A layman's primer into setting up Private Limited Company in India

1. Setting up <YOUR OWN> Company
Vinodh Soundarajan
7th August 2011

2. Introducing myself
• Co-founder, Colorsutra Retail Pvt Ltd
• Advisor, Quadrivium Software Pvt Ltd
• Partner, Futureshift Consulting Pte Ltd
• VP Global Engineering, SumTotal systems
• Director Product Development, JDA
http://in.linkedin.com/in/vinodhsoundarajan

3. Disclaimer
• These are my personal views and opinions based on the
study/research I have conducted. Audience is
encouraged to pursue their own research and discuss
with CA’s/Legal Counsel before embarking on their
venture

4. Your Choices are…
• Sole Proprietor
• Partnership
(http://www.mca.gov.in/Ministry/PS_act.html)
Type of • Private Limited Company
(http://www.mca.gov.in/Ministry/companies_act.html)
Company

5. Starting Sole Proprietorship
• It starts when you are ready
• Decide on the name and what its goal is. Define the value it
provides to customers. Ask the question “Why should the customer
chose it over others”.
• Get a website.
• Print Business Cards, Letterheads, brochures, sales receipts (if
applicable)
• Line up past customers and testimonials.
• If absolutely necessary, copyright your Trademark
• Maintain separate accounts - Bank and Credit Card
• Income Tax – To be filed end of year (same as personal tax filings).
Work with CA to determine acceptable expenses for business
• VAT/CST/Excise/Service Taxes – Quarterly
• Professional Tax and TDS filings - monthly

6. Sole Proprietorship - Pros/Cons
⁺ Minimal company/tax formalities to start
⁺ Compliance, record-keeping is low
⁺ Income Tax as an individual
⁻ Credibility, especially with big orders, customers
⁻ Attracting investment, loans (personal property
collateral)

7. Registrar of Companies
ANDHRA PRADESH
Pvt Ltd Company - I 2ND FLOOR, CPWD BLDG.
KENDRIYA SADAN, SULTAN BAZAR, KOTI,
HYDERABAD - 500195
PHONE 040-4657937,4652807
FAX: 040-4652807
roc.hyderabad@mca.gov.in
• DIN
• Name Search
• Registration with Ministry of Company Affairs, Authorized vs Paid up
Capital, Stamp Duty
Incorporation • Form 1, MOA, AOA, Form 18, Form 32 -> Certificate of Incorporation (CIN)
• PAN – For all income tracking
• TAN – Tax Deduction at Source
PAN/TAN
Sole Proprietorship
1. Register the company with Registrar of Companies* under Shops &Establishment
act
2. Individual files Tax returns on his/her own PAN card, at the individual tax rates
3. Yes. TDS is applicable

8. Pvt Ltd Company - II
• Noting of MOA/AOA, Filing of Form 2 (Allotment of shares, Certificates, Letter of allotment),
Selecting bankers, Appointment of Chairman/Secretary, Noting Company Registration and
Board Registered Address, Appointment of Auditors, Declaration of Financial Year, Common Seal,
Company and Director Stamps
Resolution
• Selection of Bankers (Loan, Salary Account, Cash Transactions, Service)
• Current Account, Signatories
Bank • Park unused funds in Debt Funds
Account
• VAT – AP Commercial Taxes, Sales related
• CST – Interstate buying of products/raw material
VAT/CST/Prof • Professional Tax – Mandatory. 2500/- per company + 2500/- per Director
Tax • Service Tax Registration – As applicable
Sole Proprietorship
1. No boards. You are your own King !!
2. Yes, Bank account required. Will need proofs
3. Yes, VAT and Service Tax must be registered

9. Pvt Ltd Company - III
• Shops and Establishment Registration
• Municipality Registration
Other Licenses • Central Excise, Customs (Import/Export), STPI/SEZ, SSI
• Payment Gateway
Miscellane • Courier signup
• Partner sign up
ous
• Rental vs Owned property
(Board
Resolutions)
• Annual filing for Income Tax Returns
• Quarterly filing for VAT/CST
Filings • Monthly filing for TAN (TDS) and Professional Tax
Sole Proprietorship
1. Shops and Establishment and other registrations required
2. Income tax filing combined with Individual Tax returns
3. Quarterly filing for VAT/CST/ST
4. TDS and Professional Taxes need to be filed monthly

10. Advantages of Pvt Ltd Company
1. Scalability/lifetime of the company beyond one or two or
handful of people
2. Institutionalization, formalization
3. Preparing for external Infusion of Investment
4. Tax benefits
5. Liability limited to company assets -> compared to
personal property.

11. Managing Finances
• Have a budget and a plan
• Keep separate Bank and Credit Card accounts for business.
Manage cash transactions carefully
• Do monthly reviews on income vs expenses
• Delay expenses to the latest possible time. Don’t over-delay
• Track Income like it is your life 
• File Tax returns on time

12. Summary
• Attention to Detail
• Brace for a long journey – Mindset
• Short cuts vs the Right way
• Adjust lifestyle to avoid daily pressures