Starting a proprietary concern or proprietary firm is a simple process. An individual may carry on business under its own name or a formal name can be given to perform the business. This is a ‘proprietary concern’ or ‘proprietary firm’. A proprietary concern is only a business name in which the proprietor of the business carries on the business. A suit by or against a proprietary concern is by or against the proprietor of business. Proprietor is a person, but he does business for trading convenience in the name of proprietary concern.

In case of a proprietary concern, a formal registration need not be done. However, an Individual/ Sole trader (or one-person firm) intending to do business or profession, can register the concern under Goods and Service Tax Act (GST), Profession Tax Act or Shops and Establishment act or Udyog Aadhar (MSME).

We at P. A. Gandhi & Co., have helped several Individuals to set up a Proprietary concern. This is a very simple and cost-effective process for starting a business.

In case you need any assistance in Setting up a Proprietary Concern, kindly write a mail on admin@pagandhi.com or …………………….

A Partnership is one of the most important forms of a business organization, where two or more people come together to form a business and divide the profits thereof in an agreed ratio. A Partnership is easy to form, and the compliance is minimal as compared to companies.

Name a Partnership Firm:

Any name can be given to a partnership firm as long as you fulfill the below-mentioned conditions:

1. The name shouldn’t be too similar or identical to an existing firm doing the same business,
2. The name shouldn’t contain words like emperor, crown, empress, empire or any other words which show sanction or approval of the government.

Agreement between Partners:

Partnership deed is an agreement between the partners in which rights, duties, profits shares and other obligations of each partner is mentioned.

Partnership deed can be written or oral, although it is always advisable to write a partnership deed to avoid any conflicts in the future.

Registering a Partnership Firm:

Indian Partnership Act, 1932 governs the partnerships. Registration of partnership firm is optional and at the discretion of the partners.

Registration of partnership firm may be done at any time – before starting a business or anytime during the continuation of partnership.

It is always advisable to register the firm since a registered firm enjoys special rights which aren’t available to the unregistered firms.

In order to Register a Partnership Firm, an application form along with fees is to be submitted to Registrar of Firms of the State in which firm is situated.

We at P. A. Gandhi & Co., have the expertise to set up a Partnership Firm. We Provide the following services:-

1. Drafting of Partnership Deed
2. Registration of the partnership firm
3. Reconstitution/amendments to the firm
4. Dissolution of partnership firm
5. File Income Tax returns for the firm and its partners
6. Tax consultation, both Income Tax and GST

In case you need any assistance in Setting up a Partnership Firm, kindly write a mail on admin@pagandhi.com or …………………….

One Person Company (OPC) is a new concept in India, it has been very popular abroad, including in Singapore, USA, even Europe.

1. Features of One Person Company:

Company may be a One Person Company (OPC) which requires only one person as a subscriber to form a company and such a company will be treated under the Act as a private company.

A person, who registers one-person company, is not eligible to incorporate more than one one-person company

The memorandum of OPC must indicate the name of a person (other than the subscriber), with his prior written consent in the prescribed form, who will become a member of the OPC when the subscriber dies or is incapacitated to contract.

The nominee to the memorandum of one person company shall not be eligible to become a nominee for more than one such company.

In case you need any assistance in Setting up a One Person Company, kindly write a mail on admin@pagandhi.com or …………………….

1. Advantages of One Person Company

A One Person Company (OPC) Private Limited has many advantages as compared to Companies and Proprietorship firm.

1. Lesser Compliance Burden when compared to Private Limited Companies
2. OPC will bring the unorganized sector of proprietorship into the organized version of a private limited company. Proprietors always have unlimited liability. If such a proprietor does business through an OPC, then liability of the member is limited.
3. Banking and financial institutions prefer to lend money to the company rather than proprietary firms.
4. An OPC being an incorporated entity will also have the feature of perpetual succession and will make it easier for entrepreneurs to raise capital for business.
5. In an OPC, it is possible for a company to make a valid contract with its shareholder or directors. This means as a director you can receive remuneration, as a lessor you can receive rent, as a creditor you can lend money to your own company and earn interest.

1. LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
2. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
3. The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
4. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
5. Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.

Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

In case you need any assistance in Setting up a Limited Liability Partnership, kindly write a mail on admin@pagandhi.com or …………………….

1. A private limited company is a company which is privately held for small or medium sized businesses. The liability of the members of a Private Limited Company is limited to the amount of shares respectively held by them. Shares of Private Limited Company cannot be publicly traded.

   Characteristics of Private Limited Company:

   Members– To start a company, a minimum number of 2 members are required and a maximum number of 200 members as per the provisions of the Companies Act, 2013.

   Limited Liability– The liability of each member or shareholders is limited. It means that if a company faces loss under any circumstances then its shareholders are liable to sell their own assets for payment. The personal, individual assets of the shareholders are not at risk.

   Perpetual succession– The company keeps on existing in the eyes of law even in the case of death, insolvency, the bankruptcy of any of its members. This leads to the perpetual succession of the company. The life of the company keeps on existing forever.

   Index of members– A private company has a privilege over the public company as they don’t have to keep an index of its members whereas the public company is required to maintain an index of its members.

   A number of directors– When it comes to directors a private company needs to have only two directors. With the existence of 2 directors, a private company can come into operations.

   Paid-up capital– It must have a minimum paid-up capital of Rs 1 lakh or such higher amount which may be prescribed from time to time.

   Prospectus– Prospectus is a detailed statement of the company affairs that is issued by a company for its public. However, in the case of a private limited company, there is no such need to issue a prospectus because this public is not invited to subscribe for the shares of the company.

   Minimum subscription– It is the amount received by the company which is 90% of the shares issued within a certain period of time. If the company is not able to receive 90% of the amount then they cannot commence further business. In the case of a private limited company, shares can be allotted to the public without receiving the minimum subscription.

   Name– It is mandatory for all the private companies to use the word private limited after its name.

    

   In case you need any assistance in Setting up a Limited Liability Partnership, kindly write a mail on admin@pagandhi.com or …………………….

1. The public charitable trust is one of the possible form of not-for-profit entity in India. Typically, public charitable trusts can be established for various purposes, including the relief of poverty, education, medical relief, provision of facilities for recreation, and any other object of general public utility. Public Trusts are generally irrevocable.

   Typically, a public charitable trust must register with the office of the Charity Commissioner having jurisdiction over the trust (generally the Charity Commissioner of the state in which the trustees register the trust) in order to be eligible to apply for tax-exemption.  In the metro city  of India, Trust can be registered  in the office of  Sub-Registrar.

   A trust can be registered under Indian Trust Act, 1882.

    

   Societies are membership organizations that may be registered for charitable purposes. Societies are similar in character to trusts, although there a few essential differences. While only two individuals are required to form a trust, a minimum of seven individuals are required to form a society. The applicants must register the society with the state Registrar of Societies having jurisdiction in order to be eligible to apply for tax-exempt status.Societies are usually managed by a governing council or a managing committee. In general, Indian citizens serve as members of the managing committee or governing council of societies, although there is no prohibition in the Societies Registration Act against non-natural legal persons or foreigners serving in this capacity. Societies are governed by the Societies Registration Act 1860, which has been adapted by various states. Unlike trusts, societies may be dissolved.

   In case you need any assistance in Setting up a Trust or Society, kindly write a mail on admin@pagandhi.com or ……………………

1. A foreign company can set up a Private Limited Company as its subsidiary in India. The minimum requirements for incorporating a company in India are –

   It should have a minimum of 2 directors and 2 shareholders. One of directors should be an Indian resident. Finding an Indian resident director becomes a challenge for many foreign companies. Generally, the companies appoint the senior employee or the country manager as its director.

   The incorporation documents including the address proof, identity proof, etc of the foreign shareholders and directors to be notarized and Apostilled/ endorsed at the Indian Consulate in the country where the registered office of the entity is situated.

   In case you need any assistance in Setting up a Indian Subsidiary, kindly write a mail on admin@pagandhi.com or ……………………

1. A body corporate incorporated outside India (including a firm or other association of individuals), can open a Liaison Office (LO) / Branch Office (BO) in India. The companies have to obtain permission from Reserve Bank of India under provisions of Foreign Exchange Management Act (FEMA)

   The basic criteria considered by the Reserve Bank while sanctioning Liaison/Branch Offices of foreign entities are-

   Track Record

   For Branch Office — a profit making track record during the immediately preceding five financial years in the home country.

   For Liaison Office — a profit making track record during the immediately preceding three financial years in the home country.

   Net Worth

   The net worth means total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name should be.

   For Branch Office — not less than USD 100,000 or its equivalent.

   For Liaison Office — not less than USD 50,000 or its equivalent.

1. Charitable Trusts can be set up in three different forms, namely

   (a) register a trust under Indian Trust Act (register the trust at Sub-Registrar’s Office)

   (b) Register it as a society under State Co-operative Societies Act or

   (c) incorporate a company under Companies Act, 2013

   The registration of a company under Companies Act, 2013 is popularly known as ‘Section 8’ company

   Who can set up a Section 8 company?

   The companies with the objective of promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other objective;

   Intends to apply its profits, if any, or other income in promoting its objectives; and

   Intends to prohibit the payment of any dividend to its members; can be registered as Section 8 Company.

   + What registrations are required under Income Tax Act?

   Charitable Trusts including Section 8 companies are eligible for tax exemption u/s 11, 12, 12A, 12AA, 13 and 80G of the Income Tax Act. The expression “charitable purpose” has been defined under

   Section 2(15) of the Act to include:(a) relief of the poor,(b) education,(c) medical relief, and (d) advancement of any other object of general public utility.

   + Can Section 8 company merge with another company?

   Yes. Section 8 companies can amalgamate only with other section 8 company and having similar objectives

Association of Persons (AOP) is an entity formed by two or more persons, for a common purpose with an objective of producing Income or profits.

An association of persons (AOP) or a body of individuals (BOI), whether incorporated or not, is treated as a ‘person’ under section 2(31) of the Income-tax Act, 1961. Hence, AOP or BOI is treated as a separate entity for the purpose of assessment under the Income-tax Act.

- Registration
- Taxation
- Auditing and reporting
- Filing Income Tax returns

+ What type of activities is generally done through an AOP?

We have come across situations where a group of individuals join together for conducting a one-time event such as seminar, conference, etc., forms an AOP.

+ Is it mandatory to file return of income?

Every AOP/BOI whether incorporated or not has to file the return of income if his total income exceeds exceeds the basic tax exemption limit.