CA In Delhi guided you on how to migrate your business registration from Service Tax or VAT to GST in ‘GST registration awaits Service Tax registrants!’. Here, CA In Delhi brings you the documentation requirement to carry out the GST Migration.
A notice from Income Tax Department feels like a bomb dropped at your place, and you start finding ways on how to defuse this bomb. But, there is nothing to fear about the tax notice, if you have paid proper taxes. There are different types of Income Tax Scrutiny Notice.. 143 is a number that can make you blush, but the case is otherwise here. Why? Scrutiny notice is issued under ‘section 143(2)’ of Income Tax Act. For its number, let’s call it ‘I Love You 2’ notice.
Oh ghosh! I missed filing TDS return. What will I do now?
CA In Delhi had explained what would happen if you don’t deposit Tax Deducted at Source (TDS) to the government’s account before due date, in previous article’. But, depositing TDS and filing returns are two different things with different due dates and different consequences. Here, CA In Delhi will tell you about TDS return filings.
But first, let us explain you those 3 magical words: TDS (Tax Deducted at Source):
Have you observed ‘prasaad’ offered at the place of pilgrimage? They slice out a piece of it before you can take it with you? Later they also give it back to you. [AdSense-B]
Same principle! You need to slice out a part of the payment you make to specified persons. The sliced amount will then be deposited every month into the god’s account- our government. This sliced payment, credited to deductee’s PAN, will be reflected in TDS return that you have to file every quarter. Hence, the person whose amount you deducted will be able to adjust it against tax payment that he will have to make to the government. Simple!
TDS return is to be filed by the assessee who had deducted the TDS.
For non government assessee: [AdSense-B]
| S. No | Particulars | Due Date |
| 1. | Tax Deducted every month, except March | 7th of next month |
| 2. | Tax Deducted in March | 30th April |
All the corporate assesses and those covered under Tax Audit under section 44AB of the Income Tax Act should deposit TDS online mandatorily. Others can also deepoosiit the same with banks.
Let CA In Delhi tell you another secret. You can pay TDS quarterly also, if Assessing Officer, with prior approval of the Joint Commissioner, permits the same. In that case, TDS due dates are:
| S. No | Quarter ends on | Due Date |
| 1. | 30th June | 7th July |
| 2. | 30th September | 7th October |
| 3. | 31st December | 7th January |
| 4. | 31st March | 30th April |
What if I don’t pay TDS? [AdSense-B]
Well, 1.5% interest per month awaits you then. Also, the interest will be calculated from the month of date of deduction till the date amount is deposited with the government. Pay attention! Date from which amount is deducted, and not the due date.
Example: If you deducted TDS on 20th January and instead of depositing before due date of 7th February, you deposited the same on 15th February, then the interest will be calculated from? The month of January, and not 7th February. Pheww..government is mean if you don’t pay on time.
Ok, I paid TDS every month before due date, now what? File TDS return every quarter. Click here to check due dates for TDS returns and what happens if you don’t file the same.
Do we need to tell you the importance of each penny? Maybe not! You are a true entrepreneur and you know, a penny saved is penny earned for your business. You can utilize it more productively.
Paying excess taxes is the most pinching thing for an entrepreneur. Why won’t it be, it doesn’t help in developing his business in any way. ‘Excess taxes’, I said, the ones that can be saved if you exercise care or take a tax expert’s advice, not the ones that deserve to be paid on your profit. After all, the deserved ones would be used in the country’s development. This article will guide you how to save tax and invest that fund into better alternates.
Isn’t it a good feeling when everything in your house and office is in the right place and order? You can find the things whenever you need them. Plenty of time is saved and you can easily focus on big and vital things.
While a messy place? ewww! It makes you all lethargic, doesn’t let you focus, keep you in a web of clutter and you just cannot understand what you are doing and why. Similarly, Accounting keeps your finances and money in the order. It sorts out your messy environment and gives you the report of revenue you made, expenditure you incurred, profits/losses you made and help you locate the reason so that you can take the best decision for your business. Accounting for business is important
It is much more than knowing true and fair position of the business. It is also a legal requirement.
There are two types of accounting- Cash basis and Accrual basis.
The Cash basis of accounting recognizes and records the financial transaction when cash is exchanged between parties. Accrual accounting recognizes and records transactions, as and when they occur, regardless of cash exchange.
Example: Your company made a sales of Rs 50,000 but, cash will be received after 15 days. The transaction will be recorded today under the accrual method. But, under cash method, it will be recorded only when cash is received against the sale. Smaller businesses generally use cash basis of accounting, as it is an easier method.
Are you covered under this? Let’s find out
These specified professionals have a technical degree and render services. They are non traders.
Don’t forget: If in any one year, your income goes below the threshold limit, you are still required to maintain books of accounts, unless sales/income falls for three years continuously.
Presumptive Income Scheme is a scheme, wherein profits declared in tax return are computed as a percentage of sales. Example: Under section 44AD of the Income Tax Act, assessee can declare his profits as 8% of the total revenue, if his gross turnover does not exceed the threshold limit of Rs 1 crore.
Every possible document in relation to business is required to be maintained:
You can choose from a list of top rated Chartered Accountants at homepage of CA In Delhi and get accounting of your business with ease
Start a business in Delhi and the most confusing question that pops up in mind- whether I should incorporate a private limited company, an LLP (Limited Liability Partnership) or an OPC (One Person Company). Isn’t it? No worries! This article will clear your doubts and un-clutter your mind so that you can confidently go ahead and start taking action. Basically, suitability of all the three forms of entities depends upon your needs and your situation. Let’s have a look from various points of view:
While minimum two persons are needed for a private limited company and an LLP, OPC comes to the rescue of those who want to start a business alone. LLP requires minimum 2 designated partners, private limited company requires minimum 2 directors and OPC requires minimum 1 director and 1 nominee for shareholder. Not to forget, directors and shareholders can be the same person.
Out of these three, formation and compliance cost is highest for companies and relatively lesser in OPC and least for LLP out of these three.
If you have a plan to raise funds, then close your eyes and start a private limited company. Investors invest against share in equity, which can be possible only in the case of a company. But keep your eyes wide open to all the all the compliances that you need to follow regularly in that case.
If you opt for a private limited company, it is mandatory for you to hold the first board meeting within 30 days of incorporation. Also, you need to hold minimum 4 board meetings in a year. There is no such requirement to hold a board meeting for an OPC with one director or an LLP. However, for an OPC with more than 1 director, first board meeting to be conducted within 30 days from the date of incorporation and at least one meeting in each half of the calendar year.
Mandatory only for private limited companies, while no such requirement for OPC and LLP.
Mandatory for every private limited company and OPC while for the LLP, mandatory only when turnover is more than Rs 40 Lakh or contribution is more than Rs 25 lakh.
Above points in simplified and tabular form: [AdSense-B]
| Basis | Private Limited Company | One Person Company | LLP |
| Minimum Requirement | 2 shareholders 2 directors (Shareholders can be the directors) | shareholder = 1 director = 1 nominee of shareholder = 1 (Shareholder can be the director) | 2 partners |
| Formation and compliance cost | Highest | Relatively lower | Relatively lower |
| Fund-raising options | Best for fund raising | Chances are low | Chances are low |
| Board Meetings | First meeting within 30 days from the date of incorporation Minimum 4 boards meetings in a calendar year. | Board meeting not needed in case of 1 director. In case of more than 1 director, first meeting to be conducted within 30 days from the incorporation date.At least 1 meeting to be conducted in each half of the calendar year. | Not compulsory |
| Annual General Meetings | Mandatory | Not Mandatory | Not Mandatory |
If you just want to do business with no plan of raising funds and want to incur minimal compliance cost, LLP is the best option for you. Compliance costs are there, but are lesser than that in a company. No audit is needed for an LLP, until turnover crosses Rs 40 lakh or contribution is Rs 25 lakh. So, if you project that turnover will exceed Rs 40 lakh or contribution is more than Rs 25 lakh, then forming a company is a better option.
But, if you have a plan to raise funding in the future, then forming a private limited company is the best option. But, with pros, comes the cons! You need to bear higher compliance cost and an extra headache of complying all the laws as non-compliance can lead to penalties and interests or even imprisonment in many cases.
In the middle of these two, lies One Person Company. Compliances are lesser than a private limited company, but more than an LLP. Funding chances, still not at par with a private limited company. Also, OPC will be there only and only if paid up share capital does not exceed Rs 50 lakh or turnover does not exceed Rs 2 crore. Otherwise, it will be mandatorily converted into a private limited company.
Did we forget to tell you the mandatory words you need to use after the names? Private Limited, LLP and OPC to be used in the respective cases. Which one do you want? XYZ Private Limited, XYZ LLP or XYZ OPC Private Limited? Choose carefully!
You can choose from a list of top rated Chartered Accountant in Delhi at our homepage and start your business with ease.
A CEO (by whatever name called), being the leader of an organisation has an ultimate responsibility of running the entire organisation. A Good CEOs should not miss some of the financial ratios and always ensure (either themselves, or with expert assistance) that finance, the foundation on which a business runs, is well managed and stable.
By looking at few important financial ratios, he can largely judge the overall efficiency of the business, locate weakness, take sound decisions and hence, ensure financial well being of organisation.
I have compiled some of the important financial ratios that will give you a major idea about the company’s financials. If you are short of time, just read summary. Let’s find out what these ratios communicate:
Hello cash flows, how are you doing? Check liquidity ratios to find out. [AdSense-B]
Oh, and keep in mind, that ratios will vary from industry to industry and over time. Every ratio tells two stories. Interpreting them requires knowledge of your business, your industry and the reasons for fluctuations. If any assistance is needed, you can contact top rated Chartered Accountants In Delhi at the homepage of CA In Delhi. They can offer sound advice, which can help you interpret and improve your financial performance. It’s important to keep in mind that ratios are only one way to determine your financial performance. Beyond what industry a company is in, location can also be important
When you take care of above points, ratios give you great insight about financial health of your business.
Namastey from CA In Delhi! This article will guide you all about how to value a startup. The way startups are becoming the trend of the season, days are not far when pados wali aunties who used to compare marks of their children earlier as a part of gossip will ask each other “Mere bete ke startup ki valuation $3 million h. Tumhari beti ke startup ki kya valuation ho gyi?” [AdSense-B]
Every other day there is a news of a startup being valued and raising funds. Har cheez ki ek keemat hoti h and startup is inevitably one of them. But how are they valued? Let’s find out!
There are three stages of a startup:
– Early stage
– Growth stage
– Exit stage
Early stage of a startup is a stage where the company has not generated any revenue or has generated very little. It has an idea or a plan (theoretical or implemented) that has a ‘potential’ to generate revenues in future.
To raise funds from investors in exchange of the shares in the company, you need to value a startup. Fund raising and share dilution normally depends on the kind of investor you are raising funds from (Angel investor, Micro Venture Capitalist, Venture Capitalist, friends and relatives, etc). Normally, 15%-25% shares get diluted at this stage and founders need to be careful in dilution as they may have to raise funds in future as well and may have to dilute more equities. [AdSense-B]
Valuation at this stage is mainly determined based on various factors including how much funds you need to run the business for a given time period Investors generally want to see growth in 18 months. Example: If your business needs around Rs 1 crore and your company raises Rs 1 crore in exchange of 20% shares, value of your company is Rs 5 crores (Rs 1cr / 20%).
Revenues: Obviously, revenues are most vital part of the company. Every organisation exists for making money. But, this holds true mainly for B2B companies. Maybe to your surprise, for B2C business, more revenues may lower the valuation of your company. It is because if you are charging your consumer, consumer may not like to deal with you and this adversely impacts your growth and hence valuation
Number of users: If your company has large number of users, it is a concrete proof that company can generate revenues anytime as business model is likable for users. This is called ‘traction’. Snapchat had valuation of $16 Billion without having any revenues. Interesting much? ????
Founder’s goodwill: Be afraid not of sheep leading a pack of lions, but a lion leading a pack of sheep. This is the case here. Investors having confidence in founder and leader of the organisation who has had prior success can easily get funding even if he does not have revenue or traction. Instagram and Pintrest are the best examples of such funding.
Industry of operation: If the industry where your startup belongs to is attractive, investors are more willing to invest at a premium.
This is the stage where your company has revenue or traction. Valuation at this stage is easier and multiples are used here to calculate the value of your company.
Multiples can be calculated from comparable transactions occurred in the market or companies of similar kind for calculating multiple of Enterprise Value to EBITDA or revenue or number of users of that similar company. Once the multiple is known, same can be applied to
Multiple= Enterprise Value
Revenue/EBITDA/no of users
EBITDA/revenue/number of users of the relevant company taking into account different scenarios. Different scenarios here mean highest possible revenue/ebitda/users or lowest possible revenue/ebitda/users.
Other way can be to discount the current and projected future earnings of the company based on the trends of the revenue and other factors. Such aggregated discounted earnings can be used as a value of the startup.
Here also, several other factors are taken into account by investors like management, state of business, opportunities, competition, technology, reputation, external risks, etc. These factors play strong role in negotiation for valuation between founders and investors. Founders always want more valuation while investors would like more equities in exchange of funds.
Exit Stage: Investors now want return for the money they invested previously in the startup.
They plan to sell their shares to other company or investor or through an Initial Public Offer.
Valuation here is again done keeping in mind the comparable transactions happened in the market for similar companies using their multiples and applying them for the relevant startup.
Replacement cost method is also used to value the company. It means the value of building the similar company from scratch at current point of time.
Projected revenues for future years (generally 10) are discounted at a suitable discount rate (as per industry and company standards) and cumulative discounted revenue can be used as a valuation of the company.
Good entrepreneurs and investors choose to use mixture of valuation methods to value their company based on the situations and industry and then use them as a tool to negotiate better.
At every stage, lot of comprehensive research and analysis of the company and industry is required since many assumptions and estimates are made at the time of valuation. That is what makes startup valuation a mixture of science and art.
Next time when somebody asks you “Toh kya keemat h tumhare startup ki?” Go proudly tell what it is. ????
You can choose from a list of best chartered accountants in delhi at our homepage and get your startup valuation done with ease.