Dangerous To Presume
Tomorrow we have a meeting set up with our accountant basically to get some clarity on how to move the business forwards. Too many times in the past I just presumed the obvious was the right action and this is not always the case. The only stupid question is the one never asked.
Currently we have been developing and creating new parts of the business and in their own right could be stand alone independent businesses. I have had one eye on the new employment laws and with an expanding growing business the 50 employee mark which triggers these laws is a very big possibility. We do not need to be anywhere near that number and splitting the various businesses at this point is being proactive making sure we stay compliant on all fronts. I am sure many other businesses who are far bigger than us are contemplating similar moves. Being told who you can and cannot hire is something I will never accept and I would not comply.
The trampoline business which is the next growth area will need another 6 employees and if you include the punch bag team that is another 5 and my mind is telling me to combine these two as a separate business now rather than later. If we add another manufacturing business combined with these two then would be up close to 20 or more employees. I don't know what the implications are and this is something that needs to be ironed out. The total staffing will have us at around 35-40 once we have expanded, but with sales growth and demand the staff numbers can swell quickly. A good problem if you have split the companies and a bad problem if you haven't.
In South Africa, under the Employment Equity Act (EEA), an employer with 50 or more employees is considered a "designated employer" and is subject to specific affirmative action requirements. This means they need to implement measures to ensure equal employment opportunities for designated groups, as defined by the Act. However, the definition of a designated employer has changed, and now only employers with more than 50 employees are considered designated, regardless of their turnover.
When you presume you are in most cases guessing without all the facts which you think you know, but do not. I am not sure tax wise or cost wise splitting the business now or later. My head says manufacturing should be separate from the warehouse business and should be paying rental which takes the pressure off the warehouse business. Are there tax benefits going this route because there could be? A stupid question really, but as stupid as it sounds I will be asking this. There could be loop holes that can be gamed and with the amount of tax we pay I need or would like to think we can claw some back.
We are also planning on importing various products this year which we were not doing before so we need advice on the best routes for LCL (less than container load) or full containers.
The meeting is only 45 minutes tomorrow and I already have half a page of questions and why you need an accountant to help guide you through as they only have your best interests in mind.
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The next question I have is: If you intentionally run a business as 2-3 (or more) separate legal entities , then would this not be seen as an attempt to circumvent the Act?
I mean. I am all for the DA's opposition for the establishment of this act. You cannot force people to hire based on race... it is also inconceivable that they would then be able to be the people to point fingers at the DA and call them "racist" and "pro-apartheid". Its propaganda for the stupid.
But all you need is an semi-informed whistleblower. If they don't know that you are running the business as different companies, they are asked "How many people work at your work?" and the answer is 60+ then they will come investigating if they cannot easily see that you comply.
I wonder if there is a way of better addressing this issue and dodging it like you are planning but you have to be careful.
Instead of trying to force people to hire based on race, they should focus on skills development of the races they find have the highest unemployment rate. In my industry, there are no unemployed Refrigeration Technicians. If we COULD hire a diverse crew of qualified technicians then we would.
We have assistant Technicians. They all get sent to the trade school. We spend the same money on all of them for those who want to become trade qualified. Yet only some of them become trade qualified and if I have to look historically over 20-25 years of this then the diversity of staff we send for training do not result in a diverse pool of qualified technicians. Despite our best efforts, some cannot pass.
Nope, why would it be? One has wholesales as object, the other is production. Two different things. But even if you would run the same activity, no one can stop you from having several companies. But again, I'm not familiar with SA law, but this is how it works in other part of the world and it's common sense.
Indeed. It is a bit of a loophole. But I hope we don't even need to worry about it and they abolish the Act.
No this would be all legal and I can see bigger companies doing similar things. They are not worried about the workers as this is all aimed at management level. If you had 100 workers and 6 managers then they would expect 3 managers to fit their demographic. We are a family run business and the family runs the company wearing different hats for different roles and cannot afford multiple managers doing the work we already do.
Indeed. I hope that works out.
Actually, even more than that. I hope they don't pass this law at all. Its junk!
It's definitely not a stupid question. Stupid would be not to ask it now and just go with the tide.
As you know, I'm not familiar with SA law and taxation, but separating productions from sales now is what I would do. If the trampoline business takes off, you'll need certification,similar as with punchbags and better have it clean, then transfer the whole thing to another company.
There may be tax benefits as well, as smaller companies can't be treated the same way as bigger one, when it comes to taxation.
I'd definitely dig deep into this and make a decision now.
Yes my thoughts exactly and why I have concerns.