Understanding Partnerships

Partnerships

• Each partner contributes something to operate in the common interest and share profits according to contributions
• Each partner needs to make a contribution towards the business
• Profit-taking must be the main motive of the business
• The partnership must function in such a way that all parties have a common interest in the agreement
• A partnership can be dissolved when there is mutual agreement among all partners
• A partnership can be dissolved on the termination date of the partnership
• A partnership can be dissolved when changes occur to the membership
• Dissolution occurs when a partner is declared insolvent in his/her personal capacity
• A partnership is easy and affordable to establish
• Partners are taxed individually according to their respective shares
• The management and control of partnerships are not regulated by legislation
• Partnerships offer advantage to more than one person
• Partners usually have a personal interest in the success of the partnership
• Dissolution of a partnership is relatively easy
• Needs a memorandum of association and incorporation

Companies

• Two kinds of companies in terms of the Companies Act are companies with share capital and companies limited by guarantee
• Advantages of companies include simplified transfers and continuity, limited liability, estate taxation benefits, and possible increase in efficiency
• In the taxation of companies a single fixed rate is applied
• Private companies are taxed according to a fixed rate, irrespective of income levels
• Private individuals pay tax according to a sliding scale, where the higher the income, the higher the tax rate
• Companies are not entitled to rebates on income
• Shareholders also pay tax on the dividends declared

Economic Innovation

• Economic innovation relates to what of entrepreneurship
• The entrepreneur is responsible for economic innovation, utilizing natural resources to produce consumable goods and other raw materials
• Produces job opportunities
• Farmers need labor and other production inputs to produce consumable goods and raw materials
• Agricultural entrepreneurs usually take the lead in the agricultural sector when implementing new technology
• Entrepreneurship is a component of the free-market system
• The free market can only operate once there is demand for and a reliable supply of products and services in the market

Entrepreneur

• The word entrepreneur describes a small business person or enterprise by combining factors of production
• Any business enterprise is a creative activity where different factors of production are applied
• Determine rewards for factors of production
• The entrepreneur is responsible for determining the rand value of the different factors of production
• The entrepreneur plans management facets, including finance, marketing, and human resources
• Risk-taking and the willingness to take risks are outstanding characteristics of an entrepreneur
• The entrepreneur is responsible for the expansion and progress of the business

Creation of an Organization

• Creation of an organization refers to the what of entrepreneurship
• The entrepreneur should create an entrepreneurial culture
• The entrepreneur should accommodate entrepreneurship and make sure entrepreneur is fit for the job
• The entrepreneur should reward the entrepreneur

Characteristics of Strategic Plan

• A strategic plan is focused on a time frame of three to ten years and even longer
• A strategic plan adapts to the environment
• A strategic plan provides broad general guidelines The resources and expertise are focused on the farming concern
• A strategic plan enables the investigation and evaluation of the external environment for profitable opportunities
• A strategic plan allows a better understanding of the environment
• Farm resources can address the weaknesses and demands of the environment
• It will guide the farming decisions, and provides a framework for decision making

Strategic Planning

• Resource limitations should be identified
• Need a plan for resources, and to minimise usage
• The environment is constantly changing, and analysed systematically
• Changes should be identified, and managed
• Opportunities for goals are identified, and strategised

Profitability Factors of Crop Division

• Choice of crops, the production system, and Level of technical competencies determine the profitability of crop division
• Extent of production, Input cost and output profitability of crop division
• Variety of seed used, type and quantity of fertilisers influence crop yield
• Planting density, pesticides and herbicides and the impact of these elements on cultivation practices

Advantages of New Building

• Building brings Increased manpower efficiency, with effective Layouts, and effective building additions, with new location
• Bring lower maintenance and repair costs and general appearance improvements

Self-Constructing a New Building disavantages

• Less farm resources available for animals and farming activities, and smaller work force
• Inferior craftsmanship, and building delays

Administration Process of the Deceased Estate

• Within 14 days of death the next of kin hands in a notice of death/ a death certificate, identity document and provisional inventory of the deceased assets
• If assets require attention, the master of the supreme court will appoint an intermediate curator
• The master of the supreme court appoints an executor by issuing an executor's letter
• The executor provides a statement of income of the deceased since the last tax return to SARS
• They have to pay all outstanding accounts to creditors, and collect income of the deceased
• Formulates a liquidation and distribution account, with net values and hands it over to the supreme court

Distributions of Assets

• Distribution account shows how the net value of all assets will be distributed among the beneficiaries
• The executor prepares a summary for estate taxation on the prescribed form handed in at the master
• Assets are divided according to distribution to heirs and legatees
• Any inheritance to a minor will be placed in the Guardian's Fund as
• The executor can apply to the master of the supreme court to be dismissed from his/her duties as executor.
• It normally does not 6 months complete uncomplicated estate administration

Drafting a practical and effective will

• Ensure funds for spouse
• Provide business continuity
• Fair asset division
• Minimise taxes
• Let testator keep control
• Avoid delays and admin costs
• Simple and easily understood
• Update consistently

Testamentary Trust

• Used to manage a minor's inheritance and involve expects; providing flexibility for family needs as investments can grow.
• Potential administrators of a trust include the creator, professionals people, i.e. attorneys or auditors or a bank

Legal definition of Trust

• The arrangement involves (settlor) transferring a legal title of assets to another person or body (the trustees) to hold for the benefit of one or more persons (the beneficiaries)

Short-Term vs Long Term Insurance

• Short term insurance renews yearly, while long term provides payout after death
• The terms of the SARS determine the long-term insurance taxation; short term has tax deduction advantages

Principals of Insurance

• Short-term insurance aims to compensate for possible losses, placing the insured in the same position as before the loss
• Long-term insurance provides security to dependants in the event of a definite event at a certain time, making provision for the future

Retirement

• Policies differ from ordinary, where premiums are income tax deductable.
• Yields are partially tax-deductible.
• Insureds's family also collect percentage amount, with a third of the fund that is tax exempted
• Amounts can be paid in Pension
• Can be brought with or without life coverage, designed for small business owners.

Crop Insurance

• Covers farmer against losses, and weather conditions.
• Droughts, floods, hail, frost, snow, thunder and lightning is included, damage due to animals is covered.

Influence Social and political changes impact on South African farmers

• Certain farmers keep operating but with less support
• Better manager skills are beneficial
• The reduction in Government support and transfer of land is beneficial

Encourage Entrepreneurship Success

• Create entrepreneurship culture, with innovative ideas
• Accommodate skills and ideas
• Employ appropriate staff

Why is entrepreneurship important in agriculture

• Responsible for economic innovation, In the agricultural sense this process natural resources, creates job markets.
• The free-market system operate where and supply of products and services.

Dimensions of entrepreneurship

• Include creation of an organization and economic innovation.

Qualities of Good Entrepreneur

• Motivated, Positive, accepting, pursuit in education

Steps to Improve entrepreneurship

• create cultural, job suitability
• reward improvement

Definition of partnership

• Relational agreement with 2 members

Aspects of partnerships

• Partners must be good faith
• Contribution
• Right to share
• Asset access
• Partner and Financial access

Steps to limit risk in farming.

• Making decisions over long periods
• Calculate cash flow and records
• Loan and credit arrangements
• Cash reserves and financial support can be increased
• New additions and stability is advantageous to the job prospects.

The Business Environment

• Business environments change, explore threat leads to successful business development
• Forecast using available resources

Cover-orientated and Investment-orientated definitions.

• Cover orientated focuses on deaths and risk.
• Investment focuses and savings, but may need medical attention.

Harvest Insurance

• Damage from severe weather conditions, plant disease and animals.
• Premiums are determined based on risk and investment.
• Security can be offered from long-term conditions, with a specified sum and period.
• Provision offers financial provision for dependents, who are regarded as the beneficiaries.

Legal Requirements definitions

• The law dictates that legatee is party which specified the asset.
• Heir is a remnant of all debts and bequests.
• The legal law terms, “usufruct” implies transfer if ownership property the testes can allow usufruct to a third or second party.
• Has obligations to take ownership of all assets.

Wills

• Legal requirements and processes must be followed for efficiency and inheritance.
• An estate should follow these steps:
• The next of kin must hand in death and assets.
• The master will contact all business regarding the deceased.
• Executor will provide evidence.
• A sum of distribution will occur.
• It should be:
• Signed under oath.
• Two partners must sign, and witnesses is also beneficial for each page.