Sole trader or llp

628 views 4 replies

Malaiselvan

Programmer

38 Points Joined July 2011

Hi,

I need your expert advice on the below subject.

I am living in Tamil Nadu, Tirunelveli and I am planning to start a company/firm (i dont know whats the difference between a company and a firm). And I am going to employ 4 freelancers/employees under my company/firm. I am the only owner and I dont have any other owner. I planned to run this business in a commercial rented place.

The nature of the business is software consulting and services. Most of my clients probably outside India and all the payment will be done via PayPal or direct Bank Transfer.

I am expecting my annual earnings would be less than Rs. 6,00,000/- and I may pay Rs. 3,00,000/- as annual Salary for my employees and office rent etc... My net profit for a year would be approximatey Rs. 3,00,000/-

Questions:

1. What type of registration do I need to do for this type of business? Some one is saying that I need to open a LLP, some one is saying for Sole Properietor. Got confused.

2. I belive since I am the only owner I need to go for Sole properietor. When i approach the bank to open a corporate account in the name of my business they asked for several documents like certificate, Sales tax certificate etc...

3. In the above scenario what type of income tax do I need to pay? And how to calculate that?

I realy need your advice.

Regards

Malai

Replies (4)

shivaji prasad bhimavarapu

CHARTERED ACCOUNTANT

2391 Points Joined March 2012

Dear Entreprenuer,

As per the information given by you, it may started as a proprietory convern.LLP means Limited Liability Partnership. To start LLP, the procedures of a company will have to followed.Sole proprietory concern can be started without any registrations as per the details given by you. But for opening of Bank Current account, these days Banks are insisting on some proof of registration with any Govt.DDepartments. As Seales tax is not applicable to you, you may go for LABOUR Licence.And also apply for PAN ( Income-Tax) if you do not have earlier.The PAN should be in your Indivbidual name if it is sole prop.

Malaiselvan

Programmer

38 Points Joined July 2011

Hi, Thanks for your valuable reply. I already have a PAN in my name and that is not a problem. Add you said my real problem is to open a current account in my business name. You said labor license. How and where can I get that? Regards Malai

RANI LOHITHAN

FINANCE OFFICER

35 Points Joined July 2009

Hi,

Better to Register any of the option in Pvt Ltd Company or LLP. you will get some corporate identity and leagality, connected with registartion is requied from insttution related industry. Opening Current account, Getting loan, Income should assessed based on the Company income not individual income.

Etc., I belong to Nagercoil, Any registration for Pvt Ltd Or LLP , i AM ACONSULTANT

rani.chaha @ gmail.com

EESHA ASSOCIATES

Malaiselvan

Programmer

38 Points Joined July 2011

Hi Rani chacha, Thanks for your reply. I sent you an email few days before itself and I didn't receive any reply from you. So I thought you are not active in this. In the above scenario considering my profit how much tax would I need to pay for a year? Regards Malai