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DEFINITION I.T.OSection 1 of the ACT • INCLUDES • CLOSE CORPORATIONS - CC • PUBLIC COMPANIES - LTD • PRIVATE COMPANIES - PTY(LTD)
INTRO - CC The CC is ideally suited to small businesses because it is more simplified and flexible than a Company Only individuals would be able to draft the papers and register the corporation by her/himself. The members need not have an active part. But usually the members manage the business.
Formation of Close Corporations One or more persons, but not exceeding 10 who qualify for membership may form a CC. On formation in terms of the Act the CC becomes a juristic person. This status is not affected by changes in membership.
CLOSE CORPORATIONS • CC is taxed at a flat rate of 35% • Cc should prepare financial statement at the end of the financial year • Financial statements should be prepared by a registered accountant • Cc’s should make provisional tax payments • Cc’s are required to make two (2)provisional payments and an optional final payment within 120 days after the year end First payment due first month of financial year and • Second payment due at end of financial year • Company should register as employer to withhold tax
PUBLIC COMPANIES (LTD) • The same set of rules as cc’s and other taxpayers are used in public companies including • Public companies consist of a unlimited number of members • Remuneration of directors of public companies is not exempt from employees tax • Audited financial statement should be submitted at the end of the financial year
PRIVATE COMPANIES PTY (Ltd) • The same set of rules as cc’s and other taxpayers are used in Private companies including • Private companies are limited to 50 members • Remuneration of directors of private companies is exempt from employees tax • Audited financial statement should be submitted at the end of the financial year
ACCOUNTING Annual financial statements • AFS must be made out within seven months of year-end in one of the official languages • Must consist of balance sheet, income statement and notes • Must be presented in terms of IAS so as to fairly present
INCOME STATEMENT REVENUE 71.900.00 COST OF SALE Purchases 26,249.00 GROSS PROFIT 45,651.00 OTHER INCOME Rentals 18,400.00 TOTAL INCOME 64,051.00 EXPENDITURE Accounting fees 2,599.00 Advertising 391.00 Bed debts 100.00 Bank charges 1,860.00 Bookkeeping fees 4,610.00 Computer expenses 250.00 Depreciation 2,712.00 Electricity/water 135.00 Motor vehicle expenses 2,878.00 Reapers and maintenance 14,423.00 Telephone/pos 7,662.00 Total Expenditure 37,620.00 NET INCOME FOR THE YEAR 2,6431.00