Private company vs Sole Proprietor
Ever wondered what the difference between the 2 is? Well, wonder no more!! We will explain the differences and requirements for each below.
If you trade as a sole proprietor, the individual and the company is the same legal entity. The name of the company will be your own initials and surname trading as the company name. The trading name has to be registered at SARS on your personal income tax profile.
A sole proprietor has to compile financial statements consisting of an income statement, balance sheet, statement of owner’s equity and notes to the financial statements. The sole proprietor does not file a seperate tax return. The financial records of the company is submitted on the individual’s income tax return.
A sole proprietor does not have any directors or shares.
A private company has it’s own incometax number with SARS, and needs to submit a seperate income tax return. The private company has to compile annual financial statements consisting of an income statement, balance sheet, cash flow statement, statement of comprehensive income and notes to the financial statements. These financial statements needs to be signed of by an independent reviewer.
A private company can issue various types of shares, and have multiple shareholders. The shareholders can appoint a director, or various directors to run the private company. The MOI, or memorndum of incorporation, dictates how the company should be run.
Itis also possible for a private company to have a trading as name. This name has to be registered at SARS. A private company also has to have a public officer registered at SARS, which can be one of the directors or shareholders. The public officer is the responsible person that needs to ensure that all the tax matters are kept up to date. And ensure that all returns, and payments are made in time.
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