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Company vs sole proprietor — the full checklist for South Africa

2026-07-04

Should you trade as a sole proprietor or register a company (Pty) Ltd? We've covered the tax angle in detail — here's the full checklist across every factor that matters, so you can decide with your eyes open.

Setup & cost

  • Sole proprietor: nothing to register — you just start trading in your own name. Free and instant.
  • Company: register with CIPC (small fee, a few days), then annual returns each year.

Tax

  • Sole proprietor: profit is taxed as your personal income on the sliding scale (18%–45%), after rebates. You're a provisional taxpayer.
  • Company: 27% flat (or SBC/turnover rates if you qualify). Pay yourself via salary or dividend. Compare with the small business tax calculator.

Liability (the big one)

  • Sole proprietor: no separation — if the business is sued or can't pay debts, your personal assets are on the line.
  • Company: limited liability — your personal assets are generally protected (a major reason to incorporate as you grow).

Admin & records

  • Sole proprietor: lighter admin, but you still need proper records and to keep business money separate.
  • Company: annual CIPC returns, separate books, and more formal record-keeping.

Credibility & opportunities

  • Sole proprietor: fine for freelancers and small trades, but some big clients and tenders won't deal with you.
  • Company: looks more established; often required for larger contracts, tenders and B-BBEE dealings.

Raising money & selling

  • Company: you can bring in shareholders, raise investment, and sell the business more easily.
  • Sole proprietor: harder to raise money or sell — the business is you.

When to switch from sole prop to company

Consider incorporating when:

  • Your profit is high enough that 27% beats your personal bracket
  • You want limited liability to protect personal assets
  • You're chasing bigger clients, tenders or investment
  • You're hiring and want a cleaner structure

Quick verdict

  • Starting out, low risk, low profit? Sole proprietor is simplest.
  • Growing, higher profit, real risk, bigger clients? A company usually wins.

Whichever you choose, keep clean books from day one — SARS treats the two very differently. 360books supports both sole proprietors and companies, with the right South African tax treatment built in.

Put this into practice

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