FORMS OF ORGANIZATION STARTUP SATURDAY, MUMBAI 10 th  December 2012 Presentation by: Team GlobaLex
FORMS OF ORGANIZATION <ul><li>A business enterprise can be owned and organized in several forms </li></ul><ul><li>The form...
FORMS OF ORGANIZATION <ul><li>SOLE PROPRIETORSHIP </li></ul><ul><li>HINDU UNDIVIDED FAMILY </li></ul><ul><li>PARTNERSHIP F...
FORMS OF ORGANIZATION <ul><li>SOLE PROPRIETORSHIP </li></ul><ul><li>Oldest and most common form of business enterprise </l...
FORMS OF ORGANIZATION <ul><li>PARTNERSHIP FIRM </li></ul><ul><li>Relationship between two or more persons who have agreed ...
FORMS OF ORGANIZATION <ul><li>LIMITED LIABILITY PARTNERSHIP </li></ul><ul><li>Refined version of Partnership </li></ul><ul...
FORMS OF ORGANIZATION <ul><li>COMPANY </li></ul><ul><li>Voluntary association of person who come together to carry on busi...
FORMS OF ORGANIZATION <ul><li>COMPULSORY REGISTRATIONS </li></ul><ul><li>PAN (Permanent Account No.) </li></ul><ul><li>TAN...
CASE STUDY – E-Commerce Startup Basic Assumptions: Form of Organization –  Company Business –  Selling of goods/ services ...
CASE STUDY – E-Commerce Startup <ul><li>LEGALITIES INVOLVED </li></ul><ul><ul><li>Company Incorporation </li></ul></ul><ul...
CASE STUDY – E-Commerce Startup <ul><li>Timelines & Costs Involved  </li></ul><ul><ul><li>Company Incorporation – 7 to 10 ...
CASE STUDY – E-Commerce Startup <ul><li>Costs Involved & Timelines (Contd….) </li></ul><ul><ul><li>Employment Contracts – ...
CASE STUDY – E-Commerce Startup <ul><li>Pitfalls </li></ul><ul><ul><li>Too much trust and too less documentation </li></ul...
CASE STUDY – E-Commerce Startup <ul><li>Best Practices </li></ul><ul><ul><li>Unambiguous documentation  </li></ul></ul><ul...
<ul><li>THANKS </li></ul><ul><li>© GLOBALEX </li></ul><ul><li>Email:  [email_address] </li></ul><ul><li>Ph: 98201 92335  <...
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Legal & accounting by anshul from GlobalEx

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Legal & accounting by anshul from GlobalEx

  1. 1. FORMS OF ORGANIZATION STARTUP SATURDAY, MUMBAI 10 th December 2012 Presentation by: Team GlobaLex
  2. 2. FORMS OF ORGANIZATION <ul><li>A business enterprise can be owned and organized in several forms </li></ul><ul><li>The form to be utilized depends on various factors: </li></ul><ul><ul><ul><li>Nature of business </li></ul></ul></ul><ul><ul><ul><li>Capital & Scale of operations </li></ul></ul></ul><ul><ul><ul><li>Degree of control required </li></ul></ul></ul><ul><ul><ul><li>Risk & responsibility of the entrepreneur(s) </li></ul></ul></ul><ul><ul><ul><li>Manner of profit sharing </li></ul></ul></ul><ul><ul><ul><li>Tax liabilities </li></ul></ul></ul><ul><ul><ul><li>Compliances involved </li></ul></ul></ul>
  3. 3. FORMS OF ORGANIZATION <ul><li>SOLE PROPRIETORSHIP </li></ul><ul><li>HINDU UNDIVIDED FAMILY </li></ul><ul><li>PARTNERSHIP FIRM </li></ul><ul><li>LIMITED LIABILITY PARTNERSHIP </li></ul><ul><li>COMPANY </li></ul>
  4. 4. FORMS OF ORGANIZATION <ul><li>SOLE PROPRIETORSHIP </li></ul><ul><li>Oldest and most common form of business enterprise </li></ul><ul><li>One man organization – Proprietor owns, manages and controls </li></ul><ul><li>Suitable for businesses which require limited capital resources and involve moderate risk </li></ul>ADVANTAGES DISADVANTAGES Ease of Formation Limited capital Maximum Incentives Limited managerial ability Secrecy of business model Limited Life Quick decisions & flexibility of operations Unlimited Liability Maximum Control Limited growth prospects
  5. 5. FORMS OF ORGANIZATION <ul><li>PARTNERSHIP FIRM </li></ul><ul><li>Relationship between two or more persons who have agreed to share profits & losses in a business carried out by all or a few on behalf of all of them </li></ul><ul><li>Formed by an agreement (written or oral) which contains the rights, duties and liabilities of all partners </li></ul><ul><li>Appropriate form for medium sized businesses requiring moderate capital and involving moderate risks </li></ul>ADVANTAGES DISADVANTAGES Ease of Formation Absence of ultimate authority Greater capital and credit resources Liability for actions of other partners Quick decisions Limited life Enhanced managerial abilities Unlimited Liability
  6. 6. FORMS OF ORGANIZATION <ul><li>LIMITED LIABILITY PARTNERSHIP </li></ul><ul><li>Refined version of Partnership </li></ul><ul><li>Formed by a registered Partnership Deed which contains the rights, duties and liabilities of all partners </li></ul><ul><li>Appropriate form for businesses requiring large capital and involving limited risks equivalent to capital committed </li></ul>ADVANTAGES DISADVANTAGES Separate Legal Person Ultimate authority lies with managing partner Transferability of Partnership Interest Compulsory registration Separate Assets/ Property Legal formalities, paperwork Limited Liability Decision making process; lower flexibility Capacity to sue in its own name Maintaining statutory books & registers
  7. 7. FORMS OF ORGANIZATION <ul><li>COMPANY </li></ul><ul><li>Voluntary association of person who come together to carry on business and share profits arising out of it </li></ul><ul><li>Artificial person created by law; can be dissolved by law only </li></ul><ul><li>Perpetual Succession and Common Seal </li></ul><ul><li>Appropriate form for large businesses (or having a potential to become so) requiring huge capital and involving high risks </li></ul>ADVANTAGES DISADVANTAGES Separate Legal Person Compulsory registration Transferability of shares Restriction on powers Management separate from ownership Legal formalities, paperwork Limited Liability Process driven; lower flexibility Capacity to sue in its own name Maintaining statutory books & registers Most favoured by PE investors – gives easy entry and exit Tax formalities; Compliance costs
  8. 8. FORMS OF ORGANIZATION <ul><li>COMPULSORY REGISTRATIONS </li></ul><ul><li>PAN (Permanent Account No.) </li></ul><ul><li>TAN (Tax Deduction Account No.) </li></ul><ul><li>VAT (Value Added Tax) (Central & State) </li></ul><ul><li>Professional Tax , Service Tax </li></ul><ul><li>Shops and Establishments </li></ul><ul><li>Employees related such as PF, ESI, etc </li></ul>
  9. 9. CASE STUDY – E-Commerce Startup Basic Assumptions: Form of Organization – Company Business – Selling of goods/ services through dedicated portal; Dedicated call center for customer support Requirements – Back End - brick mortar office, warehouse, supply vendors, IT infrastructure Front end – Call centre, Employees, Payment Gateway, Courier Agency, Portal
  10. 10. CASE STUDY – E-Commerce Startup <ul><li>LEGALITIES INVOLVED </li></ul><ul><ul><li>Company Incorporation </li></ul></ul><ul><ul><li>Registration for PAN, TAN, Service Tax, VAT, Shops & Establishment, PF, ESI etc. </li></ul></ul><ul><ul><li>Domain name/ Trademark Registration Applications </li></ul></ul><ul><ul><li>Shareholding Agreement between Promoters </li></ul></ul><ul><ul><li>Leave & License Agreement/ Lease Agreement </li></ul></ul><ul><ul><li>Employment Contracts </li></ul></ul><ul><ul><li>Vendor / Courier Agency / Call Center/ Payment Gateway Agreements </li></ul></ul><ul><ul><li>ESOP Trust Formation, Vesting and Exercise Policy </li></ul></ul><ul><ul><li>Warranty and Replacement Policy </li></ul></ul>
  11. 11. CASE STUDY – E-Commerce Startup <ul><li>Timelines & Costs Involved </li></ul><ul><ul><li>Company Incorporation – 7 to 10 days – 25K-30K + Statutory Fee </li></ul></ul><ul><ul><li>Registration for PAN, TAN, Service Tax, VAT, Shops & Establishment – 15 days – 10 -12K + Statutory Fee </li></ul></ul><ul><ul><li>Shareholding Agreement between Promoters – Depends on complexity of the structure –Stamp Duty + Attorney fee </li></ul></ul><ul><ul><li>Leave & License Agreement/ Lease Agreement - 6-7 days – stamp duty + registration charges + Attorney fee + Agent fee </li></ul></ul>
  12. 12. CASE STUDY – E-Commerce Startup <ul><li>Costs Involved & Timelines (Contd….) </li></ul><ul><ul><li>Employment Contracts – Attorney Fee </li></ul></ul><ul><ul><li>Vendor / Courier Agency / Call Center/ Payment Gateway Agreements – Stamp Duty + Attorney Fee </li></ul></ul><ul><ul><li>ESOP Trust Formation, Vesting and Exercise Policy – Stamp Duty + Attorney Fee </li></ul></ul><ul><ul><li>Domain name/ Trademark Registration Application – 6 to 7days – Statutory Fee + Attorney Fee </li></ul></ul>
  13. 13. CASE STUDY – E-Commerce Startup <ul><li>Pitfalls </li></ul><ul><ul><li>Too much trust and too less documentation </li></ul></ul><ul><ul><li>Cash dealings to avoid tax </li></ul></ul><ul><ul><li>Cutting corners on compliance costs </li></ul></ul><ul><ul><li>No clear cut policy on intellectual property management </li></ul></ul><ul><ul><li>No policy or inappropriate policy for warranty/ replacement </li></ul></ul>
  14. 14. CASE STUDY – E-Commerce Startup <ul><li>Best Practices </li></ul><ul><ul><li>Unambiguous documentation </li></ul></ul><ul><ul><li>Proper regulatory filings </li></ul></ul><ul><ul><li>Intellectual Property registrations and policy for usage </li></ul></ul><ul><ul><li>Clear cut policy on warranty/ replacement </li></ul></ul>
  15. 15. <ul><li>THANKS </li></ul><ul><li>© GLOBALEX </li></ul><ul><li>Email: [email_address] </li></ul><ul><li>Ph: 98201 92335 </li></ul>

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