Close corporations or CC's are a type of ownership that is suitable for small to medium sized enterprises in South Africa. If you are looking for an easy and inexpensive form of ownership that has a legal presents then a CC is the right option for you. Just like any form of ownership, there are advantages and disadvantages, the advantages and disadvantages need to be taken into consideration when deciding on what form of ownership is the best for your business.
The advantages of a CC are:
* The registration process is affordable and simple as there are only a few regulations.
* Close Corporations are permitted to give financial assistance to member such as a loan to acquire an interest in the corporation.
* A CC is regarded as a legal entity or person which is an advantage because the continuity of the business is not linked to the life or status of the members.
* The income that is issued to the members of the business is exempt from normal tax.
* The owner's interest in the Close Corporation does not need to be in proportion to their capital. This means that a member can contribute less capital into the business as he or she will be bring in experience, knowledge or skills that is required by the CC.
* A founding statement is required to form the business, the changing of the founding statement is easy and inexpensive.
* The liability of the members is limited, except under exceptional circumstances.
* Close Corporations are not required to hold annual general meetings or have the financial statements audited. This is an advantage as it makes the running of the business easier and cheap as audit fees are avoided.
* A CC has the capacity to have one to ten members, this is an advantage because it increases the amount of capital that can be raised as there are more people.
As you can see from the above list, there are a number of advantages to registering a Close Corporation. In order for you to make an informed decision in deciding what form of ownership will suit your needs, it is recommended that you also consider the disadvantages of a Close Corporation. Only after considering both the advantages and disadvantages will you be able to make the right decision to determine if a CC is the right form of ownership for your business.
Did you find these tips on Close Corporations useful? You can learn a lot more about Close Corporations and how to register a CC at http://www.ccguide.co.za
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