Small Business Corporation

In previous articles, I mentioned the tax benefits of your company registered as a small business corporation.Today I will focus more in depth into the requirements to meet in order to qualify as a small business corporation.

-   All shareholders must be individuals. Shares my not be held by a Trust or other entity type. 

-   These individuals my not hold shares any other private company or Closed Corporation.  This are not applicable to  listed shares. 

-   If, however, one of these individuals do hold shares or members interest in a dormant company or Closed Corporation and the asset value is less than R 5,000 OR has taken steps to wind-up the company, it can still qualify as a small business corporation. 

-   Company may not be receiving gross income of more than 20% from the following activities: 

1. Personal services.  Examples: Architecture, education, engineering, management, consulting, accounting services, attorneys, journalism, IT, brokers etc.If, however, these companies employ three (3) or more full-time employees, it will still be able to qualify as a small business corporation.  These employees may not be connected parties to the directors or shareholders.
2. Investment income: Examples: Interest, dividends, trading of financial instruments and rental income from fixed property.

The tax rates are very attractive for start-up companies, but please do read my article on estate risk protection.

The small business corporation tax rates for financial years ending between 1 April 2018 and 31 March 2019:

 

Taxable income                                         Tax rate

R 0 - R 78,150                                          -  No income tax payable

R 78,151 - R 365,000                               -  7% of taxable income above R 78,150

R 365,001 - R 550,000                             -  R 20,080 + 21% of taxable income above R 365,000

Above R 550,000                                      -  R 58,930 + 28% of taxable income above R 550,000

 

Apart from these lower income tax tables, a small business corporation also receives a favourable deprecation:

-      New and unused manufacturing plant, equipment and machinery. 

-      All other assets on a scale of 50:30:20.

Feel free to contact us for monthly accounting and tax assistance.

This Form cannot be submitted until the missing fields (labelled below in red) have been filled in
General Enquiries
Please note that all fields followed by an asterisk must be filled in.
First Name*
E-Mail Address*
City*
Business Phone*
Cell Phone*
Enquiry / Comments
Please enter the word that you see below.