A very Good Day to all the Business Entrepreneur,
Very often we come across the question that what type of business entity we should be creating.
We must have also thought about the same when we have started our own business entity...
But here i would like to focus on the fact the other way round, that what based on my experience of almost a decade in this Industry, we should avoid.
To start with lets understand what a business man should consider / thinks as long term goal when starting a business and what comes inherent along with a business:
1. Long Term Goal to create a Brand
2. Earn from the business
3. Unsecured Liabilities
4. Secured Liabilities
5. Fixed Assets
6. Other Assets
7. Valuation of Business
8. Pass on the Business to Next generation or expansion through collaboration
9. and many more...
We are having the following options to proceed with i.e. namely
1. Individual Name
2. Propreitorship
3. Partnership Firm (Registered or Unregistered)
4. Private Limited
5. Public Limited
6. Limited Liability Partnership firms
7. One Person Company
Based on our opinion, we should avoid using option 1 and 2 as mentioned above for the very reasons as mentioned below:
1. Business liabilities are also considered as your Individual liability. Since both you and your business carry same PAN which is key for Income Tax or any Financial Institution
2. Legacy of Business name cannot be carried forward since the same is your proprietory concern. If you add partners (Through MOU or Verbal), the sense of ownership may not come.
3. Business Assets and Personnal assets are all remains segregated
4. Any Scrutiny from any department shall be restricted to your business assets and liabilities but in case of option 1&2, since no final separate books, it is likely to come in ambit of scrutiny also
5. Transparency in working is reflected
6. Financial benefit in terms of more likely to get financial assistance
7. and Many other...
So before I end, the question is, if it is possible, should not we segregate all our personal assets and liabilities with business assets and Liabilities?
Regards,
Team Palankarta
Very often we come across the question that what type of business entity we should be creating.
We must have also thought about the same when we have started our own business entity...
But here i would like to focus on the fact the other way round, that what based on my experience of almost a decade in this Industry, we should avoid.
To start with lets understand what a business man should consider / thinks as long term goal when starting a business and what comes inherent along with a business:
1. Long Term Goal to create a Brand
2. Earn from the business
3. Unsecured Liabilities
4. Secured Liabilities
5. Fixed Assets
6. Other Assets
7. Valuation of Business
8. Pass on the Business to Next generation or expansion through collaboration
9. and many more...
We are having the following options to proceed with i.e. namely
1. Individual Name
2. Propreitorship
3. Partnership Firm (Registered or Unregistered)
4. Private Limited
5. Public Limited
6. Limited Liability Partnership firms
7. One Person Company
Based on our opinion, we should avoid using option 1 and 2 as mentioned above for the very reasons as mentioned below:
1. Business liabilities are also considered as your Individual liability. Since both you and your business carry same PAN which is key for Income Tax or any Financial Institution
2. Legacy of Business name cannot be carried forward since the same is your proprietory concern. If you add partners (Through MOU or Verbal), the sense of ownership may not come.
3. Business Assets and Personnal assets are all remains segregated
4. Any Scrutiny from any department shall be restricted to your business assets and liabilities but in case of option 1&2, since no final separate books, it is likely to come in ambit of scrutiny also
5. Transparency in working is reflected
6. Financial benefit in terms of more likely to get financial assistance
7. and Many other...
So before I end, the question is, if it is possible, should not we segregate all our personal assets and liabilities with business assets and Liabilities?
Regards,
Team Palankarta
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