Startups

6 Common tax mistakes that most startups make

01-05-2015

by : CA Pratik Anand

These days there is a flurry of new businesses or start-ups being launched. As a start-up, you won’t want to get into a legal tangle especially with a very aggressive tax regime and a long incorporation process. To make sure your new business is handling its regulatory, tax obligations properly, run through these common mistakes that most start-ups make:

 

  1. Choosing the Wrong Legal Entity

Your startup’s legal structure affects your legal reporting requirements and your tax filings and how much you pay as tax, so it’s important to choose the right entity.

There are a number of entity structures that you could choose such as a Registered Company (Public/Private Limited), LLP, proprietorship, partnership etc.

While the proprietorship mode of business could lower your tax pay out to an extent but a registered company is more formal and widely accepted way for doing business especially with foreign clients which generally want to do business with registered companies. Also venture backed startups generally require registered companies for funding.

Also if you do not want personal liability for the losses/liabilities of your startup than you could opt for either a Limited liability partnership or Limited Company, but if you don’t mind your personal assets being used for settling the business losses/liabilities then you could opt for proprietorship or partnership.

Remember that not choosing the right form of a legal entity can get you into a legal tangle and can also result in a higher tax outgo. A discussion with a tax advisor or CA can help you figure out which structure is right for your situation.

  1. Not Keeping Track of All Your Expenses

From the moment you launch a business, you’re able to deduct all “ordinary and necessary” business expenses (e.g. office supplies, event fees, kilometers driven to meet with partners).

The biggest mistake start-ups make is not keeping track of these expenses throughout the year and trying to gather every receipt when it’s time to file the tax returns. Always remember, you can’t deduct what you can’t document, and failing to record expenses as you go most likely means you’re leaving money on the table.

Find a method for documenting expenses that works for you. There are accounting softwares, such as QuickBooks, Tally, Busy, FreshBooks etc which let you record and manage expenses. You can hire services of an accountant to record all your expenses. You can also get all your accounting outsourced from a professional such as a CA.

 

  1. Mixing Capital Expense with Revenue expense

First-time business filers get tripped up as to which expenses are considered assets /capital expenditure and which are revenue expenses deductible in the P&L A/c. Capital Expenditure/ Assets/ Equipment are typically higher-value items that will last significantly longer than one year. For example, a new computer, server, office chairs. The expenses on their purchases are not deductible as revenue expenses in the P&L A/c but only the depreciation/amortization on them is deductible over a period of time.

Revenue expenditure includes things that you use/consume during the year (e.g. printing paper, pens, toner cartridges etc.).

If you mistakenly deduct your equipment or capital items as revenue expense, the tax department can determine that you improperly characterized the expense and that you’re not entitled to the deduction.

 

  1. Mixing Personal and Business expenses

New startup founders and small business owners often invest so much of their time and money in the company that their personal and business expenses become indistinguishable. This practice can lead to major confusion come tax filing time, and in some cases, can lead to deductions being disallowed on an ad-hoc basis by the revenue and higher tax outgo as a result. Avoid trouble by establishing a company financial account from the start and maintaining separate records for the business.

  1. Not Paying Your Taxes Regularly

Businesses, including self-employed sole proprietors, are required to pay taxes on a advance basis i.e they have to determine their taxes for the year in advance and pay as prescribed instalments in Advance. Not paying the taxes deducted from payments of suppliers/ service providers can land you in big trouble. Take a stock of your profit/loss statement at each quarter and pay your advance taxes accordingly. A CA/Tax Consultant can help you estimate these payments if you need some help.

 

  1. Not asking for professional tax help

Once you get established and incorporate, find a tax advisor to make sure you are following all the regulations. Your job is to get your company up and running, to focus your energy on creating your product, forming strategic relationships, and other big-picture ideas. The last thing you want to think about is taxes. It’s essential to hire a tax advisor to accept liability, and make sure you follow all regulations.

Above all, any startup or small business owner must think of taxes as a year-long obligation, not just something to revisit once a year.

(The author is a Chartered Accountant in practice and has wide experience of working startups/new businesses right from incorporation to compliance related filings. He is also founder at taxraasta.com which deals in setting up businesses for startups in India.)

– See more at: http://taxguru.in/income-tax/6-common-tax-mistakes-startups.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+articlenoticejudiciarynews+%28TaxGuru.in+%3A+Legal+%26+Tax+Updates%29#sthash.FbAbQfxK.dpuf

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Motivations, People / Stories, Startups

The child bride who is now the CEO of a $112 million company

Last updated on: February 26, 2015 19:08 IST

“Living is hard, but dying is easy.

“These were my last thoughts as I downed a bottle of poison.

“My aunt caught me in the act and rushed me to the local hospital…

“When I opened my eyes in the hospital room I was not the same person any more.

“Gone was the naive helpless girl the world had deemed too worthless to exist.

“I felt strong, recharged and empowered.

Padmashree awardee Kalpana Saroj who fought child marriage, poverty and a host of social injustice went on to become the CEO of a million dollar company and lived to tell her tale.

Kalpana Saroj

Business Ideas, Business Plans, Calendar, Innovation, Marketing, Mentoring, News, Startups, Technology

Eureka 2014 – International Business Plan Comptetition

Eureka! – An International Business Plan Competition

Aimed at encouraging people all around the world to unleash their inventive potential and flesh out ideas spanning multiple dimensions, Eureka! is Asia’s largest B-Plan competition as acknowledged independently by CNN and Thomson Reuters.

Designed to emulate the process of the growth of an idea towards a full-fledged startup. Eureka! prides itself on providing a 360 degree, holistic experience in the 5 month period that it spans. Right from acknowledging that your idea has potential, to writing a B-Plan, and pitching in front of an investor- this platform has it all !

Over the 15 years of its existence, Eureka has grown from a competition in which 50 teams competed for INR 50,000 , to a competition which sees over 6000 entries competing for prizes worth INR 4.5 Million with excellent networking opportunities in India and the Silicon Valley !

Eureka! now serves not only as a launch pad for budding ideas, but now has moved to be recognised as a platform for intensive learning of the entrepreneurial ecosystem by interactions and mentorship from the leaders of this field.

With the vision of promoting both business and social innovations, we follow two tracks:

  • Eureka! Business
  • Eureka! Social

Eureka! Business

The trademark of Eureka!, the business track of Eureka! is aimed at helping ideas develop into businesses that have the potential to revolutionize the world.

Eureka! Social

Now into its 4th successful year, Eureka! Social aims at helping build innovative enterprises and technology to aid the strata at the bottom of the pyramid and/or build a greener tomorrow. With associations like NSEF, Ashoka and Villgro, Eureka! Social runs as a parallel side track to Eureka! Business.

Click Here for more

Business Plans, Motivations, Startups

TiE International Business Plan Competition – 2015

The TiE International Business Plan Competition is the world’s richest BPlan contest organised by TiE in association with Rice University. This competition provides professionals, entrepreneurs and graduate-level University students a chance to compete in World’s largest and most successful Business Plan Competition. Last year, TiE reached a great milestone with a submission from TiE Kolkata, BetaGlide, who took home over $1million in investment at Rice University.

Like last year, this edition too has a 2 track competition in which teams can choose either the Investor (Open) Track or the Rice University (Student) Track.

Those who choose the Rice Track must meet additional eligibility requirements including having at least two student team members on their team, one a graduate level student. There exists a common application process for both tracks.

Click Here for more details

Motivations, Social Entrepreneurship, Startups

India Innovation Initiative 2014

India Innovation initiative 2014 is now accepting applications from Innovators, NGO’s and Companies for development of break-through technologies that will benefit society. The objective of this initiative is to strengthen the entrepreneurial eco-system in the country and short-listed projects stand a chance of receiving funding from government agencies to take their ideas to the market.

 

This year , the initiative is accepting applications under the following Innovation Categories and Submissions

Education
Healthcare
Water
Energy
Transportation
Agriculture
Sanitation
Infrastructure
Environment
IT & Communication
Skill Development
Others

Important Dates

Last date for Online Submission of application form : 15 Oct 2014
Announcement of shortlisted projects : 25 Oct 2014
National Fair at Knowledge expo 2014 : 20-22 Nov 2014
To know more and submit your applications visit : http://www.i4c.co.in/cii

Courtesy : India Microfinance

Startups

14 Steps to register a startup company in India

14 Steps to register a startup company in India

How to Register a private limited company in INDIA?

Registering a company in India can take anything from 15 days to as many as 35 days, though instances of getting the certificate of incorporation in a day to a week are also there. Registration of all sorts of companies in India is overseen by the Registrars of Companies (ROC), appointed under Section 609 of the Companies Act 1956. Every state has a regional office of the ROC to oversee the registration process. The ROC is vested with the power to register companies in India and also ensure they comply with all statutory requirements under the Act.

Click Here for the steps and the approximate costs

Startups

The job platform for startups

Capturejobooh is a job platform dedicated to startups from around the world. Startups can post jobs for free and job seekers can browse and send their applications directly to the employers.

We make it hassle free for startups to shortlist and hire candidates with little effort. Candidates get the opportunity to find job opportunities in promising young companies anywhere in the world. That makes Jobooh an ideal meeting point for startups and skilled professionals worldwide.

But we don’t stop here. If you lack work experience and looking for an opportunity to get into the amazing world of startups, we also have a good number of internship positions that can launch your career to the next level.

Headquartered in Geneva, Switzerland, we started our journey in 2011 and continue to expand internationally. We are currently operating in more than 50 countries. Our mission is to build the best job platform to find the most rewarding startups jobs and the best talent in the world.