Hello everyone ,
I just want to know for tax planning purpose which is the best ,,, Propreitory Concern Or Pvt Ltd Company ??
7 Replies
CS BHAVIN SHETH
(MANAGER-Company Secretary)
(131 Points)
Replied 16 December 2013
DEAR POONAM,
PVT LIMITED COMPANY IS BETTER
regards
Poonam
(Student CA Final )
(90 Points)
Replied 16 December 2013
| Originally posted by : CS BHAVIN SHETH | ||
 |
DEAR POONAM, PVT LIMITED COMPANY IS BETTER regards |
 |
Sir , can u explain it, How ??
CS BHAVIN SHETH
(MANAGER-Company Secretary)
(131 Points)
Replied 16 December 2013
Dear Poonam,
For your understanding, please see the below mentioned table differentiating between Proprietary concern and PVT LTD company. Also Income tax slabs for understanding.
Apart from given differences, I feel its easy to get loan through Pvt Ltd compare to Propritar ship and risk level is less but yes complainces are more but for that we are here, so not to worry
| Features | Sole proprietary concern | Partnership firm | Limited liability company (includes Private limited and public limited companies) |
| Liability of business debts | Unlimited liability. Liability extends to the individual’s private property. | Unlimited liability. Liability extends to the individual’s private property for satisfaction of partnership debt. | Limited liability. Limited to the extent of shares held but not paid. |
| Minimum and maximum no. of people | One person | Minimum 2 but not more than 20. | In a private limited company the minimum is two and maximum is 50. In a public limited company the minimum is seven and no limit on maximum. |
| Separate legal entity status | No separate legal entity | It does not acquire a separate legal personality even if registered. | Has a corporate personality distinct from the individuals who are its members. |
| Charter documents | None | Partnership Deed | Memorandum and Articles of Association |
| Registrations required to start. Other registrations required are under the purview of separate legislations such as service tax, professional tax, PF, ESI etc. as applicable. | None. | Register the Partnership Deed with the Registrar of Firms. | Incorporate the company with Registrar of Companies |
| Termination / continuity | Dissolved on the death of the sole proprietor. | Dissolved on the death of a partner, unless there is a contract to the contrary. Can be terminated by voluntary action of dissolving the partnership. | Perpetual. Terminated through prescribed winding up processes. |
| Ownership of property | Property belongs to the individual. | The property of the firm belongs to the partners and they are collectively entitled to it. | Property belongs to the company. |
| Capacity to sue | Not a separate legal entity, hence the individual can sue or be sued. | Only a registered partnership firm can sue or be sued. Else, action may be brought in the name of the members either individually or collectively. | Since a separate legal entity, a company can sue and be sued in its own name. |
| Sole proprietary concern | Partnership firm | Company |
| Taxed as an individual.
Tax Slabs: Upto Rs. 1,10,000 : No tax Rs.1,10,000 to Rs.1,50,000: Taxed at 10% Rs.1.5 lakhs to Rs.2.5 lakhs: Taxed at 20% Rs.2.5 lakhs to Rs. 10 Lakhs: Taxed at 30%. No surcharge Above Rs. 10 Lakhs: Taxed at 30% + surcharge |
Taxed as a partnership firm. The profits from partnership is not included in the partner’s (individual’s) tax return.
Tax Slabs: Upto Rs. 1 crore: Taxed at 30% + cess Above Rs. 1 crore: Taxed at 30% + surcharge + cess |
Taxed as a company. Dividend tax to be paid by the company.
Tax Slabs: Upto Rs. 1 crore: Taxed at 30% + cess Above Rs. 1 crore: Taxed at 30% + surcharge + cess |
Thus considering points mentioned above, My personal Answer would be Pvt Ltd Company on financial point of view
regards
BHAVIN SHETH
Poonam
(Student CA Final )
(90 Points)
Replied 16 December 2013
| Originally posted by : CS BHAVIN SHETH | ||
|
Dear Poonam, For your understanding, please see the below mentioned table differentiating between Proprietary concern and PVT LTD company. Also Income tax slabs for understanding. Apart from given differences, I feel its easy to get loan through Pvt Ltd compare to Propritar ship and risk level is less but yes complainces are more but for that we are here, so not to worry Features Sole proprietary concern Partnership firm Limited liability company (includes Private limited and public limited companies) Liability of business debts Unlimited liability. Liability extends to the individual’s private property. Unlimited liability. Liability extends to the individual’s private property for satisfaction of partnership debt. Limited liability. Limited to the extent of shares held but not paid. Minimum and maximum no. of people One person Minimum 2 but not more than 20. In a private limited company the minimum is two and maximum is 50. In a public limited company the minimum is seven and no limit on maximum. Separate legal entity status No separate legal entity It does not acquire a separate legal personality even if registered. Has a corporate personality distinct from the individuals who are its members. Charter documents None Partnership Deed Memorandum and Articles of Association Registrations required to start. Other registrations required are under the purview of separate legislations such as service tax, professional tax, PF, ESI etc. as applicable. None. Register the Partnership Deed with the Registrar of Firms. Incorporate the company with Registrar of Companies Termination / continuity Dissolved on the death of the sole proprietor. Dissolved on the death of a partner, unless there is a contract to the contrary. Can be terminated by voluntary action of dissolving the partnership. Perpetual. Terminated through prescribed winding up processes. Ownership of property Property belongs to the individual. The property of the firm belongs to the partners and they are collectively entitled to it. Property belongs to the company. Capacity to sue Not a separate legal entity, hence the individual can sue or be sued. Only a registered partnership firm can sue or be sued. Else, action may be brought in the name of the members either individually or collectively. Since a separate legal entity, a company can sue and be sued in its own name. Sole proprietary concern Partnership firm Company Taxed as an individual. Tax Slabs: Upto Rs. 1,10,000 : No tax Rs.1,10,000 to Rs.1,50,000: Taxed at 10% Rs.1.5 lakhs to Rs.2.5 lakhs: Taxed at 20% Rs.2.5 lakhs to Rs. 10 Lakhs: Taxed at 30%. No surcharge Above Rs. 10 Lakhs: Taxed at 30% + surcharge Taxed as a partnership firm. The profits from partnership is not included in the partner’s (individual’s) tax return. Tax Slabs: Upto Rs. 1 crore: Taxed at 30% + cess Above Rs. 1 crore: Taxed at 30% + surcharge + cess Taxed as a company. Dividend tax to be paid by the company. Tax Slabs: Upto Rs. 1 crore: Taxed at 30% + cess Above Rs. 1 crore: Taxed at 30% + surcharge + cess Thus considering points mentioned above, My personal Answer would be Pvt Ltd Company on financial point of view regards BHAVIN SHETH |
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Thank u so much Bhavin Sir for full information ...
tme s limted,bt drms r unlmtd
(Mba ( fin.) Ca final Student)
(257 Points)
Replied 17 December 2013
prop is good as compared to pvt ltd co
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