Re: Company for DC16 - some research
We had a longish IRC chat on this topic. I think the best way to extract
value is for me to summarize the conclusion, and then confirm with the
lawyers/accountants whether the details are accurate.
- We will incorporate a for-profit corporation (PBO is impossible, and
even NPO is just too difficult). I'll call it DC16(Pty)Ltd here, but
final name TBD.
- DC16(Pty)Ltd will register for VAT, and pay 14% VAT on all
sponsorships it receives from local companies.
- The vast majority of DC16(Pty)Ltd's income will come from SPI (a
US-based non-profit). These funds will be transfered into DC16(Pty)Ltd's
bank account, and DC16(Pty)Ltd will then pay the university, caterers,
bus rental companies, venue for conference dinner, travel companies for
the Day Trip, etc.
- DC16(Pty)Ltd will not pay VAT on funds received from SPI.
(Technically, DC16(Pty)Ltd could potentially be regarded as providing a
contracted conference-running service to SPI, so we need to verify we
won't be hit by VAT for every single rand that runs through DC16(Pty)Ltd.)
- At the close of each tax year while DC16(Pty)Ltd exists, it will pay
corporate income tax on any profits remaining. Profits are income from
SPI and local sponsors, minus any amounts paid to the university,
caterers, bus rental companies, venue for conference dinner, travel
companies for the Day Trip, etc. We expect profits to be near zero.
(Verify that this is a reasonable expectation, and that all of those
categories of expenses reduce our "taxable turnover".)
- When we pay VAT to local vendors, we can reclaim VAT that we paid for
sponsorships from local companies. (i.e. we can act as a pass-through
for VAT, and not pay it twice.)
- Final question: is there anything else they recommend we consider
related to incorporation, taxation, or business operation?
Allison
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