GENERAL ADVICE FOR A START UP

Few Tips for a Start up Founder



1. Pre-Operative Expenses



All Pre-operative expense like doing research , paying to consultants , travel , food and restaurant bills , communication expenses , salary of co-founder/s , interest paid on loan taken if any to fund the initial expense eve from friends and relatives are all pre-operative expenses which are allowed as expenses in the accounts of the start-up and it is very important to keep a record of all such with supporting.

Not only will it benefit in terms of tax benefit but also in terms of equity contribution calculation.



2. Insurance



It is prudent to take insurance for any assets and specially cash in hand and in transit and inventory against all perils and theft.



Once the business has started and the company has got some funding it is worthwhile to explore Key man's insurance in the name of the founder who is the main brain behind the start-up.



3. Key Registrations



It is important to have key registrations as per the requirement of the Companies Act like Registration of the company with a registered office and minimum number of directors and paid up share capital , for Income tax purpose a TAN no , PAN no and for Indirect tax depending upon the nature Excise or service tax and VAT or State Tax registration and now GST registration .



4.Deduction of Tax at source for domestic payments and withholding tax for international payments is another important statute which must be followed as otherwise there are interest and penalties



5. Contracts

It is advisable to get standard contract formats for vendors, customers etc. so that multiple vetting and legal fee is not incurred. However in case there are any clauses which are additional or non-acceptable it should be legally vetted.



6. Overheads

While it is always advisable to keep overheads under control but there are certain overheads which are worth spending as they are strategic and policy oriented and right advice about the structure of the commercials, tax planning, pricing model, processes and controls can bring much more savings in terms of money and time as compared to the outflow.