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PPT of Stepping stones for your startup webinar
Citation preview
Stepping Stones for your Start up
Presented By CA Varun Gupta
Learn with Taxtriangle
Requirement of start ups
Types of Business forms
Sole Proprietorship
Partnership Firms
Private Limited Company
Comparison of Business forms
Requirement of start ups
Types of Business forms
Sole Proprietorship
Partnership Firms
Private Limited Company
Comparison of Business forms
Requirements of Startups
Start-Ups
Business Idea
SWOT Analysis
Funds Arrangement
Business Formation
Marketing
Customer’s Feedback
Requirement of start ups
Types of Business forms
Sole Proprietorship
Partnership Firms
Private Limited Company
Comparison of Business forms
Business Formation deciding factor of Startups FateAmongst 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
Sole
Pro
prie
tors
hip
Part
ners
hip
Firm
Com
pany
Lim
ited
Liab
ility
Pa
rtne
rshi
p
New Startups most often chose the most convenient form of business assuming it the least concerned factor for success.
Types of Business FormsSole
ProprietorshipPartnership
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?
Sole Proprietorship
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
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
FlexibleSelf Employment
De-Merits of Proprietorship
One Man Show
Lack of Specialization
Limited Finance
Lack of Stabilit
y
Unlimited Liability
Higher Uncertainity
Higher Risk
Limited Expansion
Partnership Firms
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
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
FlexibleSelf Employment
De-Merits of Partnership Firm
Instability
Lack of
Specializati
on
Higher
chances of confli
ct
Lack of
Public Confidence
Unlimited Liability
Higher Uncertainity
Higher Risk
Possible misuse of
funds
Company
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
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 ConstraintStability
De-Merits of Company
Non Transferability
Restriction
on Share
s Transf
er
Concentrtion of economic powe
r
Limited
Membersh
ip upto 50
Statutory Compliances
Higher Statutory compliances
Higher Taxation
Rate
Mandatory Audit
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
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
Requirement of start ups
Types of Business forms
Sole Proprietorship
Partnership Firms
Private Limited Company
Comparison of Business forms
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
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
PersonalIncome 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
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
Need Additional Help
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