- 30% flat tax rate from the first dollar
- The most effective form of business for capital raising and easier access to bank credit than other types of business organisations.
- Companies have distinct advantage of limited liability. The owners (shareholders) risk only what they have paid for the shares purchased. Their personal assets are not at risk if company suffers bankruptcy. Company can be sued but not shareholders.
- Companies as artificial persons have continuity of existence independent of its owners so business is easier to transfer or shares to be sold to new owners.
- Long range of planning and growth can be implemented.
- Succession of the business
- Generally greater specialization and profitability
- Easy to sell or buy shares
- Higher establishment fees
- Double taxation effect if company is not integrated in taxation system
- Dividend distribution is not tax deductible
- Separation of ownership and control
- Higher compliance requirements
- Complicated and expensive to wind-up
Incorporate or not?
Generally larger the business becomes incorporation becomes imperative because of its advantages with raising capital and ability to borrow and delegate specialized duties. Initial costs of establishing company can be claimed in 5 year period.
This article is written and published by:
Online Tax Agent
Registered Tax Agent
Bachelor of Commerce, ASA CPA
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