Tax credits and preferred rates of interest are just two of the benefits of being an approved Small Company in Trinidad and Tobago, yet only a few are taking advantage of the opportunity.

orking for yourself pays, that's what the SBDC says, boasts a television advertisement from the Small Business Development Company. But that's more easily said than done!

Starting your own business can be a difficult task, and the job can be even more difficult when the owner does not have all the information he needs to make the business a success, says Judith Lea Marchan, Head of the SBDCs Business Information Centre.

"It is not enough just to start your own business. A lot of new business owners and even those who have been in business for years, do not know about many of the benefits, fiscal and otherwise, that are in place to assist them.

"Small businesses which are owned by one person or perhaps a partnership, can receive many tax benefits for which companies cannot claim.

"For example, a partnership owned by four persons which makes $50,000 in profits will pay not tax, but a company will have to pay $19,000 in corporate taxes.

"Likewise, small companies get added incentives and benefits that are not allowed for larger companies. Approved small companies are also entitled to a 10 percent tax deduction on the net increase of loans for the year of income.

"Under the Corporation Tax Act, approved small companies are entitled to a tax credit of 15 percent of their chargeable profits. So the effective tax rate for this year will be 23 percent.

Registration
Approved Small Company

1. The tax relief is available to registered companies only, and not sole proprietors and partnerships.
2. Applications have to be submitted for each year of income for which the relief is being requested.
3. A processing fee of $100. Is to be paid for each application submitted.
4. Approved small companies must submit the Certificate of Registration with their tax return in order to be granted the tax relief.
5. The Small Business Development Company issues a Certificate of Registration to the approved small company. In cases where approval was not granted, the applicant will be notified of the reasons for refusal.
6. Companies can re-apply for approval, and, certificates of approval and registration can be canceled, if companies fail to live up to the requirements of approval.

Loan Incentive

Financial institutions are also given incentives to lend more money to small companies, and these benefits are passed on to the loan recipient.

"To encourage more financial institutions to grant small business loans, the Act allows for financiers to earn a 50 percent exemption on Corporation Tax from interest earned on loans to approved small companies".

Marchan said agricultural enterprises are also entitled to tax exemptions, if the criterion of an approved agricultural holding is satisfied.

Financial institutions granting loans to approved agricultural holdings would also receive a 50 percent tax exemption on the interest earned.

"To get these benefits, small companies can register with the SBDC and they will be entitled to many other incentives which can make their corporate existence more meaningful".

To be granted the status of an approved small company, the company must be locally owned and controlled. The machinery, equipment, and working capital should not exceed $1.5 million dollars. It should also have at least five permanent employees.

It should not have as a shareholder, any other company holding shares directly or indirectly and must not be the result of splitting or the reconstruction of an existing company. Its system of accounts should also be approved by an Accountant who is a member of the Institute of Chartered Accountants of Trinidad and Tobago.