Tag Archives: Starting Business in India

shutterstock_853963451

Foreign Direct Investment (FDI)

India has already marked its presence as one of the fastest growing economies of the world. It has been ranked among the top 10 attractive destinations for inbound investments. Since 1991, the regulatory environment in terms of foreign investment has been consistently eased to make it investor-friendly.

The measures taken by the Government are directed to open new sectors for foreign direct investment, increase the sectoral limit of existing sectors and simplifying other conditions of the FDI policy. FDI policy reforms are meant to provide ease of doing business and accelerate the pace of foreign investment in the country.

 

Foreign Direct Investment (FDI)

FDI because the name suggests, it’s associate degree investment directly created by a remote company into business in another country. Such investment may well be either within the kind of business enlargement in another country or may well be a results of acquisition of the corporate.

Direct Foreign investments in India approval were introduced by the then Finance Minister Dr. Manmohan Singh in 1991 under Foreign Exchange Management Act to promote such investments thereby increasing supply of domestic capital & increase the economic growth.

As per Foreign Exchange Management Act, ‘FDI’ means investment by non-resident entity/person resident outside India in the capital of an Indian company under Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000.

 

Advantages of FDI in India
There are several benefits of increasing foreign direct investment in India. First of all, with more FDI, consumers will be able to save 5 to 10 percent on their expenses because products will be available at much less rates and to top it all, the quality will be better as well. In short, it will be a win-win situation for the buyers. It is also expected that the farmers who face a lot of economic problems will also get better payment for their produce. This is a major benefit considering how many farmers have been giving up their lives lately. It is expected that their earnings will increase by 10 to 30 percent.

FDI is also supposed to have a positive effect on the employment scenario by generating approximately 4 million job opportunities. Areas like logistics will be benefited as well because of FDI and it is assumed that 6 million jobs will be created. The governments – both central and state – will be benefited because of FDI. An addition of 25-30 billion dollars to the national treasury is also expected. This is a substantial amount and can really play a major role in the development of Indian economy in the long term.
Steps Taken by Government to Promote FDI
The Indian Government has taken a number of steps to show its willingness to allow more foreign direct investment in the country. In the infrastructure development sector, it has relaxed the norms pertaining to area restriction, the laws regarding gaining a comfortable exit from a particular project and the requirements relating to minimum capitalization. If companies are ready to commit 30 percent of their investments for affordable housing, then the rules for minimum capitalization and area restriction will be waived off. It is expected that this will benefit the construction sector a lot, especially in the form of greater investment inflow.

The Indian Ministry of Finance has also proposed that 100 percent FDI will be allowed in railways-related infrastructure. However, this does not include the operational aspects. While it is true that the foreign investors will not be allowed to intervene in railway operations, they will be able to provide for high-speed trains, such as bullet train, and enhance the overall network in the process.

 

Who can invest in India?

  • A Non-resident entity means a person resident outside India.
  • Non Resident Indian or Person of Indian Origin (PIO holder) or Overseas Citizen of India (OCI holder).
  • A body corporate means a company incorporated outside India.
  • Foreign Institutional Investor (FII) means an entity established or incorporated outside India which proposes to make investment in India and which is registered as a FII in accordance with the Securities and Exchange Board of India (SEBI) (Foreign Institutional Investor) Regulations 1995..
  • Foreign Venture Capital Investor (FVCI) means an investor incorporated and established outside India, which is registered under the Securities and Exchange Board of India.

 

If you have any query regarding this Click Here

blog-header-41-1024x307

Direct Indirect Tax Difference

A tax is a financial charge or other levy imposed upon a taxpayer (an individual or legal entity) by a state or administrative division. Failure to pay tax is punishable by law.Tax is not a voluntary payment or donation.It is a contribution imposed by government, state or administrative division to enable them to meet the expenses.

So if anybody earns an income, he should share a portion of the same with the government. In India, taxes are divided in Direct Indirect Tax.

 

The way in which taxes are imposed, decides whether the tax is direct or indirect.

If a tax is levied directly on a person income then they are called direct taxes

Whereas the indirect taxes are levied on a product or a service the incidence of which is borne by the consumers who ultimately consume the product or the service.

 

For example I earn Rs. 12 Lac as salary. Suppose I need to pay Rs. 8000 as income tax on this salary income. Since the income tax of Rs. 8000 is directly levied on my salary income hence income tax is direct taxes.

Suppose in second case, I paid Rs. 950 (Rs. 900 basic amount + Rs. 50 as service tax) as my mobile bill to Airtel. Airtel will retain Rs. 900 and pay the Service tax Rs. 50 to the government.

 

Difference between Direct Tax and Indirect Tax:
There are different implications of direct and indirect taxes on the country. However, both types of taxes are important for the government as taxes include the major part of revenue for the government.

 

Key differences between Direct and Indirect Tax are:

  • Direct tax is levied and paid for by individuals, Hindu undivided Families (HUF), firms, companies etc. whereas indirect tax is ultimately paid for by the end-consumer of goods and services.
  • The burden of tax cannot be shifted in case of direct taxes while burden can be shifted for indirect taxes.
  • Lack of administration in collection of direct taxes can make tax evasion possible, while indirect taxes cannot be evaded as the taxes are charged on goods and services.
  • Direct tax can help in reducing inflation, whereas indirect tax may enhance inflation.
  • Direct taxes have better allocative effects than indirect taxes as direct taxes put lesser burden over the collection of amount than indirect taxes, where collection is scattered across parties and consumers’ preferences of goods is distorted from the price variations due to indirect taxes.
  • Direct taxes help in reducing inequalities and are considered to be progressive while indirect taxes enhance inequalities and are considered to be regressive.
  • Indirect taxes involve lesser administrative costs due to convenient and stable collections, while direct taxes have many exemptions and involve higher administrative costs.
  • Indirect taxes are oriented more towards growth as they discourage consumption and help enhance savings. Direct taxes, on the other hand, reduce savings and discourage investments.
  • Indirect taxes have a wider coverage as all members of the society are taxed through the sale of goods and services, while direct taxes are collected only from people in respective tax brackets.
  • Additional indirect taxes levied on harmful commodities such as cigarettes, alcohol etc. dissuades over-consumption, thereby helping the country in a social context.

 

Both direct and indirect taxes are important for the country as they are intricately linked with the overall economy. As such, collection of these taxes is important for the government as well as the well-being of the country. Both direct taxes and indirect taxes are collected by the central and respective state governments according to the type of tax levied.

 

If you have any query regarding this Click Here

2016-12-29-12_18_24-can-a-domain-be-trademarked_-indiafilings-com-_-learning-center

Can a Domain be Trademarked?

The Internet Domain Names have now become much more than mere representing the websites of different companies on the Internet. Today, in this age of well-developed information technology and worldwide businesses through Internet, these domain names have attained the status of being business identifiers and promoters. Since the commercial activities on the Internet are to go on increasing day by day, the importance and usefulness of domain names too, are to be enhanced for the purposes of greater publicity, popularity, and profitability of businesses in all economic sectors. According to Bill Gates, the founder of Microsoft, “Domains have and will continue to go up in value faster than any other commodity ever known to man”. Broadly, the functions of domain names are now quite similar to the functions of a trademark or service mark, for these purposes. Ours this very informative web-article offers rich and hugely beneficial and securing information regarding the registration and protection of the domain names as trademarks, with a view to help and serve people, companies, and professions pertaining to diverse occupational and economic fields.

 

General Rule
Domain names are written representation of an internet address. Hence, it is common for businesses involved in ecommerce to spend significant amount of money for the building of brand name around a domain name. Such businesses or those wishing to trademark a domain name can apply for the same by filling a trademark application as a wordmark. And, it is permisssible under the Trademark Act to allow for a domain name to be trademarked. However, just because a domain is registered does not make the mark eligible for trademark registration. The key test applied by the Trademark Examiner would be whether the wordmark proposed would be liable for registration, not simply, not simply as a domain name.

While processing of the application, the Trademark Registrar would still subject the application to usual criteria and test for registration of trademark. The elements of domain name included as part of the application would be not considered and only the reminder or the distinct part of the mark is considered.

 

What Names Can Be Registered?

Not all domain names can be registered as trademarks. The USPTO is particular about what can be registered as a domain name. For example, you will have a problem registering a generic name like drugs.com as a trademark. And you’d face an uphill struggle to register a domain name that you use solely as an address and not a signifier of services. For example, the law firm of Smith & Jones would have a hard time registering smith&jones.com as a trademark. It would have to prove that the domain is being used for some other purpose than for people to find and contact the law firm.

 

Example
If an application is made for the registration of snapdeal.com or snapdeal.in, the trademark examiner would not consider domain elements like .com or .in and would only consider the word “snapdeal”. If that word passes the normal test for objection like similar or identical trademark exists or other reasons, then the mark is cleared for publising in the Trademark Journal.

Further, in some cases, even words that are not eligible for registration as a word mark may be eligible for registratoin as a domain name, as there is no space in between the words and the addition of .com gives a character to the mark. For example, Fast Forward may not be eligible for trademark registration, but fastforward.com could be eligible for registration.

 

If you have any query regarding this Click Here

004f3c43a5820724ef27b79e19d43b23-d8wgns2

What is Bookkeeping ?

If you’re running a business, it doesn’t matter whether you’re an independent contractor or a growing company, managing accounts payable is a key part of your everyday business administration. Accounts payable is the process of tracking money owed by your business to suppliers. As your business grows, so does the complexity of your accounts payable process.

 

The term bookkeeping means different things to different people:

  • Some people think that bookkeeping is the same as accounting. They assume that keeping a company’s books and preparing its financial statements and tax reports are all part of bookkeeping.
  • Others see bookkeeping as limited to recording transactions in journals or daybooks and then posting the amounts into accounts in ledgers. After the amounts are posted, the bookkeeping has ended and an accountant with a college degree takes over. The accountant will make adjusting entries and then prepare the financial statements and other reports.
  • At mid-size and larger corporations the term bookkeeping might be absent. Often corporations have accounting departments staffed with accounting clerks who process accounts payable, accounts receivable, payroll, etc. The accounting clerks will be supervised by one or more accountants.

 

Bookkeeping (and accounting) involves the recording of a company’s financial transactions. The transactions will have to be identified, approved, sorted and stored in a manner so they can be retrieved and presented in the company’s financial statements and other reports.

 

Some of a company’s financial transactions:

  • The purchase of supplies with cash.
  • The purchase of merchandise on credit.
  • The sale of merchandise on credit.
  • Rent for the business office.
  • Salaries and wages earned by employees.
  • Buying equipment for the office.
  • Borrowing money from a bank.

 

The transactions will be sorted into perhaps hundreds of accounts including Cash, Accounts Receivable, Loans Payable, Accounts Payable, Sales, Rent Expense, Salaries Expense, Wages Expense Dept 1, Wages Expense Dept 2, etc. The amounts in each of the accounts will be reported on the company’s financial statements in detail or in summary form.

 

Start a daily regimen of entering incoming bills. If you incur a business credit card expense, enter it on the same day. Employee expenses should also be entered. Don’t forget to keep and securely store paper copies of all your documents too.Make a habit of paying your bills on a weekly basis and establish a window of payment that aligns with your supplier’s terms. If their terms are 30 days, don’t wait the 30 days to pay them; mail out the check or make the direct deposit payment a few days in advance of the deadline. This way you’ll maintain good relations with your vendors.

 

It’s inevitable that there will be times when cash flow is tight and paying bills on time can be challenging, be proactive. Refer back to all your suppliers’ terms to see if their payment windows allow for any wiggle room. If you know you can’t cover a payment this month, call your supplier and be honest: tell them you’ll make a minimum payment this month, and X amount next month until it’s paid off. While it’s not an ideal situation, and you may have to pay interest, it demonstrates to the supplier that you are proactive and serious about making payments. If you have a strong record of past payments, remind them of that fact and do whatever you can to reassure them of your business viability.

 

If your accounting system is taking up too much of your time, then you may want to enlist an assistant to help with some basic bookkeeping, or hire or outsource to an accountant. As your business grows, you might even want to consider the services full time .

 

If you have any query regarding this Click Here

 

20141203053605

Financial statements analysis

Financial statements represent a formal record of the financial activities of an entity. These are written reports that quantify the financial strength, performance and liquidity of a company. Financial statements reflect the financial effects of business transactions and events on the company.

Statement of financial position, also known as the Balance Sheet, presents the financial position of an entity at a given date. It is comprised of the following

  • Assets: Something a business owns or controls (e.g. cash, inventory, plant and machinery, etc)
  • Liabilities: Something a business owes to someone (e.g. creditors, bank loans, etc)
  • Equity: What the business owes to its owners. Equity therefore represents the difference between the assets and liabilities.

 

Income statement, also known as the Profit and Loss Statement, reports the company’s financial performance in terms of net profit or loss over a specified period. Income statement is composed of the following :

  •  Income: What the business has earned over a period (e.g. sales revenue, dividend income, etc)
  •  Expense: The cost incurred by the business over a period (e.g. salaries and wages, rental charges, etc)

Net profit or loss is arrived by deducting expenses from income.

 

Cash flow statement, presents the movement in cash and bank balances over a period.

  • Operating Activities: Represents the cash flow from primary activities of a business.
  •  Investing Activities: Represents cash flow from the purchase and sale of assets other than inventories (e.g. purchase of a factory plant)
  • Financing Activities: Represents cash flow generated or spent on raising and repaying share capital and debt together with the payments of interest and dividends.

 

Statement of Changes in Equity, also known as the Statement of Retained Earnings, details the movement in owners’ equity over a period. It is derived from the following components:

  •  Net Profit or loss during the period as reported in the income statement
  •  Share capital issued or repaid during the period
  •  Dividend payments
  •  Gains or losses recognized directly in equity (e.g. revaluation surpluses)
  •  Effects of a change in accounting policy or correction of accounting error

 

Financial statements are used by so many different types of people from investors, to creditors, managers and even employees. These statements are proven useful tools that provide valuable information about a business enabling the user of the statements to make the most appropriate business decisions.

 

If you have any query regarding this Click Here

llp-vs-partnership-firm-1050x600

What is LLP in India?

In India a business organization can take many forms such a LLP (Limited Liability Partnership), Private Limited Company, Public Company etc. On 7th January 2009 with assent of the President the Limited Liability Partnership Act, 2008 came into effect. LLP has been a successful business vehicle since then as it combines the benefits of a partnership with that of a limited liability company, making it a lucrative option for start-ups. It keeps personal wealth of partners safe and on the other hand it helps leverage the benefits of a partnership.

In Limited Liability Partnership a partner is not bound by other partner’s acts; it can be due to negligence, misconduct etc. In other words, LLP can also be defined as a corporate entity which combines professional as well as entrepreneur behavior to operate in effective, efficient and flexible manner by providing benefit of limited liability and larger financial resources.

Requirements and Benefits of a LLP

  • Formation of a LLP requires a minimum of 2 partners and at least one of them shall be an Indian resident. Each partner will only be liable to the extent of its capital in the business unless found to have acted with fraudulent intentions and deceiving purposes to cheat creditors.
  • It is a separate legal entity formed under the LLP Act 2008 therefore It shall now possess the power to sue and be sued. Also, both an individual and a body corporate may become a partner.
  • Duties, rights & share of each partner are governed by an agreement among partners or between the LLP and partners subject to the act. Law gives the freedom to formulate the agreement per choice.
  • There is No minimum capital required to form a LLP, moreover creation of a limited liability partnership is inexpensive as compared to other forms of business.
    When paralleled with regular partnership a LLP is a preferred choice of lenders hence making borrowing easier. Also it has less stringent compliance and regulatory requirements making it easier for the business owners to focus on operations.

 

Disadvantages of a LLP in India

  • A Limited Liability Partnership is not allowed to go public this means that it can not be listed on the stock exchange and is not allowed to raise money from the general public.
  • Actions of any partner related to the LLP will have an impact on it and the entity will be legally held responsible for any liabilities thus created.
    Winding up a LLP can be a tedious and expensive task.

 

If you have any query regarding this Click Here

shutterstock_1287109131

BUSINESS OPPORTUNITIES IN INDIA

India has emerged as the number one FDI destination in the world during the first half of 2015.With FDI capital inflows of US$30.8b, India has outpaced all other economies, moving up to the premier position from being in the fifth spot during the corresponding period of the previous year.
In FY15, India’s growth was 7.3 per cent, which would increase to 7.5 percent each in the next two years of 2016-17 and 2017-18.

Why invest in India?
India is a large and rapidly growing consumer market constituting up to 300 million people for branded consumer goods.

  • This market is estimated to be growing at 8% per annum.
  • Demand for several consumer products is growing at over 12% per annum.

 

Consultancy on following:

 

Key Investors

  •  Expansion of business
  •  Setting up of new business abroad
  • SMEs and Large size firms

 

Benefits

  •  Better Business Contacts
  •  Ease of Business Promotion
  •  Effective communication
  •  Global Presence
  •  Improvement in Quality of Service
  •  Cost Savings
  •  Increased Revenue Potential

 

INDIA GROWTH & INITIATES

  • By 2040, India will have added 1bn people (Almost it’s entire current population to the middle class)
  • The biggest youth population in the world.(572 million are under the age of 24)
  • One of world’s top ten industrial producers.(19th largest exporter and 10th largest importer in the world.)
  • World’s third largest economy by 2030.
  • One of the world’s biggest telecom markets (with over 850 million wireless subscribers ).
  • One of fastest growing retail markets. (The estimated economic value of top 5 retail markets is $450 billion.)
  • Purchasing power parity, India’s economy is fourth largest in the world at $ 4.06 trillion

 

Now that you now know these facts, it becomes important that you sit and check yourself to see if you would still want to go ahead with setting up business in India. This is not to say that India isn’t a favorable place for business. As a matter of fact, you can make loads of returns of investment in India.

 

If you have any query regarding this Click Here

istock_000023226663medium-1366x911

Why Register a Limited Company?

A limited company is most popular business models for all sizes of organisations. This is due to the many benefits it provides over other types of legal business structures. Whether you choose to register a commercial company limited by shares or a non-profit company limited by guarantee, there are a number of perks that far surpass those available to the sole trader or contractor working through an umbrella company.

Types of Private Limited Company
Private limited companies can be registered as ‘limited by shares’ or ‘limited by guarantee’, but what’s the difference?

Limited by shares

    Used by profit-making enterprises and contractors.
    Owned by one or more people known as ‘shareholders‘, or ‘members’.
    Day-to-day operations managed by one or more people known as ‘directors’.
    Company is dividend into shares, each of which represents a percentage of the business.
    Members receive a proportion of profits in relation to their percentage of ownership.
    Liability of members is restricted to the nominal value of their shares.

Limited by guarantee

    Used by non-profit enterprises and charities.
    Owned by one of more people known as ‘guarantors‘, or ‘members’.
    Managed by directors.
    No shares or shareholders.
    Members do not usually receive any sare of profits.
    Liability of members restricted to the nominal value of their guarantees.

Top 7 Reasion to Register limited company.

1. Minimising personal liability
Limited liability is one of the biggest benefits of running a business as a limited company. Protecting your personal assets is crucial if you plan to operate in the public domain or provide high value supply or services that could potentially lead to liability claims and put your home and finances at risk.
If your business is unable to pay its creditors or is faced with legal claims for damages, you will only have to contribute the nominal value of your unpaid shares or guarantee. Most shares and guarantees have a nominal value of £1 each. Beyond the limit of member liability, the business itself is wholly responsible.

2. Professional status
Limited status could significantly boost the perceived value of your business, thus attracting more clients and investors. Many large corporations refuse to award contracts to sole traders, instead choosing to deal exclusively with other limited companies. This is because they are held in higher regard.

3. Tax efficiency and planning
Limited companies pay 20% Corporation tax on profits, as opposed to 20-45% Income Tax paid on sole trader profits. This offers greater flexibility for tax planning.
Reinvesting surplus cash
Rather than withdrawing all available profits each year and paying more personal tax on top of your Corporation Tax liability, you can retain surplus income in the business to pay for future operational costs and growth. This makes more sense than withdrawing all profits, paying Income Tax and reinvesting your own finances when the business needs additional capital.
Deferring personal income
You can defer the withdrawal of profits to a later tax year in which a lower rate of business or personal tax tax is due. This is an efficient strategy if the withdrawal of all available profits would take you into a higher Income Tax or Dividend Tax bracket.

4. Higher personal remuneration
As a director and shareholder, you can keep your income below higher tax rate thresholds and reduce your National Insurance Contributions by issuing your take-home pay as a combination of a salary and dividends. This strategy will enable you to avoid entering the higher and additional Income Tax brackets

5 . Separate legal identity
Unlike the sole trader structure, a limited company is a legal ‘person’ in its own right, with an entirely separate identity from its owners and directors. As a result, companies can enter into contracts in their own name and are responsible for their own debts and liabilities.
The owners are only liable for the value of their unpaid shares or personal guarantees, rather than the full extent of the company’s liabilities. If a company becomes insolvent, it is the business itself which is declared bankrupt, not the shareholders or directors
Furthermore, this means that companies enjoy perpetual succession and survive the death or ownership of the original shareholders or guarantors. The business can be sold or transferred to other people at any time, thus enabling the company to continue to exist with minimal disruption to clients and employees.

6. Credibility and trust
By operating as a limited company, potential clients will assume your business is bigger and more established than it may be in reality. This professional, corporate image will add valuable prestige and credibility to your business. Potential clients, suppliers and investors are also more likely to trust your firm.
Image is important and can drastically improve your competitive advantage when bidding for valuable contracts, particularly if you provide high-risk services in the financial, IT or construction industry.

7. Investment and lending opportunities
Companies can have multiple owners, so it is possible to raise additional capital by selling portions (‘shares’) in the business to new investors. Generally, companies also have more lending opportunities than sole traders, and certain banks will only lend to incorporated businesses. Furthermore, it is often possible to secure a loan for a company without the need for shareholders or directors to provide security against their own property.

 

If you have any query regarding this Click Here