Why You Should Not Go To Income Tax Act 500 Pdf Section Wise – Income Tax Act 1961 Pdf Section Wise
Image courtesy: http://www.psdnetwork.com
One of the best important decisions to be fabricated afore ablution a amusing action is allotment a acknowledged structure.
Why is this important? There are a cardinal of affidavit and implications as to why it is important to pay absorption to acknowledged structure. Some of them are: how the amusing action gets funded, how the profits (if any) get distributed, babyminding structure, adver responsibilities, tax liabilities, and buying pattern.
India, clashing abounding added countries – like the US and the UK – does not acquire affluence of elbowroom in agreement of accurately alignment a amusing enterprise. In the US, for example, there are abounding options, which acquire been distinctively carved out befitting the needs of a amusing action in mind. They are low-profit bound accountability aggregation (L3C), Account Corporations, Certified Account Corporations (B Corps) and Flexible Purpose Corporations.
India, on the added hand, has bound options in agreement of acknowledged structure. Broadly speaking, there are four types of acknowledged structures that amusing action can opt for. We accord you a basis of anniversary one of them, forth with the pros and cons.
Non-profit or accessible accommodating organization:
Non-profits can annals as a Trust (under the Indian Trusts Act, 1882), a Section 25 aggregation (under of the Companies Act, 1956) or as a Society (pertaining to societies registration, of the anxious state). The better account of registering as a non-profit is the accommodation to get tax allowances beneath the Income Tax Act of 1961 and they can additionally acquire adopted donations beneath the Adopted Contribution (Regulation) Act.
The non-profit archetypal is best ill-fitted for start-ups that do not apprehend revenues from their activities or acquire a continued evolution aeon afore they alpha to aculate revenues. Examples of non-profits accommodate Agastya Foundation, Teach for India, Digital Green and Akshaya Patra Foundation. They strive to accomplish calition and carbon their ignment beyond abounding geographies application bartering strategies. Their way of comestible themselves financially is through grants and donations. One of the problems with this archetypal is that conceivably the disability to appoint top-cl apude or advance in latest technology and infrastructure.
Pros: Adeptness to focus alone on creating amusing appulse after the burden of banking return.
Cons: Constant charge to accession funds.
The for-profit amusing enterprise:
In India there are abounding choices back it comes to ambience up a for-profit amusing enterprise. Broadly, there are bristles altered types of for-profits: sole proprietorship, partnership, bound accountability partnership, clandestine close and co-operative.
This blazon of acknowledged anatomy is conceivably best ill-fitted for amusing enterprises that are attractive for advance and profitability. It comes as no surprise, according to a abstraction by Intellecap , Indian amusing enterprises 80 per cent of those polled, anatomy themselves as for-profit clandestine bound companies (PLCs). Examples of for aculation amusing enterprises accommodate Vaatsalya Healthcare, Ujjivan Microfinance and dLight. These amusing enterprises acquire usually absurd the market, and acquire a artefact or account that consumers acquire accepted, and are accommodating to pay money for. Also, because of their for-profit structure, they acquire the adeptness to accepting allotment from VCs and affair shares and go public.
Pros: Adeptness to allure allotment from VCs, pay top dollar for acceptable apude and advance in technology and infrastructure.
Cons: Sometimes focus on profits leads to mission alluvion that makes the aboriginal shareholders and stakeholders unhappy.
The amalgam model:
These blazon of amusing enterprises alpha off as a non-profit or for-profit and again barrage an exact adverse twin. Some of the affidavit are adequately straight-forward. As funds alpha to dry up for non-profits they are beneath burden from their funders to focus on acquirement breeding activities. This leads to them ablution a for-profit sister eny. Head Held High Foundation, for archetype is a non-profit that promotes rural entrepreneurship, beneath its bend are two for-profit organizations- Head Held High Services Pvt. Ltd and Magic Wand Empowerment. The Times of India wrote about the amalgam archetypal in a November, 2013 article, highlighting companies like Fractal Foundation, Waste Wise Trust and Beneath The Mango Tree. Back it comes to for-profit amusing enterprises, they barrage a non-profit so that they can allure donations and grants, which can be acclimated for activities like training, ysis or subsidizing a artefact or service.
Clearly this is a abundant archetypal that ensures that amusing enterprises can both allure donations and grants, and still be able to acquire admission to amusing adventure funding.
Pros: This is the best of both worlds, acceptance a amusing action to abstracted the amusing and acquirement breeding activities.
Focusing on both types of enies could be a botheration and so the affair of architecture a accepted culture.
Disclaimer: Our aim is accommodate you with a ample compionate of acknowledged structures, amuse argue with acknowledged and tax experts afore authoritative a decision.