“Hi Asav,
I saw on Paypal site, that it gives us an option to buy using our Bank money directly without moving on to credit card.
Ref: https://www.paypal.com/cgi-bin/webscr?cmd=xpt/Marketing/general/NewConsumerLink-outside.
Now if this account is under my name, then will my transaction through this account will come under my company's name.
Actually I am confused here. I want to buy/sell things on my company's name but presently don't have an account/card's under Company's name.(I also don't know whether this has to be done or not).
So if I pay money from my account, then will it be regarded as company's expense or as my expense. How can an Owner's expense be treated as Company's expense(if it's possible).
The starting capital of 1Lakh will be spent gradually online, so how will I be doing it. Should my company have some bank account through which the transactions have to be made.
Hi Asav,
Please let me know if my query is clear to you or not.
I am talking about, how does owner spend company's money. Do I need to have some bank account in company's name also? And how do I become owner of the company in the bank.
Another thing: Can I invest in mutual funds/stocks through my company money. If yes, then it will allow me to transfer money from my savings account to company's account. And all the profits/returns of funds would be first available for expense and then will be taxed.
The company's money is indrectly my money. So can I transfer money from the company's haccount to my account, or vice-versa whenever I wish??
Waiting dearly for your reply, “
Hello,
Thank you very much for asking such a nice question about the corporate (Company) Structure. Well, of course yes. You can show your expense as a company’s expense. You don’t have to do anything for it. But you have to just ask your Chartered accountant (CA) for this. Basically they show to the government on paper that, you have done this expense on behalf of your company and later on your company will reimburse this expense to you.
Say for example, if you buy something for Rs.10,000 on PayPal than you can buy this thing from your own bank account and later on at the end of the year, you have to issue one cheque of your company of Rs.10,000 in your favour. This is called reimbursement. I own this Blog via my company “PATEL EDUCATION PRIVATE LIMITED”. and I do this several times a year. There is nothing wrong in this.
But it is better if you register your company’s account with some bank. Registering a company is a fortnight process. You can register your company with Ministry of Company Affairs (MCA), India.
We don’t have to register a company with MCA but this is the job of our CA. Ask your CA and he will do all the legal documents for it.
Once you register a Company, they will provide you with the “Memorandum & Articles of Association”. It’s a 30 page booklet. And on this booklet there is the Company Registration Number certificate. This Certificate is useful when you want to open an account with any bank in name of your company.
Once you register a company, you need to apply for a separate PAN Card in your company’s name. All of this will cost you around Rs.15-18K. Once you register a Company with MCA by legal CA, you can open as many Savings, Current or Demat accounts in the name of your company.
And once you open the Demat account of your Company, you can buy shares, bonds, gold, real estate, mutual funds or any other asset in the name of your company. You can also buy a website, blog, forum or any other web property in the name of your company.
You can also transfer your account’s money in your company’s account. But What I do is, Whenever I transfer money from my account to my company’s account, I show it as on paper as I have bought shares of my own company as a price of Rs.10 per share.
Once you register a company and open a bank account in company’s name, the bank will give you ATM/Debit Card in the name of your company. And you can spend your company’s money also.
Suppose if you buy a Laptop, you can show that it is the Business Equipment. I have bough my Compaq Laptop worth Rs.40,000 and shown that It is my Business Expense because I operate my Blogging Business through my Laptop. My Internet Bill, Mobile Bill, The Economic Times Subscription & other Personal Finance & Investing books expenses are paid by my company.
And yeah…. Whatever the profit your company does, all of its expenses are tax deductible. Actually this is the job of your CA to show your expenses as company’s expenses. Suppose if I buy a Mobile it will be treated as a Company’s Equipment. If I buy a Car, it will be treated as a Business Vehicle and so on…..You can virtually show any expense as your company’s expense. In fact, rich people are doing this since years and that’s why they are rich.
Lastly you have asked that, Your Company’s money are your money so can you transfer this money between your and company’s account?
Well, absolutely NOT….!!!! Your Company’s money are not your Money…. Remember this basic thing. Company is a separate legal entity just like you. Your Company’s money & Assets are not your assets legally. You are not the owner of these assets, you are only the director and controller of these assets means you have a full control and access over these assets and money but the owner of this money and assets is Company only.
But this is a good thing also. It’s a “Bullet Proof” Asset protection also. Suppose if somebody sues you, than you don’t have to pay from your company’s asset. Because they are company’s assets. Rich people use this law to protect their assets from Divorce, sues and false claims. If somebody owns all his assets and money in the name of his company than in case of divorce, he does not have to divide the assets which are in the name of his company because they are the assets of the company and not yours…..!!!!!
Anyway, I hope this much information is useful to you….!!!!
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