Stepping stones for your startup

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Stepping stones for your startup

  1. 1. Stepping Stones for your Start up Presented By CA Varun Gupta
  2. 2. Learn with Taxtriangle  Requirement of start ups  Types of Business forms  Sole Proprietorship  Partnership Firms  Private Limited Company  Comparison of Business forms
  3. 3.  Requirement of start ups  Types of Business forms  Sole Proprietorship  Partnership Firms  Private Limited Company  Comparison of Business forms
  4. 4. Requirements of Startups Start-Ups Business Idea SWOT Analysis Funds Arrangement Business Formation Marketing Customer’s Feedback
  5. 5.  Requirement of start ups  Types of Business forms  Sole Proprietorship  Partnership Firms  Private Limited Company  Comparison of Business forms
  6. 6. Business Formation deciding factor of Startups Fate Amongst all the requisites that lay down the foundation layer of any startup business, formation of business entity plays the pivotal role in deciding its success factor in a major way. Business Forms SoleProprietorship PartnershipFirm Company LimitedLiability Partnership New Startups most often chose the most convenient form of business assuming it the least concerned factor for success.
  7. 7. Types of Business Forms Sole Proprietorship Partnership Firms Company What does these terms actually mean? What are they used for? Will I need to bother? What are the merits/ demerits of them? How are they differentiated from each other? How can I form a firm or proprietorship or a company?
  8. 8. Sole Proprietorship
  9. 9. Technical Definitions for Sole proprietorship can be from Wiki or Google; however, in layman language- Proprietorship is a business enterprise exclusively owned, managed & controlled by single person with all responsibility, authority and risk. Characteristics of sole proprietorship • One man show • No profit/ risk sharing • No separate legal Existence • Ease in management • Prompt decision making • Ease in formation • Unlimited Liability • Easy to dissolve Sole Proprietorship
  10. 10. Merits of Proprietorship • Motivation to Work • Flexible to adapt market changes • No Profit/ risk sharing • Generates employment for others • Easy Formation • Limited Statutory provisions • Easy to Dissolve • Independent Control • One man show • Quicker Decisions Simple Management Simple Statutory Compliances Flexible Self Employment
  11. 11. De-Merits of Proprietorship One Man Show Lack of Specialization Limited Finance Lack of Stability Unlimited Liability Higher Uncertainity Higher Risk Limited Expansion
  12. 12. Partnership Firms
  13. 13. A partnership is the relationship between two or more persons who join to carry on a trade or business with the intention of profit sharing. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business. Each member of such a group is known as partner and collectively known as partnership firm. These firms are governed by the Indian Partnership Act, 1932. Characteristics of Partnership Firms • Contractual relationship • Voluntary registration • Sharing of risk & rewards • Unlimited liability • No separate legal entity • Decentralized control • Restriction on transfer of interest • Mutual Cooperation Partnership Firms
  14. 14. Merits of Partnership Firm • Self- Motivation •Flexible to adapt market changes • Flexible Operations • Division of risk • Abundant Capital • Better Scope of Expansion & Growth • Easy Formation • Limited Government Regulations •Easy to Dissolve •Tax Advantage • Qualitative Decision making • Favorable Credit Standing • De-centralized Controls Collaborative Management Simple Statutory Compliances Flexible Self Employment
  15. 15. De-Merits of Partnership Firm Instability Lack of Specialization Higher chances of conflict Lack of Public Confidence Unlimited Liability Higher Uncertainity Higher Risk Possible misuse of funds
  16. 16. Company
  17. 17. A Company is an artificial person created by law, having separate legal entity with perpetual succession and a common seal. A company is a juristic person (in the eyes of law it is a person). The company can sue and it can be sued. It has its own name and a separate legal entity, distinct from its members who constitute it. A company has its own property, the members (shareholders) can not claim the property of the company as their own property. Characteristics of Company • Contractual relationship • Perpetual Existence • Sharing of risk & rewards • Limited liability • Separate legal entity • Decentralized control • Management & Ownership are separate • Business Stability • Common Seal Company
  18. 18. Merits of Company • Abundant capital •Opportunity for Foreign Direct Investment • Flexible Capital Structure • Division of risk • Perpetual Succession • Favorable Credit Standing • Better Scope of Expansion & Growth • Liability limited to share capital • Taxation • Higher Public Confidence • Separate Legal Entity with common seal • Qualitative Decision making • De-centralized Controls Separate Legal Entity Limited Liability No Capital Constraint Stability
  19. 19. De-Merits of Company Non Transferability Restriction on Shares Transfer Concentrti on of economic power Limited Membershi p upto 50 Statutory Compliances Higher Statutory compliances Higher Taxation Rate Mandatory Audit
  20. 20. Requisites for a Private Limited Company Minimum 2 Directors Minimum 2 Shareholders Minimum Share capital of Rs 100,000 Registered Office Director Identification Number (DIN) for all the directors Digital Signature Certificate (DSC) for one of the directors
  21. 21. Formation of Private Limited Company Issue of Certificate of Incorporation Payment of ROC Fees Filing e-forms with ROC along-with Affidavit Drafting of MOA & AOA Approval for Company Name Acquire/ Register DSC Apply for DIN
  22. 22.  Requirement of start ups  Types of Business forms  Sole Proprietorship  Partnership Firms  Private Limited Company  Comparison of Business forms
  23. 23. Distinction between all Business Forms Point of Distinction Sole Proprietor Partnership Company Definition Business owned by one person An association of two or more persons carrying on business in common with profit sharing motive An artificial person created by law with perpetual succession and a common seal. Governed By No Governing Body Partnership Act, 1932 The Companies Act, 1956 Ownership One person Generally between 2 to 20 partners. Upto 50 members Legal Entity No Separate Legal Entity No Separate Legal Entity Separate legal entity from its members and directors Liability Unlimited Unlimited Limited
  24. 24. Continued………. Point of Distinction Sole Proprietor Partnership Company Property Ownership Rights Can own property in proprietor’s Name Cannot own property in firm’s name Can own property in company’s name Statutory Compliances Quick and easy to set up Quick and easy to set up in comparison to Companies Numerous formalities & statutory procedures to comply with Profits taxed at Personal Income Tax Rates Partners’ personal Income Tax Rates Corporate Tax Rates Continuity in Law Exists as long as the owner is alive and desires to continue the business Exists subject to partnership agreement A company has perpetual succession until wound up or struck off
  25. 25. Services we offer  Company Formation Services  Partnership Firms/ LLP Registrations  Tax Advisory & Compliance  Auditing Services  Company Law Services  Corporate Financing Services  Accounting Services  Business Valuation  Business Advisory Services  VAT/ Service Tax Registrations  Fixed Asset Verification  FEMA & RBI related Services
  26. 26. Need Additional Help For blogging, visit at: blog.taxtriangle.com For details regarding our services; visit at: www.taxtriangle.com For any further queries email to: info@taxtriangle.com

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