In my 5 year long Practice, a no. of people come and ask for advice for starting a business and even ask for the what Form of Business should they opt for i.e. Proprietorship Firm/ partnership Firm/ Companies. And although I am Company Secretary, but I always advice them to start with Proprietorship Business and not for Private/ Public Limited Company at initial level of his business. As when a person is going to start a business, huge investment is required and if he initially opt for the Companies (Private/ Public Limited Companies), he has to deal with another department of Registrar of Companies and to comply with additional compliances of Secretarial work. What Basic reason to advice such option for me is not only to think for our Income but for client’s perspective also. As in proprietorship, there are a no. of Benefits like:

  1. First important benefit is the income tax benefit where he gets exemption of tax upto the income level of Rs. 2, 20, 000 and even after that as per slabs he is to pay the income tax, where as in case of Firms and Companies, he is to pay Rs. 30 even if he earns Rs. 100 during the year.
  2. He is not to perform any compliance during the year like Private Limited Companies have to do annual filing and at any time if there is any change in the company, have to intimate to ROC.
  3. In case of Proprietorship Firm, no audit is required from Chartered Accountant until and unless, the turnover is Rs. 100 Crores whereas in case of company no matters your income is 1000 crores or Rs. 0, Audit of Company Account is necessary.

But for Immigration Consultants, who opt to start business as Genuine Immigration Consultants, I always advice for starting a Private/ Public Limited Companies and not the Proprietorship/ partnership Firms. As in states like Punjab, Gujrat etc. where there is too much craze among people to go abroad and settle there. And as we see in newspapers and channels that because of wrong advice and wrong way these immigration consultant choose for sending the people to abroad (as seen earlier in case of Punjabi Singers who does  “Kabootarbaji”), the general public gets looted and even come in trap of Foreign Police. And instead of making the future bright in foreign countries, they are being deported back to India. So why incorporating a Limited Company is better for Immigration consultant from my point of view is:

  1. On MCA Portal, everything is transparent. Any director through their permanent address can be traceable in case any wrong is done by them with the public. Hence, the trust of the general public will increase in case there are the companies rather than Prop. Firm/ Partnership Firms
  2. In case of Prop. Firm, the only liability of the firms is to Income Tax Department and that too only upto payment of income tax. No check over Director is being kept. But in Case of Companies, ROC keep check over the every Director that no person should be appointed who is criminal or should not be imprisoned etc., whether Activities done by the Company are legal or not and are as per main objects or not etc. or is there any change in the company or not.
  3. Chances of genuineness increases as everything about the company and the person who control it, is over the site. Hence, the trust of public increases too much over the Consultants who work through companies rather than firms.
  4. Public before taking the advice from such Immigration Consultants, can inspect records of the company to see whether the company is genuine or not on basis of its turnover, public image of directors, tenure of the company etc.

Conclusion: The reason before writing this article is not to elaborate the immigration consultants but only up to giving the benefits and limitations of having a Private Limited Companies. And I think having a Prop. Firm/ Partnership firm is good but only up to a level and if the business rises, it should be converted into Companies to get the best advantages of having Companies.

Note: The above is a general discussion and of my own personal view points. Viewpoints of other esteemed Professional are welcome.

——–

CS Mohit Saluja

Company Secretary in Practice

Jalandhar, Punjab

Mobile: 9914558709

Email id: csmohitsaluja@gmail.com

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0 responses to “Whether Option for Immigration Consultants to Opt for Private Limited Companies is Right?”

  1. CS Mohit Saluja says:

    Dinesh sir,sorry fro the clerical mistake. And thanks.

  2. CA DINESH DESWAL says:

    Dear Sir,

    One crore is limit for tax Audit not 100 crore as you written on the article on tax Guru. Otherwise article is good.

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