Chapter 17 Legal Aspects Flashcards
IMPORTANT ASPECTS IN ESTABLISHING A NEW VENTURE
REGISTRATION
NAME
REGISTERING A TRADEMARK
PUBLICIZING THE VENTURE
SOLE PROPRIETORSHIP AMD PARTNERSHIPS
COMPANIES
REGISTRATION OF THE BUSINESS
COMPANY: needs to be registered with the COMPANIES AND INTELLECTUAL PROPERTY COMMISSION
PARTNERSHIP: does not need to be registered but rather established in terms of a partnership agreement, drawn up by partners before startup
SOLE OWNERSHIP: the only for, of venture free from any formalities before it can start to operate
ALL BUSINESSES MUST BE REGISTERED WITH THE FOLLOWING INSTITUTIONS
SARS: income tax, PAYE, SITE and VAT
DEPARTMENT OF LABOUR: unemployment insurance and workmen’s compensation
LOCAL AUTHORITIES: Licensing for trading I’m food/perishables, ownership of property and payment of appropriate levies
THE LOCAL GREATER METROPOLITAN SUBSTRUCTURES
NAMING THE BUSINESS VENTURE
1 - RESERVE a name for your business before it is established by the CIPC (known as defensive name)
2 - MAKE a list of up to 4 alternative names which will be considered for reservation in listed order
3 - ONLY ONE NAME MAY BE RESERVED
4 - APPLYING TO RESERVE A NAME WILL PREVENT SOMEONE ELSE FROM REGISTERING THAT SAME NAME
REGISTERED TRADEMARK
A TRADEMARK IS A BRAND NAME, SLOGAN OR LOGO THAT DEFINES THE G/S OF ONE PERSON AND DISTINGUISHES IT FROM THE OTHER
- NO ONE ELSE CAN USE THE SAME TRADEMARK OR ONE THAT IS CONFUSINGLY SIMILAR
- APPLY WITH CPIC TO REGISTER A TM
- A REGISTERED TRADEMARK CAN BE PROTECTED FOREVER ( renewed every 10 years with renewal fee)
PUBLICISING A BUSINESS VENTURE
- FULL NAME OF THE BUSINESS MUST BE DISPLAYED OUTSIDE EACH OFFICE / PREMISES WHERE THE BUSINESS IS OPERATING
- FULL NAME MUST BE DISPLAYED ON ALL NOTICES OR OFFICIAL PUBLICATIONS, CHEQUES, DELIVERY NOTES, INVOICES AND RECEIPTS
BEFORE YOU REGISTER A BUSINESS YOU MUST DECIDE ON THE TYPE OF ENTITY
SOLE PROPRIETORSHIP AND PARTNERSHIPS
NOT NECESSARY TO REGISTER EITHER
BUT YOU WILL NEED TO OPEN BANK ACCOUNT
- SOLE PROPRIETORSHIPS ARE SUBJECT TO THE SAME TAX REGULATIONS, VAT AND LEVIES AS OTHER LEGAL ENTITIES
- A LEGAL PARTNERSHIP IS A PREREQUISITE FOR THE ESTABLISHMENT OF A PARTNERSHIP
COMPANIES:
MEMORANDUM OF ASSOCIATION ENTAILS:
NAME OF THE COMPANY
DESCRIPTION OF MAIN PURPOSE
AMOUNT OF INITIAL REGISTERED SHARE CAPITAL
ANY POWERS OR AUTHORITY LEGALLY ENTITLED TO THAT NEED
TO BE EXCLUDED/ QUALIFIED
ADOPTION OF ANY PRE INCORPORATED CONTRACTS
SPECIAL T&C’s regarding operation of the company
ASSOCIATION CLAUSE STATING THE WISH TO FORM A COMPANY AND AGREEMENT TO TAKE UP SHARES
COMPANIES : ARTICLES OF ASSOCIATION
CONCERNED WITH THE INTERNAL MANAGEMENT OF THE COMPANY
- deals with aspects such as shares, lending powers, meeting procedures, voting rights
MUST BE SET OUT ON A PRESCRIBED FORM
REQUIRED DOCUMENTS FOR COMPANIES
FORM CM5 - stating the approved and reserved name and if necessary translated or abbreviated name
FORM CM22 - THE PHYSICAL OFFICE AMD POSTAL ADDRESS
A PROXY FROM EACH FOUNDING MEMEBER, AUTHORISING ANOTHER PERSON TO SIGN THE MEMORANDUM AND ARTICLES IF THEY ARE NOT GOING TO SIGN THEM PERSONALLY
CPIC WILL ISSUE A CERTIFICATE TO OPERATE AFTER RECEIVING:
AN APPLICATION FOR THE CERTIFICATE TO COMMENCE BUSINESS
A STATEMENT BY THE DIRECTORS TESTIFYING THAT THE ISSUED SHARE CAPITAL OF THE COMPANY IS SUFFICIENT TO CONDUCT ITS BUSINESS
THE PARTICULARS OF THE DIRECTORS
CONSENT FROM AUDITOR TO BE THE OFFICIAL AUDITOR OF THE COMPANY
SARS DEALS WITH THE FOLLOWING:
INCOME TAX ON INCOME DERIVED FROM OPERATING A BUSINESS
VAT
CAPITAL GAINS TAX
EMPLOYER REGISTRATION FOR PAYE
REGISTRATION FOR SKILLS LEVY
SMALL BUSINESS TAX AMNESTY
INCOME TAX
INCOME TAX IS PAYABLE BY EVERY INDIVIDUAL THAT DERIVES A TAXABLE INCOME
REQUIRED INDIVIDUALS TO A PAY A PROGRESSIVELY INCREASING RATE UNTIL A MAX OF 40% is reached, while companies and close corporations pay 28 %
RATES CHANGE FROM TIME TO TIME
DEDUCTIBLE EXPENSES (DART TAMAATI)
DEPRECIATION OR WEAR AND TEAR ALLOWANCE ON VEHICLES, EQUIPMENT AND ARTICLES USED IN BUSINESS
A PROPORTION OF THE PRIVATE HOME EXPENSES IF PART OF YOUR RESIDENCE IS USED FOR BUSINESS PURPOSES (rent, rates and telephone)
REVENUE EXPENDITURE ON SCIENTIFIC RESEARCH DONE DURING AND FOR THE DEVELOPMENT OF THE BUSINESS
TRAVELING EXPENSES
TRADE DEBTS THAT CANNOT BE RECOVERED
A 10 % initial allowance and a 2% annual allowance on the cost of erecting the buildings
Manufacturers may deduct depreciation of 20% per year on a straight line basis on plant and equipment
An allowance of 50% of the cost of building housing for employees
Any expenditure from improving land or building rented for business purposes
TWENTY FIVE % of the total debtors who are considered doubtful
INTEREST PAID ON LOANS FOR THE PRODUCTION OF INCOME
VAT
- BUSINESSES WITH AM ANNUAL TURNOVER OVER 150k MUST REGISTER FOR VAT
- should be calculated on a regular basis and returns submitted to SARS on a standardized form.
CAPITAL GAINS TAX
DESCRIBED AS THE DIFFERENCE BETWEEN THE BASE COST OF A SPECIFIC ASSET AND THE CONSIDERATION REALIZED UPON DISPOSAL OF SUCH AN ASSET
- Net capital gain should be included in the entrepreneurs income for the year of assessment
REGISTRATION FOR SKILLS LEVY
BUSINESSES ARE REQUIRED TO REGISTER WITH THIER SECTOR EDUCATION AND TRAINING AUTHORITY FOR THE SKILLS DEVELOPMENT LEVY
- The levy equates to 1% points the total amount paid in salaries to employees when payroll is above R500k a year, must be paid no later than 7 days after the end of every month
Small Business and Tax amnesty
THIS ACT EMPOWERS THE TAX COMMISSIONER TO APPROVE APPLICATIONS FOR TAX AMNESTY IN RESPECT OF APPLICANTS WHO APPLY FOR TAX AMNESTY
APPLICANTS MUST PAY A LEVY FOR TAX AMNESTY AND ARE FIR THE BENEFIT FOR THE NATIONAL REVENUE FUND
CONTRACTS
A CONTRACT IS DEFINED AS ANY AGREEMENT BETWEEN TWO OR MORE PERSONS AND IS BINDING BY LAW
ASPECTS OF A CONTRACT INCLUDE :
PHYSICAL POSSIBILITY: T&C’s must be realistic
LEGALITY: MUST BE LEGALLY POSSIBLE
CONSENSUS: CONSCIOUS AGREEMENT OF T&Cs
CONTRACTUAL CAPACITY: EACH PARTY MUST HAVE THE CAPACITY TO ACT
FORMALITIES: THESE ARE PRESCRIBED FOR THE FORMATION OF THE CONTRACT
DEFECTIVE CONTRACTS
Void contract: one of the requirements is absent or no contract concluded
Voidable contract: a contract that was concluded can be set aside due to a defect that existed at the time of conclusion
Unenforceable Contract: contract has been concluded but creates a natural obligation recognized but not enforced by law
ENTREPRENEURS AND THE NATIONAL CREDIT ACT (Credit providers)
ENTREPRENEURS WHO SUPPLY G/S under a credit agreement who advance credit under a pawn transaction or extend credit under a credit facility need to be registered as credit providers
- ENTREPRENEUR NEEDS TO REGISTER AS A CREDIT PROVIDER IF THEY HAVE ATLEAST 100 CEDIT AGREEMENTS
- CREDIT PROVIDERS MAY NOT ENTICE PROSPECTIVE DEBTORS IN ANYWAY
- THIS ACT HAS STRICT CREDIT ADVANCING REGULATIONS AND PROVIDE THE CONSUMER WITH AN ARRAY OF RIGHTS SHOULD THEY NOT BR ABLE TO REPAY THE CREDIT AMOUNT
APPLICANTS FOR CREDIT PROVIDERS ARE EVALUATED ON:
THE APPROPRIATENESS OF REGISTERING THE APPLICANT BASED ON A SPECIFIC CRITERIS
THE COMMITMENTS MADE BY THE APPLICANT IN COMBATING OVER INDEBTEDNESS
WEATHER THE APPLICANT IS REGISTERED WITH SARS
ASPECTS OF THE CONSUMER PROTECTION ACT
- Customers have the right to cancel any prebooking without being penalized
- Fixed term agreements cannot be automatically renewed
- Customers can cancel a fixed term agreement at any time with a 20 day notice beforehand
- Businesses must give a quote before work is done
- Consumes may return unsafe or defective goods within 6 months of purchase
- Mandatory 3 month warranty on installed repair work
- No obligation to pay for unfrequented goods
- All agreements must be in plain language
