Question

explain the legal benefits that the law gives to companies structured as small proprietary companies. your answer must include the legal test to quality as a small proprietary company.

Answer 1

The liability of shareholders is limited to the share capital they have subscribed and any debts which they may have personally guaranteed.

Shareholders and directors can be employed by the company under normal salary and wage conditions and their income taxed at personal rates

Shareholder's personal assets are not under threat if the company incurs financial loss and debts.

Company taxation is at a fixed rate. A company's income tax is calculated as a percentage of the taxable income earned by the company during the financial year. The current rate is 30 percent.

Compared with other business structures, the transfer of company ownership can be relatively simple. The company does not have to be wound up in the event of the death, disability or retirement of any on the persons involved.