Taking a Look at PTY Registrations
If you are looking to start a business, there are several legal entities you can consider. You can trade as a Sole Proprietor, go into a partnership, trade as a Private Company (Pty) Ltd, start a franchise or do business as a Close Corporation. Of all these entities, PTY registrations are the most popular and there are various benefits involved when choosing this option for your business.
Personal Protection
One of the most important reasons to register a Private Company (PTY) is that you are protected. A PTY registration is seen as a separate legal entity. For example, if you loan money from the bank under a PTY and are unable to pay it back, the responsibility falls on to the company and not you personally. The directors or shareholders must then make a plan to divert the crisis. It you are not registered as a company but trading in your own name, you as individual will be held responsible for paying back that loan. Assets can then be sold in order to cover your debt.
The Tax Benefits
There are many tax benefits that should be considered when doing a PTY registration. This entity will be able to distribute profits which can save you money, whereas to not being registered you will be taxed to pay personal tax on all profits. There are tax brackets, but the higher your income the higher your bracket and you will then have to pay more tax as well.
A Professional Image
When someone sees the word (PTY) Ltd after your company’s name, it immediately creates the impression that you have a big and well-established organisation that will be conducting business in a professional manner and with competence. Your registration number will also give customers and suppliers an indication of how long you have been in business.
Another benefit of PTY registrations is that you can apply for tenders as these are rewarded to registered businesses. Shares can also help to raise money; since a PTY consists of shareholders, you can increase the number of shareholders that will basically pay the majority of your start-up shares.
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