to the industry, as most of our competitors are inferior to us in many ways including pricing. A Shelf CC that is sold cheaper than ours, for example, is dispatched with no choice in the name (you are just given a name) 12 days after date of order, with no change of ownership papers prepared; to have the latter taken care of costs extra, but no guidance is provided regarding the completion of said papers. At the end of the day or night for that matter, not only have you paid a lot more than you expected, but the frustration of unnecessary delays and not knowing who, what, why and when is really not worth saving a few Rand.
  47. What does a CC/PTY cost? Please see the schedule of prices on our Orders page.
  48. What do I need to know when buying property through a CC or PTY? Here is some info.
  49. What about CGT on a CC/PTY owning property? Capital Gains Tax and CCs/PTYs. (This info is dated and should be checked.)
  50. How can buying property in a CC or PTY make me more money? Here’s how. (This info is dated and should be checked.)
  51. What have past clients said about eCC? Please view our References page.
  52. How does your Agency with Registrar of Companies benefit me? We have built a meaningful relationship with the Registrar over more than 18 years. We are in an excellent position to handle all your statutory requirements with the Registrar. We can do things quicker and more effectively than the average person who does not usually deal with the Registrar. Our 24-hour-a-day 7-day-a-week electronic link to the Registrar allows us to stay up to date about statutory matters in general and your documentation in particular.
  53. Where can I search your website? Here:
  54. Where can I search the International Web? Here: Buka Search.
  55. What is a Public Officer? A Public Officer (“PO”) is the person required by the South African Revenue Service to sign and render tax returns to SARS. A PO must be resident in SA. All clients are POs for their own CC/PTY. We provide the form with your CC/PTY to appoint you the CC’s/PTY’s PO. We are the PO for international clients running their CCs/PTYs in another country (outside SA).
  56. What about tax registration? SARS is online with the registrar. Thus, CCs/PTYs that are registered are usually registered for tax. It may take a couple of weeks or so but the registration paper with the CC’s/PTY’s tax number usually does come. (This is no longer the case.) In the event that it might not, filling a form with SARS can rectify the situation. VAT registration is something else. See below for VAT questions.
  57. Should I use a trade name? This is up to you. Please see our article on trade names for more info.
  58. How should I choose a trade name? Please see our article on trade names for this.
  59. How do I check if a trade name is not being used for a CC or PTY name? We can help you with this here. Also, please see our article on trade names for more info.
  60. Do you charge VAT on CC/PTY sales? No. Our sales are exempt from VAT in terms of the Value-Added Tax Act, 1991. Therefore we neither charge VAT nor can you claim VAT on the purchase price of your Close Corporation / Company.
  61. When does my CC/PTY have to register for VAT? Your Close Corporation / Company may only be registered for VAT in South Africa if its turnover in any 12-month period will exceed R1 000 000. Because this cannot be established before a Close Corporation / Company is sold, we do not supply Close Corporations / Companies that are VAT-registered. Should you wish to register your Close Corporation / Company for VAT, we recommend that, when you receive the final Close Corporation / Company document, you approach VAT Registrations Online to assist you.
  62. Didn’t find your question? Ask your question here.

New Companies Act supports honest directors

COMPANY directors who act honestly and reasonably while performing their duties under new company laws could have a valid defence if they face possible legal and criminal action, says a legal expert at Werksmans Attorneys.

Eric Levenstein, a director at Werksmans, said last week that directors who met their obligations and were able to show that they had discharged their obligations, would be able to defend themselves by showing they acted on the company’s behalf in a “reasonable” way.

“Personal liability is becoming an increasingly emotive issue for directors. They need to be aware of the circumstances in which they can be held responsible for company debts,” Mr Levenstein said.

The new Companies Act, which came into effect on May 1, penalises directors and holds them personally responsible for any losses incurred through knowingly carrying on business recklessly, or with the intent to defraud creditors and other stakeholders. It also created criminal liability for directors trading in a manner calculated to defraud creditors, Mr Levenstein said.

However, a director who meets his obligations under the new legislation would be seen as discharging his duties to the company.

George Tweedy, audit risk leader and national professional practice director at Deloitte, said the new laws also contained defence mechanisms for directors who had made bad decisions at board level.

Mr Tweedy said the new “business judgment” rule would give directors more protection from civil actions unless they were guilty of fraud or other unlawful activities.

“The Companies Act provides that a director will have satisfied his duties if he took reasonably diligent steps to become informed about the matter, does not have a personal financial interest, and has made a decision rationally in the belief that it was in the best interests of the company,” he said.

Mr Levenstein said: “Embracing honest, reasonable standards and meeting the requirements of the Companies Act would ensure that decisions made were defensible.”

via BusinessDay – New act ‘supports honest directors’.

Consumer Protection Act explained

There’s always one. One schoolkid – it’s usually a boy – who will direct what he thinks is a terribly clever, brazen question to a visiting speaker.

Last week was no exception. I was talking to a group of high school kids about the Consumer Protection Act at the invitation of their business studies teacher.

They were a lively bunch, flinging up their hands to ask mostly very intelligent questions. Then it came, delivered with a straight face: “So what happens if someone goes to an escort agency, and they aren’t happy with the service…?”

Well, he’d have redress, of course, as long as that service wasn’t illegal.

When the act becomes effective on April 1, it will give consumers the right to demand quality service and to full disclosure of the price of goods and services, and protection against false, misleading or deceptive representations.

Predictably, the section of the act which is shaking up the marketplace most is Section 56: “Implied warranty of quality”.

For decades, many retailers have adopted a “sorry for you” attitude when their customers return problem goods.

Either they refuse to accept that the goods were defective in any way, or they begrudgingly take the goods back and issue a credit note, valid for a short period of time.

In short, they’ve assumed total power to decide how to respond when problematic goods are returned.

Actually, common law has for many years protected consumers against defective goods – though few realise this – but it doesn’t give consumers the right to decide how they’d like to be compensated, leaving suppliers to decide what to do, if anything.

And manufacturer or store warranties limit recourse to repairs, because it’s obviously much cheaper for a company to repair an item than replace it or refund a customer’s money in full.

But the act has turned that status quo on its head, giving the consumer the power to decide on the remedy – and he or she is backed up by a Consumer Commission and Consumer Tribunal which have the power to impose hefty penalties on companies which fail to comply with the terms of the act.

If goods bought by consumers fail in some way, the consumers get to decide which of the three Rs – a refund, replacement or repair – they want.

via Consumer Protection Act explained – South Africa

Business in Population Management

Global population numbers are on track to reach 7 billion in 2011, just 12 years after reaching 6 billion in 1999. Virtually all of the growth is in developing countries.

And the growth of the world’s youth population (ages 15 to 24) is shifting into the poorest of those countries.

The new Population Reference Bureau’s 2009 World Population Data Sheet, offers detailed information about country, regional, and global population patterns.

In the context of CSR, I find it interesting that we talk a lot about the environment and its connections with growth and we discuss at length the use (and abuse) of natural resources and links to climate change.

Yet, one of the major challenges that businesses could play a role in relates to birth control and population management.

via A Role for Business in Population Management | Use

SA needs to start more businesses

Perhaps I am being melodramatic, but let’s take a look at some numbers.. Data that tracks the total entrepreneurship activity of some countries has shown that South Africa is waning in terms of entrepreneurship activity.

In a recent report released by FNB and Endeavor South African about the state of South African Entrepreneurship shows that the total entrepreneurial activity for SA is 5%, which is less than half that of India, Brazil and Mexico.

Total entrepreneurship activity is a global index and it measures how much of the labor force of a particular country has started a business and also includes people who have kept businesses going for the last 3.5 years.

In 2001, the total entrepreneurship activity for South Africa was 9.3% and our labour force was about 12.4 million. This probably meant that about 1 153 200 people in South Africa’s labour force were pursuing some kind of entrepreneurial activity.

According to figures released recently by Statistics South Africa, the labour force is currently sitting at 17.7 million. From my calculations, about five percent of our labour force is 885000.

So perhaps it’s not a death as reflected in my sensationalist, dramatic headline, but it is a cause for concern. In 2009, the African country that came out tops in terms of percentage in Africa was Uganda.

via Is entrepreneurship dying? | The Scribblers