Vetting help on the sole-proprietor-vs-company decision

When deciding whether to operate as a sole proprietor or register as a company, you're making a choice that shapes your tax bill, your liability, and how much admin you'll handle. The right answer depends on your income level, risk profile, and growth plans—but too many people make this decision on a hunch or after a five-minute chat with someone claiming expertise. Finding someone who can genuinely guide you through this requires specific vetting steps you can run yourself.

A capable tax advisor in this space doesn't just tell you which structure looks "best"—they ask detailed questions about your actual revenue, what assets you own, whether you employ staff, and what you plan to do next. They explain the trade-offs: company tax rates and compliance burden versus sole proprietor simplicity and pass-through taxation. They also check whether your choice aligns with SARS's view of your substance and circumstances, not just what sounds clever on paper.

Checking registration and credentials

Start with the registers. Ask the person for their tax practitioner or accountant registration number, and verify it against the relevant body—either SAICA (South African Institute of Chartered Accountants) or IRBA (Independent Regulatory Board for Auditors) for accountants, or SARS's register of tax practitioners. Cross-reference the name and registration status online; if they're reluctant to provide a number or it doesn't come back, that's a red flag.

Ask whether they hold professional indemnity insurance and request proof. This protects you if their advice goes wrong, and any legitimate advisor carries it without hesitation. Also check whether they're listed on POPIA-compliant websites—they should be transparent about how they handle your financial data.

What to ask them directly

During your conversation, test their depth with real questions. First, ask them to walk you through how they'd assess your situation—what information they'd need and why. A rushed answer or vague reassurance ("just go company, everyone does") suggests they're not doing proper analysis.

Second, ask them to explain the actual cost difference. They should compare the company tax rate against your personal marginal rate, factor in dividend tax and admin costs, and show you the break-even point. If they quote a specific number without asking about your income, you're being sold a template, not tailored advice.

Third, ask how they'd handle SARS scrutiny. What if the tax authority questions your choice? A strong advisor has seen audits and knows what SARS challenges—they can tell you what documentation matters and why. A weak one might admit they've never had a client questioned, which is either luck or a sign they're not advising complex cases.

Fourth, ask what they do if circumstances change. Your income might double in two years, or you might want to sell the business. Can they pivot your structure, or do they just set it once and forget? This reveals whether they see tax planning as a one-off transaction or an ongoing conversation.

Proof and references that matter

Request at least two references—ideally businesses similar to yours in size and industry. When you phone them, ask specific questions: Did the advisor explain the trade-offs or just push one option? When circumstances changed, did the advisor proactively suggest a review? Did they explain the tax bill clearly, or did you get surprised come tax time? Ask whether they'd use the same person again.

Also ask for a sample memo or report the advisor has prepared for another client (with names redacted). A professional piece explains their reasoning, quantifies the impact, and sets out next steps. A sloppy or vague document is a warning.

Finally, check whether they're current. Tax law shifts—dividend tax was introduced in 2015, and SARS regularly updates rulings on work-from-home deductions and deferral thresholds. Ask them what's changed in the past 18 months and how it affects sole proprietors or small companies. If they can't name something concrete, they might not be tracking updates.

Your choice between sole proprietor and company is too important to delegate to someone you haven't vetted properly. On Strove, you can find verified tax advisors in your province, read reviews from other business owners, and message them with your specific scenario before you commit.