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Setting up a Pvt. Ltd Company
This document discusses options for setting up one's own company as either a sole proprietorship or private limited company. It provides details on the incorporation process for a private limited company, including registering with the Registrar of Companies, obtaining a PAN/TAN, initial board resolutions, opening a bank account, and necessary filings. Advantages of a private limited company over a sole proprietorship include scalability, institutionalization, limited liability, and potential tax benefits. The document emphasizes the importance of budgeting, financial management, and tax compliance.
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Setting up a Pvt. Ltd Company
- 1. Setting up <YOUROWN> Company Vinodh Soundarajan 7th August 2011
- 2. Introducing myself • Co-founder, Colorsutra Retail Pvt Ltd • Advisor, Quadrivium Software Pvt Ltd • Partner, Futureshift Consulting Pte Ltd • VP Global Engineering, SumTotal systems • Director Product Development, JDA http://in.linkedin.com/in/vinodhsoundarajan
- 3. Disclaimer • These aremy personal views and opinions based on the study/research I have conducted. Audience is encouraged to pursue their own research and discuss with CA’s/Legal Counsel before embarking on their venture
- 4. Your Choices are… • Sole Proprietor • Partnership (http://www.mca.gov.in/Ministry/PS_act.html) Type of • Private Limited Company (http://www.mca.gov.in/Ministry/companies_act.html) Company
- 5. Starting Sole Proprietorship •It starts when you are ready • Decide on the name and what its goal is. Define the value it provides to customers. Ask the question “Why should the customer chose it over others”. • Get a website. • Print Business Cards, Letterheads, brochures, sales receipts (if applicable) • Line up past customers and testimonials. • If absolutely necessary, copyright your Trademark • Maintain separate accounts - Bank and Credit Card • Income Tax – To be filed end of year (same as personal tax filings). Work with CA to determine acceptable expenses for business • VAT/CST/Excise/Service Taxes – Quarterly • Professional Tax and TDS filings - monthly
- 6. Sole Proprietorship -Pros/Cons ⁺ Minimal company/tax formalities to start ⁺ Compliance, record-keeping is low ⁺ Income Tax as an individual ⁻ Credibility, especially with big orders, customers ⁻ Attracting investment, loans (personal property collateral)
- 7. Registrar of Companies ANDHRA PRADESH Pvt Ltd Company - I 2ND FLOOR, CPWD BLDG. KENDRIYA SADAN, SULTAN BAZAR, KOTI, HYDERABAD - 500195 PHONE 040-4657937,4652807 FAX: 040-4652807 roc.hyderabad@mca.gov.in • DIN • Name Search • Registration with Ministry of Company Affairs, Authorized vs Paid up Capital, Stamp Duty Incorporation • Form 1, MOA, AOA, Form 18, Form 32 -> Certificate of Incorporation (CIN) • PAN – For all income tracking • TAN – Tax Deduction at Source PAN/TAN Sole Proprietorship 1. Register the company with Registrar of Companies* under Shops &Establishment act 2. Individual files Tax returns on his/her own PAN card, at the individual tax rates 3. Yes. TDS is applicable
- 8. Pvt Ltd Company- II • Noting of MOA/AOA, Filing of Form 2 (Allotment of shares, Certificates, Letter of allotment), Selecting bankers, Appointment of Chairman/Secretary, Noting Company Registration and Board Registered Address, Appointment of Auditors, Declaration of Financial Year, Common Seal, Company and Director Stamps Resolution • Selection of Bankers (Loan, Salary Account, Cash Transactions, Service) • Current Account, Signatories Bank • Park unused funds in Debt Funds Account • VAT – AP Commercial Taxes, Sales related • CST – Interstate buying of products/raw material VAT/CST/Prof • Professional Tax – Mandatory. 2500/- per company + 2500/- per Director Tax • Service Tax Registration – As applicable Sole Proprietorship 1. No boards. You are your own King !! 2. Yes, Bank account required. Will need proofs 3. Yes, VAT and Service Tax must be registered
- 9. Pvt Ltd Company- III • Shops and Establishment Registration • Municipality Registration Other Licenses • Central Excise, Customs (Import/Export), STPI/SEZ, SSI • Payment Gateway Miscellane • Courier signup • Partner sign up ous • Rental vs Owned property (Board Resolutions) • Annual filing for Income Tax Returns • Quarterly filing for VAT/CST Filings • Monthly filing for TAN (TDS) and Professional Tax Sole Proprietorship 1. Shops and Establishment and other registrations required 2. Income tax filing combined with Individual Tax returns 3. Quarterly filing for VAT/CST/ST 4. TDS and Professional Taxes need to be filed monthly
- 10. Advantages of PvtLtd Company 1. Scalability/lifetime of the company beyond one or two or handful of people 2. Institutionalization, formalization 3. Preparing for external Infusion of Investment 4. Tax benefits 5. Liability limited to company assets -> compared to personal property.
- 11. Managing Finances • Havea budget and a plan • Keep separate Bank and Credit Card accounts for business. Manage cash transactions carefully • Do monthly reviews on income vs expenses • Delay expenses to the latest possible time. Don’t over-delay • Track Income like it is your life • File Tax returns on time
- 12. Summary • Attention to Detail • Brace for a long journey – Mindset • Short cuts vs the Right way • Adjust lifestyle to avoid daily pressures