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The forms of money, property or service

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    Consumers love her product and so she has effectively created a successful small business for herself. It is a very rewarding way of starting or expand a business, because with research one could determine if the original product does well within the market by observing consumers in other shops. If the product does well, by altering or improving it one creates a unique product to your specific business. 1. 2 Attribute analysis (8) Attribute analysis is where existing products’ and/or service’ features are listed and analyses.

    After it was analyses, alternative suggestions are made and written down for the different traits. It helps by improving the product to be more successful. One often see ‘New and Improved’ on products, like recipes. The entrepreneurs analyses their products weak and strong features. Then they came up with an idea on how to improve the weaker aspects and enhance the stronger ones. 1. 3 Existing products (8) Existing products is one most often used to start a business. Wholesalers and manufactures sell their products to entrepreneurs and they resell it to the public.

    If a product does well, more people will opt for selling it. Some of the main aspects to consider when using existing products for your business is to keep in Indo the competitors, to provide the product cheaper or to provide exceptional service to make you stand apart from the other business selling the same product. Using existing products could help to start your business and then help you to come up with innovative ideas to improve it and your business. 1. 4 Brainstorming (8) With Brainstorming one can generate a lot of different ideas and suggestions.

    It is best to list them all until there is no more to add. After listing the ideas evaluate them and determine which ones are the most feasible and realistic to achieve. Brainstorming give you a starting point and guidelines on what you would like to achieve with your business. It is an effective way to find the best route to plan your business and identify possible risks and opportunities. 1. 5 Metaphorical analogy (8) Specific solutions to specific problem are solved by using this method. An example is using nature for innovative ideas.

    Like George Mistral who invented Evolve. After a hunting trip in the Alps George De Mistral’s dog was covered in burdock burrs. He placed it under a microscope and discovered a design of hooks that nimbly attached to fur and socks. After years of experimentation, he invented Evolve – Information obtained from http://www. Bombers. Com/slideshows/2013 -08-18/14-smart-inventions-inspired-by-nature-biometry. HTML#slides [40] QUESTION 2 2. 1 Distinguish between direct and indirect taxation. Make use of suitable examples where necessary. 15) Direct Taxation Personal taxation is the most vital form of direct taxation. Personal taxes are paid on the taxable income of individuals, companies, partnerships and close corporations. So in other words it is taxes imposed on all sectors known as persons. In South Africa the wealthy contribute a greater portion to taxation than the poor. So if a person has a higher income they pay a higher percentage tax. This also applies to when a salary increases – your percentage tax also rises. Personal taxation is the government’s largest form of income.

    An example can be seen below regarding Personal tax: Income tax table (2012/201 Taxable Income (in Rand) Rate of Tax o- 160,000 18% of taxable income 160,001 – 250,000 R 28 800 + 25% of the amount above REAR 000 250,001 – 346,000 R 51 300 + 30% of the amount above REAR 000 346,001 – 484,000 R 80 100 + of the amount above REAR OHO 484,001 – 617,000 R 128,400 + 38% of the amount above REAR 000 617,001 and above R 178,940 + of the amount above REAR OHO (Table retrieved from Wisped) http://en. Wisped. Org/wick/Taxation_in_South Africa Indirect Taxation This is where taxes are levied on transitions rather than on persons.

    The most important forms of indirect taxation are VAT, customs and excise duties. VAT is applicable on most goods (Food, clothing, stationary, etc. ) and services (telephone, and is levied at a standard rate of 14%. VAT cannot be charged to salaries and wages. Non-residents of South Africa are eligible to claim back VAT on movable goods purchased in the country as long as they present a tax invoice for purchased odds. 2. 2 Elaborate on the characteristics of a close corporation. (15) A closed corporation is a juristic person consisting of one to ten member who can be natural persons.

    Staring a Closed Corporation business can be done by one or a group of entrepreneurs at minimal cost. Some of the Characteristics of a Close Corporation is: The Name of the Business must end with the capital letters C e. G. Orgy Distributor C. A Closed corporation does not need to have profitability as its objective. The corporation must have a minimum of one member, but must not exceed more than ten. A close corporation does not issue shares. It has members and the interest of those members are expressed in a percentage of the total member’s fund in the corporation.

    The members must make an initial contribution in the forms of money, property or service. Liability of the members for the debts of the business is limited to their investments in order to protect their personal possessions. However it is only applicable if the member does not owe any money to the corporation. A Close Corporation has an unlimited existence. Should the membership change, the corporation still stays a legal entity. The corporation can buy the interest of deceased or resigned embers. A collaboration agreement will stipulate the relationship between the members.

    However should such an agreement not be conducted, the Act will specify the internal relations. There is no difference within the corporation between the owners and the managers. The members can bind the corporation to a transaction which is conducted within the business of the corporation. Profitability belongs to the corporation until a proper distribution between the members is declared. The Act requires that a closed corporation to comply with certain solvency and liquidity requirement when certain payments are made. After such payments the assets must be more than its liabilities. Dishonesty must be brought up by the Registrar.

    No compulsory meetings and auditing of books are prescribed. An accounting official must however be appointed. The corporation is started with a Founding Declaration in which certain information is contained. This declaration is comparable with the Memorandum of Association of a company. 3 QUESTION 3 3. 1 Discuss the five facts about a market economy in detail. (15) A market economy is where the people in a country have individual property rights and where price systems functions properly. In these capitalist countries, the prices influence the people in what to produce, how much to produce, what skills to acquire etc.

    Self-interest deeds automatically acts out into someone else’s interest. People try to make money for themselves and their families. Competition between sellers and between service providers occurs, because they try and convince the consumers that they have a better product or price. Producers adapt and grow their products to give a better goods to the customer. They try new innovative ideas to convince customers that their product is the best, Selling and buying is voluntary and people are not forced to do so. Consumers determines the prices of products or services, because they have to part with their money.

    If something is too expensive, they will not buy it. They will search for a cheaper alternative. Competition is very important in a market economy. Entrepreneurs should always strive to improve their products and services. Society allows individual property rights. The government does not interfere with the price system and does not impede too much in the economy. 3. 2 What are the reasons why entrepreneurs are important to the economy? (15) Entrepreneurs creates job opportunities. When entrepreneurs opens a easiness they hire people. These creates jobs and generates income within the community.

    Natural resources remain underground and undeveloped. Entrepreneurs help build the country’s economy. If a country is rich in natural resources, but does not use it, it is worthless. However, natural resources such as oil, gold, coal etc. Does not determine the economic wealth of a country. Entrepreneurs initiate the production process. They undertake that the products and services are produced they use a combination of labor, capital technology and raw materials. Entrepreneurs are catalysts to generate wealth and higher standard of living.

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