LLP, PRIVATE LIMITED COMPANY & OPC

Benefits of Incorporating a LIMITED LIABILITY PARTNERSHIP/PRIVATE LIMITED COMPANY/ONE PERSON COMPANY

 

A Limited Liability Partnership (LLP) is a partnership firm in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence. Section 2(62) of the Act, defines a “One Person Company” as a company which has only one person as a member. OPC is a Private Limited Company with only 1 shareholder, similar to a Proprietorship firm, where firm is owned and managed by an individual. A private limited company, is a type of privately held business entity. This type of business entity limits owner liability to their shares, limits the number of shareholders to 200, and restricts shareholders from publicly trading shares. All three of the above are registered under the Ministry of Corporate Affairs. And all these entities are incorporated and registered under respective laws and are distinct from their shareholders/owners.

 

Raising Capital

Incorporate your business for investment opportunities. Whereas sole proprietorships and standard partnerships are limited as to how they can raise capital for their business, a corporation can raise capital through selling of corporate stock, or interest, in the company. Investors are more readily attracted to a business opportunity where their exposure to liability is at a minimum. Today, Angel Investors or Venture Capitalists or other investors prefer investing in an incorporated entity, to feel safe and assured while investing in any new business.

 

Credibility

Credibility is another benefit attached to an entity that is incorporated. Customers and other businesses usually feel more secure engaging in transactions with a corporate legal entity because it instills a feeling of confidence in the company. For investors and lenders to a business, it gives them knowledge that their investment assets are afforded better legal protections.

 

Perpetual Duration

The incorporated business has perpetual duration unless stated otherwise in the articles of incorporation. This unlimited life allows the entity to continue to exist and conduct business, even following the untimely death of an owner, or the decision by individual owners to discontinue their stake in the entity.

 

Liability Protection

In order to enjoy maximum liability protection from lawsuits, the company or corporation must be established, operated, and maintained properly, with all of the “operating formalities” properly implemented and adhered to. Since the shareholders are not personally responsible for the corporation’s obligations, they can be protected from corporate litigation. Thus, if the company is involved in a lawsuit, the shareholders’ personal homes or assets would not be at risk.

 

Tax Savings

Incorporate your business for tax benefits. There are substantial advantages, and savings, available to an incorporated business. One can also write off all his medical expenses, including prescriptions, through his corporation and one is able to write off 100% of his insurance premiums versus the mere 30% write-off available to partnerships or sole proprietorships. These are just a glimpse of the types of advantages available by establishing your company as a corporation.

GST – GOODS AND SERVICE TAX

GST & ITS BENEFITS

GST is basically an indirect tax that brings taxes imposed on goods and services, on manufacture, sale and consumption of goods and on supply of services, under a single domain at the national level. In the present system, taxes are levied separately on goods and services. The GST is a consolidated tax based on a uniform rate of tax fixed for both goods and services and it is multiple point taxation system, but final burden falls on end consumer.

Continue reading GST – GOODS AND SERVICE TAX

BENEFITS OF FILING INCOME TAX RETURN

  • It creates a strong financial background as filing income tax return online creates financial credibility of the assessee thereby assisting him in easy fund procurement.
  • Luxury of reducing taxable income in forth coming years by the option of carrying forward losses on various heads of income.
  • If you want to claim refund then you must file income tax return!
  • No threat from the income tax department in form of scrutiny notices or search and raids.
  • Submitting income tax returns of past three years even if it is a NIL return to banks or financial institutions for smooth processing of Loans like housing, education, vehicle etc.
  • Foreign travel is possible only through VISA and VISA is possible only through submission of IT returns as one of the documents.
  • Quick registration of immovable properties in some of cities of India.
  • It is a standard proof of income of a person which establishes record with the tax department.
  • You can use the amount donated as deductions which are tax friendly, thereby reducing your taxable income.
  • You can even claim the amount of LIC premiums paid as deduction and reduce the tax liability.
  • Who knew that even tuition fees paid of children can act as a tax saving tool? Generally people are unaware that deduction of tuition fees paid for two children is available u/s 80C of the income tax act 1961.

All your income is legal and white money now, thus making you a responsible citizen and contributing in Swachh (Clean) Bharat (India) Abhiyaan (Campaign) in true sense.