I am into web hosting and designing business and run my business as a sole proprietor.
Here is a bit details of my business: 1. We design websites and develop applications for both Indian and International clients. 2. We receive payments from International clients via credit card and via paypal. 3 .Also we lease/colocate dedicated servers from India as well as US Vendors. For US servers we either pay using paypal balance or credit card. We then sell hosting on this servers to both Indian and International clients.
We do not have service tax number as our turnover was less then 10 lacs and also we do not deduct TDS as it was not required as we are sole proprietor with no audit required. But this march end we reached the 10 lacs figure and current year will will cross this figure easily.
So instead of getting service tax and TAN number on my propriertorship firm, would u advice me to form a pvt. ltd. company and move my whole business into this company? As the business is growing and having a pvt. ltd. company gives more trust to international and corporate clients, I wanted to go for a pvt. ltd. company. But a few people suggesed that it involves much paper work and much restrictions for payments.
If I form a pvt. ltd. company, what will be the approx. annual charges of all accounting and auditing etc. and what will be the apprx. formation charges? Also as a pvt. ltd. company will there be any restrictions on making payments to international vendors ? When we make payment to international vendors for leasing dedicted servers, do we need to deduct TDS?
Pls suggest and help me decide to get service tax numbers and TAN as sole proprietor or a pvt. ltd. company.
Maintaining a pvt ltd company is little expensive as compare to proprietorship business but as you said the to create a trust in business, pvt ltd company is better option, you should go for it. Regarding deduction of TDS, all payments made to out of india a subject to deduction of tax(TDS),but subject to fulfillment of certain conditions, so its depends case to case basis. Regarding formation charges of the company, better you should consult a good CA/Consultant for this. If you are in Bangalore(Karnataka), i can help you in this.Thanks
01 May 2010
Thank u Mahendra for yr inputs. I am from Mumbai and can you suggest me some Good CA/Consultant who is well versed with Online business like web hosting.
In my opinion, "FORMING A PARTNERSHIP FIRM" would be better as compared to PVT. LTD. COMPANY as it involves lesser compliance procedures and less paper work.
But ultimately it's up to you that for which option you want to go
Regarding your business, i think you should go for some Corporate form of entity. A Pvt Co would be best for your, because it will create a impression on your clients, which would be a bit difficult in case of sole proprietor.
Dont think of expense of creating or handling a private limited company, but think about the rewards you would get from such a corporate form of entity.
CAclubindia
