4 ms·

dude. unless you are doing some space age shit or something, you don't need to set up a company in india to do business. sure the whole "limited liability" and

dude. unless you are doing some space age shit or something, you don't need to set up a company in india to do business. sure the whole "limited liability" and that but in reality that is just a smokescreen. just use your personal pan card to open a bank account, get a GST registration, do income tax audit and you will be done. No compliance, no nothing. i do taxes and books for businesses with 250+ Crore turnover and they are all sole proprietorships. Why? the simple answer is why bother? you can have all the employees,all the corporate hierarchy and still be a proprietorship... One part of the problem is all the professionals milking companies for "compliance management fees" but in the end of the day, my suggestion to businesses is unless you REALLY REALLY need a company, please don't bother

roguesherlock 4y ago
isn't the tax burden for sole proprietorship higher than for say limited company? 30 vs 25 iirc?
- 2Gkashmiri 4y ago
  you can claim as many expenses as you like, in companies there are restrictions, there are deferred tax assets and liabilities because of companies act and income tax act depreciation difference. There is MAT applicable sooner than sole proprietorship i think. lets just say it is easier to "appropriate" the books as a sole proprietorship. you have to pay mca fees for your authorized capital, one off but if you are doing serious business, it costs. i know, 5% "might" sound a lot in taxes but by fudging some numbers, by not paying complaince fees, by not being on the hook for a "lot of compliance" and the penalties that come up, it does not sound worth the risk.... Look, if you are doing big business, want to raise money from the public, sure go ahead but not otherwise.
  - andsoitis 4y ago
    > but by fudging some numbers And this is the corruption mentality right there.
JumpCrisscross 4y ago
> you don't need to set up a company in india to do business You do if you want outside investment. Or if you want professional management. Or if you want to seriously engage in international business. What you say is true: most businesses are sole proprietorships. But that's a significant and manufactured barrier to growth.
spaceman_2020 4y ago
Unfortunately you need to incorporate if you want to raise venture funding. You'll also struggle to get taken seriously by good tech talent if you try to hire them as a proprietorship.
- _448 4y ago
  Depends. The comment you replied to has a point. I have a family business. From personal experience this is how it works in practice for most entrepreneurs. As for funding and business strategy, it will get bit tricky because you will now have to think of different ways of financing instead of VCs. But it is nothing different than VC financing (and you get to keep 100% of your company).
napier 4y ago
You need limited liability at larger scale and an official entity to get low interest loans, support and above the counter investor funding. These systems need new company centred reform and redesign to remove friction causing elements like OP describes to enable Indian entrepreneurship to realise its untapped potential in India as well as overseas. The amount of bureaucracy left behind by the British and the layer upon layer of mindless inefficiency added since is stifling innovation, adaptation and growth like nothing else.
- spaceman_2020 4y ago
  What makes me pessimistic is the place bureaucrats still occupy in the social hierarchy. Even today, getting a government job carries tremendous prestige, especially outside urban areas. Becoming an IAS/IPS officer is the most prestigious thing you can do as an individual. Bureaucracy will remain obdurate as long as members of the bureaucracy are feted by society. Ideally, bureaucrats should be invisible. But in India, IAS/IPS officers make headlines regularly. I won't get even started about the sheer amount of man hours wasted in preparing for administrative exams. Statistically, less than 0.1% of the people preparing for IAS exams will actually be selected. The remaining 99.9% waste YEARS of their lives in this futile endeavor instead of actually building and learning. I remain bearish on India as long as the bureaucracy remains paramount.
  - unmole 4y ago
    > Becoming an IAS/IPS officer is the most prestigious thing you can do as an individual. If you are in UP and Bihar. That's not true for the rest of the country.
    - llampx 4y ago
      Is that because of their geographical proximity to New Delhi, the capital?
      - unmole 4y ago
        No, it's because these states have fewer options.

roguesherlock 4y ago

isn't the tax burden for sole proprietorship higher than for say limited company? 30 vs 25 iirc?

2Gkashmiri 4y ago
you can claim as many expenses as you like, in companies there are restrictions, there are deferred tax assets and liabilities because of companies act and income tax act depreciation difference. There is MAT applicable sooner than sole proprietorship i think. lets just say it is easier to "appropriate" the books as a sole proprietorship. you have to pay mca fees for your authorized capital, one off but if you are doing serious business, it costs. i know, 5% "might" sound a lot in taxes but by fudging some numbers, by not paying complaince fees, by not being on the hook for a "lot of compliance" and the penalties that come up, it does not sound worth the risk.... Look, if you are doing big business, want to raise money from the public, sure go ahead but not otherwise.
- andsoitis 4y ago
  > but by fudging some numbers And this is the corruption mentality right there.

JumpCrisscross 4y ago

> you don't need to set up a company in india to do business You do if you want outside investment. Or if you want professional management. Or if you want to seriously engage in international business. What you say is true: most businesses are sole proprietorships. But that's a significant and manufactured barrier to growth.

spaceman_2020 4y ago

Unfortunately you need to incorporate if you want to raise venture funding. You'll also struggle to get taken seriously by good tech talent if you try to hire them as a proprietorship.

_448 4y ago
Depends. The comment you replied to has a point. I have a family business. From personal experience this is how it works in practice for most entrepreneurs. As for funding and business strategy, it will get bit tricky because you will now have to think of different ways of financing instead of VCs. But it is nothing different than VC financing (and you get to keep 100% of your company).

napier 4y ago

You need limited liability at larger scale and an official entity to get low interest loans, support and above the counter investor funding. These systems need new company centred reform and redesign to remove friction causing elements like OP describes to enable Indian entrepreneurship to realise its untapped potential in India as well as overseas. The amount of bureaucracy left behind by the British and the layer upon layer of mindless inefficiency added since is stifling innovation, adaptation and growth like nothing else.

spaceman_2020 4y ago
What makes me pessimistic is the place bureaucrats still occupy in the social hierarchy. Even today, getting a government job carries tremendous prestige, especially outside urban areas. Becoming an IAS/IPS officer is the most prestigious thing you can do as an individual. Bureaucracy will remain obdurate as long as members of the bureaucracy are feted by society. Ideally, bureaucrats should be invisible. But in India, IAS/IPS officers make headlines regularly. I won't get even started about the sheer amount of man hours wasted in preparing for administrative exams. Statistically, less than 0.1% of the people preparing for IAS exams will actually be selected. The remaining 99.9% waste YEARS of their lives in this futile endeavor instead of actually building and learning. I remain bearish on India as long as the bureaucracy remains paramount.
- unmole 4y ago
  > Becoming an IAS/IPS officer is the most prestigious thing you can do as an individual. If you are in UP and Bihar. That's not true for the rest of the country.
  - llampx 4y ago
    Is that because of their geographical proximity to New Delhi, the capital?
    - unmole 4y ago
      No, it's because these states have fewer options.