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Board of Directors

When Stakeholders own the ship, the directors appointed by them run the ship. The board of directors stands in a fiduciary relationship with shareholders and is expected to protect their interests.  A system should be developed to ensure selection of right individuals as directors.  If you are a first-time entrepreneur or a serial one, this blog will guide you deciding Company board.

 

Proven to be effective practices while deciding on Board of Directors:

 

Separation of the position of the Chairman and the CEO:

The Chairman leads the board, while the CEO leads the executive team. Therefore, governance is likely to be affected adversely if an individual holds both the positions. At an early stage, an individual can handle both roles, after the company grows, the structure could be changed.

 

Presence of non-executive directors:

Particularly independent directors who do not have any significant pecuniary interest in the company improves the performance of the board. It is expected that independent directors will bring varied relevant experience and will evaluate the executive management more objectively as they will not be subservient to the CEO like executive directors.

 

Board Structure:

In India, the Corporate Governance Code11 requires that:

  • Total non-executive directors should be at least 50% of the board size;
  • The number of independent directors should be at least 50% of the board size if the chairman is an executive director;
  • Total independent directors should be at least 33% of the board size if the chairman is a non-executive director.

 

Size of the board of the company:

It is suggested that ideally, the size of the board should be between 10 and 15 members. The Indian Companies Act stipulates that the size of the board should not exceed 15 members.

 


Functioning through committees:

It is a global trend that a board functions through committees like the audit committee, remuneration committee, shareholders grievance committee and nomination committee. Majority of members in each of these committees are independent directors. The reason behind such a division of members into committees is to avoid any discrepancies in disposing of responsibilities.

 

In conclusion, any company while deciding on the size of the board of directors, should give due consideration to the best practices to lead a well-organized company. At Wazzeer, we insist our clients exercise the three main rights available within company law, those are:

  1. Shareholders’ right to appointment and or remove directors;
  2. Shareholders’ right to subject directors to exercise their discretion in the interests of the shareholders as a class;
  3. Shareholder’s right to structuring the incentives of the members of the board so as to induce them to promote the interests of the shareholders as a class.

 

Right mentorship is hard to find but is an added value in paving the path to achieving the organizational goals. Wazzeer Professional Network has always ensured to offer a reliable consultation before project kick-off reason being that is a client right. We at Wazzeer work day and night to offer what is right for our clients, a feel of confidence.  To kick-start your startup journey with us-> “Get your Wazzeer”

 


For further readings on the same line:

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Agreements

Let’s take a situation here, say there are two organizations- A and B. A enters a contract with B to outsource tech team. The Contract is a well vetted and very much valid contract drafted by an experienced Lawyer. Now, say the contract was breached by Organization B for some reason. In this article, we will look into the solutions that Organization A has, which basically answers our first question ‘What could be the consequence of breaching an Agreement or Contract in India?’

Compensation for loss or damage caused by breach of contract

Organization A who suffers by such breach is entitled to receive from Organization B a compensation for any loss or damage caused.

Compensation for breach of contract where penalty stipulated for

When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, the Organization A complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the Organization B.

Party rightfully rescinding contract, entitled to compensation

A person who rightfully rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfillment of the contract.

Compensation for failure to discharge obligation resembling those created by contract 


When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.


Examples of scenarios where the breach of contract takes place:

  • Firm P contracts to buy of Firm Q, at a stated price, 50 mounds of rice, no time being fixed for delivery. P afterward informs Q that he will not accept the rice if tendered to him. Q is entitled to receive from A, by way of compensation, the amount, if any, by which the contract price exceeds that which Q can obtain for the rice at the time when P informs Q that he will not accept it.
  • Firm P contracts to buy Q’s ship for 60,000 rupees, but breaks his promise. P must pay to Q, by way of compensation, the excess, if any, of the contract price over the price which Q can obtain for the ship at the time of the breach of promise.
  • Firm P contracts to repair Q’s Office in a certain manner and receives payment in advance. P repairs the house, but not according to contract. Q is entitled to recover from P the cost of making the repairs conform to the contract.


In conclusion, if a contract is valid it is enforceable to protect parties that are affected by the breach in some way or the other. We at Wazzeer provide the flexibility to clients by including specific clauses to protect the client from any disputes and as well ensure to provide a guarantee of service.

 

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Accounting

What does the CA say?

Maintain Employee handbook right from the early stage.


Is Employee handbook really important?

One of the best practice that is normally ignored in startups and small entities is to have an Employee Handbook. This manual contains information like:

  • Reimbursement/expense procedure
  • Travel policy
  • Work etiquette
  • Email etiquette
  • Outlines key legal issues
  • Employee leave entitlements and benefits

Generally, these ventures are bootstrapped entities formed by friends and families, similarly, the initial funding is from the same parties. Owners of these ventures think that the venture is an extension of the family even though there are employees from different backgrounds. Such attitude restrains them from taking policies easy.


How does Employee handbook benefit the firm?

  • During External Funding scenario, this document is one of the mandatory requirements for funding due diligence, the reason being employee liability is pretty high.
  • Reiterates the at-will status of employment
  • Minimizes time spent answering general questions that can be easily addressed in the employee handbook
  • Clearly defines and communicates policies applicable to all employees, which promotes a sense of fairness, if enforced uniformly
  • Identifies key performance expectations
  • Facilitates discipline by providing a document that management and HR personnel can point to when a policy has been violated
  • Outlines employer and employee rights and responsibilities.
  • Promotes consistent treatment throughout the company, which may reduce employee lawsuits.

How is Employee handbook drafted?

An employee handbook can be drafted by a CA, HR personnel, pretty much by the founders too. When drafting the employee handbook care should be taken because one should consider which laws and policies are necessary for the business based on size, geography, and other relevant factors. Due to continuing changes in the employment laws, it is highly recommended that organizations have the employee handbook reviewed by legal counsel. A typical Employee Handbook should consist the following clauses:


  • A welcome statement along with a brief history of the company and a summary of the company’s mission.
  • At-will status of employment
  • Contract disclaimer and right to revise
  • Equal employment opportunity statement.
  • Policy against unlawful harassment
  • Commitment to provide reasonable accommodations, where available, and to engage in the interactive process.
  • Other policies depending on the entity size.

Wazzeer Professional Network is built on qualified CAs, CSs, and Lawyers who work with startups in understanding and delivering various compliance works seamlessly. We would be happy to work with you getting this organized and compliant. Let’s connect -> “Get your Wazzeer”






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FSSAI, License

Food License or FSSAI was established to achieve three objectives:

  1. Framing an integrated Food Law
  2. Prioritizing Consumer Safety
  3. Harmonizing food standards with international regulations.

Every Food Business Operator (FBO) in India needs to be licensed or registered under the Food Safety Standards Act 2006. Under FSSAR, licensing is a two-tier system involving central and State Licensing. In this blog, we will be looking into the kind of business that requires FSSAI License.


Kind of Food Businesses that comes under central licensing:

  1. Dairy units including milk chilling units equipped to handle or process more than 50 thousand liters of liquid milk/day or 2500 MT of milk solid per annum.
  2. Vegetable oil processing units and units producing vegetable oil by the process of solvent extraction and refineries including oil expeller unit having installed capacity more than 2 MT per day.
  3. All slaughterhouses equipped to slaughter more than 50 large animals or 150 or more small animals including sheep and goats or 1000 or more poultry birds per day.
  4. Meat processing units equipped to handle or process more than 500 kg of meat per day or 150 MT per annum.
  5. All food processing units other than mentioned under point.1 to point.4 including relabellers and repackers having installed capacity more than 2 MT/day except grains, cereals, and pulses milling units.
  6. 100 % Export Oriented Units
  7. All Importers importing food items for commercial use.
  8. Retail chains operating in three or more states.
  9. Food catering services in establishments and units under Central government Agencies like Railways, Air and airport, Seaport, Defence etc.


Kind of Food Businesses that comes under State licensing:

License for commencing or carrying on the food business, which is not covered under central licensing shall be granted by the concerned State Licensing Authority.

  1. Dhabha.
  2. Restaurants
  3. Storage
  4. Wholesaler
  5. Retailer
  6. Distributor
  7. Supplier
  8. Canteen
  9. Club
  10. Transporter
  11. Hawker
  12. Marketer
  13. Food Processor

 

In conclusion, this means almost every Food Business Operator is required to get Food License. Wazzeer has helped a number of Food startups in all legal, accounting, and secretarial services, we would be very happy to help you. Just in case you want our expert advice, do let us know. 

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Acquisitions, Agreements

1. Acquisition of Shares:

 

Acquisitions may be via an acquisition of existing shares of the target, or by subscription to new shares of the target. 

 

 a. Transferability of Shares:

 

Depending upon the entity type, the eligibility and procedure of carrying out this process will change. For instance, maximum membership of private limited company is 200, and transferability of shares is governed by the AoA as guided by the Company Act, 2013. While acquiring shares of a private company, it is therefore advisable for the acquirer to ensure that the non-selling shareholders (if any) waive any rights they may have under the articles of association.

 

In case of a Public Limited Company, Shares are easily transferable. Any transfer of shares, whether of a private company or a public company, must comply with the procedure for transfer under its articles of association.

 

b. Squeeze out procedures:

 

Situations where there is already Contracts held by shareholders of the Transferee company, such sensitive situations guided by specific sections of Company Act, 2013.

  • Section 395 of the CA 1956 – Section 395 envisages a complete takeover or squeeze out without resort to court procedures. Governs when Contracts between shareholders.

 

  • Section 236 of the CA 2013 – Under the CA 2013, if a person or group of persons acquire 90% or more of the shares of a company, then such person(s) have a right to make an offer to buy out the minority shareholders at a price determined by a registered valuer in accordance with prescribed rules.
  • Scheme of the capital reduction under section 100 of the CA 1956 – Section 100 of the CA 1956 permits a company to reduce its share capital in any manner and prescribes the procedure to be followed for the same.
  • Section 186 of CA 2013 provides for certain limits on inter-corporate loans and investments.

 

2. SEBI Regulations

 

If the acquisition of an Indian listed company involves the issue of new equity shares or securities convertible into equity shares (“Specified Securities”) by the target to the acquirer, the provisions of Chapter VII (“Preferential Allotment Regulations”) contained in ICDR Regulations will apply (in addition to company law requirements mentioned above).

 

3. Takeover Code

 

If an acquisition is contemplated by way of issue of new shares, or the acquisition of existing shares or voting rights, of a listed company, to or by an acquirer, the provisions of the Takeover.

 

Merger and Acquisition are two business decisions that have to be securitized up by qualified Lawyer and Accountant. Starting from due diligence till contracts signing, ensuring that nothing is been hidden or executing things smoothly is a task. Wazzeer understands the requirements thoroughly and delivers a well-consulted end to end legal, accounting, and secretarial service to our clients, all you have to do is ->“Get your Wazzeer”

 

 

 

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Accounting, Start up Lessons, Startup Funding Paperworks

What does the CA say?

Maintain Chart of Accounts right from the early stage of the venture.

 

Is Chart of Accounts really important?

A company’s Chart of Accounts is a view of all Asset, Liability, Equity, Revenue, and Expense accounts included in the company’s General Ledger. The number of accounts included in the chart of accounts varies depending on the size of the company. Designing a COA is one of the first tasks that have to be performed when setting up a budgeting and its associated accounting and financial reporting systems.

 

The Chart of Accounts (COA) although appears to be just concerned with classifying and recording financial transactions, is critical for effective budget management, including tracking and reporting on budget execution.  A mistake in designing the Chart of Accounts could have a long-lasting impact on the ability of the system to provide required financial information for key decisions. Remember, COA is also the hub of any computerized accounting and reporting system.

 

How does maintaining Chart of Accounts benefit the firm?

  • The COA specifies how the financial transactions are recorded in a series of accounts that are required to be maintained to support the needs of various users/stakeholders.
  • The COA provides a coding structure for the classification and recording of relevant financial information within the financial management and reporting system.
  • The COA provides room for planning, controlling and reporting of budgetary allocations as well as internal management needs of budget units and/or cost centers.

 

How is Chart of Accounts designed?

COA can be designed by anyone who is aware of the nuances of accounting, but the difference that an experienced professional brings in is productivity and quality. It is a known fact that startups, most of them, lack the management bandwidth and expertise to carry out COA related works. 

The development and implementation of a COA should involve the following key steps:

  • The COA can only be properly configured after a comprehensive business needs analysis has been undertaken
  • The COA segments and the hierarchical levels within each segment should be defined.
  • The COA and its segments should use basic logic and account definition
  • Creating a global or a unified COA establishes a foundation for consistency in terminology and serves to eliminate redundant accounts
  • Define clear institutional, legal and procedural frameworks to prevent the COA structure from becoming fragmented.
  • For the COA to achieve its desired impact of facilitating improved budget management and financial reporting, all users should be adequately trained.
  • An effective change management strategy also needs to be developed to implement the new COA and associated reforms in the accounting and reporting system

 

Wazzeer Professional Network is built on qualified CAs, CSs, and Lawyers who work with startups in understanding and delivering various compliance works seamlessly. We would be happy to work with you getting this organized and compliant. Let’s connect -> “Get your Wazzeer”

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License

Ayurveda or the revolutionary remarks by Patanjali and growing demand for organically developed cosmetic products is catching up blazing demand, and with many startups focusing on developing products that are Homemade or 100% Natural this sector is catching eyes of investors globally. The manufacturing, distribution, and selling of cosmetic products are governed by The Drugs and Cosmetics Act, 1940 and The Cosmetics and drugs rules 1945.

 

Cosmetics are products that are intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to, the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance and includes any article intended for use as a component of cosmetic. For manufacturing, distribution and selling of cosmetic products license are mandatory. Manufacturing license is valid for is valid for 5 years.



Major Categories under which cosmetics have been divided as:

 

  • Powders like Face powder, cake makeup, compacts, face packs, masks, and rouges, etc.
  • Creams, lotions, emulsions, pastes, cleansing milk, shampoos, pomade, brilliantine, shaving creams and hair oils etc.
  • Nail Polishes and Nail Lacquers.
  • Lipsticks and Lip-gloss, etc.
  • Depilatories
  • Preparations used for Eyes
  • Aerosol
  • Alcoholic Fragrance Solutions.
  • Hair Dyes
  • Tooth powders and toothpaste, etc.:
  • Toilet Soaps
  • Sanitary pads

 

Procedure to acquire the manufacturing license:

 

  1. Fill Form 31with a license fee of Rs.2500 and an inspection fee of rupees 1000 for every inspection.
  2. Application to manufacture additional items of cosmetics shall be accompanied by a fee of Rs 100 for each item subject to a maximum of Rs. 3000 for each application.
  3. The Inspector or Inspectors from Licensing Authority will conduct on the premise and generate a report.
  4. Once the authority is satisfied that your premise abides by the standards, it will provide you the license.
  5. If cosmetics are to be manufactured at more than one place, a separate application for each premise need to be made and separate license needs to be obtained for each premise.

 

Documents to be furnished along with Application to acquire license:

 

  1. Affidavit of Applicant
  2. List of machines installed for manufacturing
  3. List of laboratory equipment
  4. Valid NOC from Pollution Control Board
  5. Rent/Lease Agreement in case premises is taken on rent or lease.
  6. Plan layout of the premises.

 

Conditions for the grant of Manufacturing Licence:

 

  1. Technical Staff consisting of at least one person who is a whole-time employee and who holds a Diploma in Pharmacy approved by the Pharmacy Council of India or registered under the Pharmacy Act, or has passed the Intermediate Examination with Chemistry as one of the subjects or an examination recognized by the Licensing Authority as equivalent to it.
  2. The factory premises shall comply with the requirements and conditions specified in Schedule M-II
  3. The Applicant must decide for Licensing Authority to conduct such tests.

 

In case you need any assistance in legal or accounting or secretarial services, things can be consulted and delivered seamlessly on Wazzeer platform -> “Get your Wazzeer”

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Federal Income Tax Returns Filing

In this blog, we will look into tax rules that affect every person who may have to file a federal income tax return in the US. It answers some basic questions:  Who should file for returns? And what forms to be used to file returns.

 

Who needs to file for returns?

 

If you are a U.S. citizen or resident alien, whether you must file a federal income tax return depends on your gross income, your filing status, your age, and whether you are a dependent.

 

As a brief, there are three major categories:

  1. For Individual – Form 1040 / 1040EZ is required to be filed for 2018 by April 15.  For earlier years, 1040X has to be filed
  2. For Partnership firms – Form 1065 by March 15, 2018
  3. For Corporations – Form 1120 or 1120S by March 15, 2018 (for those fiscal ending Dec 31, 2017). Else it is 2 1/2 months from the date of the financial year ending.
  4. Filing of extensions for submitting the tax returns
      1. For Individuals – Form 4868
      2. For Partnership firms – Form 8736
      3. For S Corp – Form 7004

 

Standard criteria based on which you may choose the forms:

 

Form 1040EZ: This form may be filed if

 

  • Your filing status is single or married filing jointly
  • You claim no dependents
  • You don’t claim any adjustments to income
  • You don’t claim any credits other than the earned income credit
  • You, and your spouse if filing a joint return was under age 65 on January 1, 2018, and not blind at the end of 2017
  • Your taxable income is less than $100,000
  • You had only wages, salaries, tips, taxable scholarship and fellowship grants, unemployment compensation, or Alaska Permanent Fund dividends, and your taxable interest wasn’t over $1,500
  • Your earned tips, if any, are included in boxes 5 and 7 of your Form W-2
  • You don’t owe any household employment taxes on wages you paid to a household employee
  • You’re not a debtor in a Chapter 11 bankruptcy case filed after October 16, 2005
  • Advance payments of the premium tax credit weren’t made for you, your spouse, or any individual you enrolled in health insurance coverage for whom no one else is claiming the personal exemption

 

Form 1040A: This form may be filed if

 

  • Your income is only from wages, salaries, tips, interest, ordinary dividends, capital gain distributions, taxable scholarships and fellowship grants, pensions, annuities, IRAs, unemployment compensation, Alaska Permanent Fund dividends, and taxable social security or railroad retirement benefits
  • The only adjustments to income you can claim are the IRA deduction, the student loan interest deduction, and the educator expenses deduction
  • You don’t itemize deductions
  • Your taxable income is less than $100,000
  • The only tax credits you can claim are the credit for child and dependent care expenses, the credit for the elderly or the disabled, education credits, the retirement savings contributions credit, the child tax credit, the additional child tax credit, the earned income credit, and/or the premium tax credit, and
  • You didn’t have an alternative minimum tax adjustment on stock you acquired from the exercise of an incentive stock option

 

Form 1040: This form may be filed if

 

  • Your taxable income is $100,000 or more
  • You have certain types of income, such as business or farm self-employment income; unreported tips; dividends on insurance policies that exceed the total of all net premiums you paid for the contract; or income received as a partner, a shareholder in an S corporation, or a beneficiary of an estate or trust
  • You itemize deductions or claim certain tax credits or adjustments to income, or
  • You owe household employment taxes

 

Form 1065: This form may be filed if

 

Form 1065 is an information return used to report the income, gains, losses, deductions, credits, and other information from the operation of a partnership. A partnership doesn’t pay tax on its income but passes through any profits or losses to its partners.

Partners must include partnership items on their tax or information returns. The term “partnership” includes a limited partnership, syndicate, group, pool, joint venture, or other unincorporated organization, through or by which any business, financial operation, or venture is carried on, that is not, within the meaning of the regulations under section 7701, a corporation, trust, estate, or sole proprietorship.

 

  • Partnerships with more than 100 partners (Schedules K-1)
  • You and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership and you must file Form 1065.
  • A domestic LLC with at least two members that do not file Form 8832 is classified as a partnership for federal income tax purposes
  • A religious or apostolic organization exempt from income tax under section 501(d) must file Form 1065
  • A qualifying syndicate, pool, joint venture, or similar organization that fails to be elected under section 761(a) that may be treated as a partnership for federal income tax purposes
  • An electing large partnership (as defined in section 775) must file Form 1065-B, U.S. Return of Income for Electing Large Partnerships.
  • A foreign partnership with effectively connected income (ECI) during its tax year
  • A foreign partnership had U.S. source income of $20,000 or less during its tax year
  • More than 1% of any partnership item of income, gain, loss, deduction, or credit was allocable in the aggregate to direct U.S. partners at any time during its tax year
  • A Foreign partnership is withholding foreign partnership as defined in Regulations section 1.1441-5T(c)(2)(i).
  • A Foreign partnership had U.S. partners at any time during its tax year
  • A Foreign partnership is withholding foreign partnership as defined in Regulations section 1.1441-5T(c)(2)(i).
  • If an entity with more than one owner was formed as an LLC under state law, it generally is treated as a partnership for federal income tax purposes and files Form 1065

 

Form 1120 and series: This form may be filed if

 

Form 1120 is used by U.S. Corporation to report the income, gains, losses, deductions, credits, and to figure the income tax liability of a corporation.

 

  • S corporation (section 1361) should file form 1120S
  • Unless exempt under section 501, all domestic corporations (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income should file form 1120
  • Domestic corporations must file Form 1120, unless they are required, or elect to file a special return.
  • A domestic entity electing to be classified as an association taxable as a corporation must file Form 1120 unless it is required to or elects to file a special return
  • The LLC can file a Form 1120 only if it has filed Form 8832 to elect to be treated as an association taxable as a corporation.
  • A corporation (other than a corporation that is a subchapter T cooperative) that engages in farming should file form 1120
  • Subchapter T cooperative association (including a farmers’ cooperative) will file form 1120C
  • Foreign corporation (other than life or property and casualty insurance company filing Form 1120-L or Form 1120-PC) should file form 1120F
  • Foreign sales corporation (section 922) should file form 1120FSC
  • Condominium management, residential real estate management, or timeshare association that elects to be treated as a homeowners association under section 528 should file 1120H
  • Life insurance company (section 801) should file 1120L
  • Fund set up to pay for nuclear-decommissioning costs (section 468A) should file form 1120ND
  • Property and casualty insurance company (section 831) should file form 1120PC
  • Political organization (section 527) should file form 1120PL
  • Real estate investment trust (section 856) should file form 1120REIT
  • Regulated investment company (section 851) should file form 1120RIC
  • Settlement fund (section 468B) should file form 1120SF

 

Wazzeer professional Network is built on experts in this matter, we can get your Income Tax Returns filing done seamlessly on our platform for $40 per hour. To start the process -> “Get Your Wazzeer”

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License, Licenses

Ever thought of starting a Homestay business and placing it for rent on Airbnb? If yes, then this is a blog is for you. Homestays are gaining popularity among the businesses in unorganized sector all credits goes to the unique experiences which come along with it. In the top 50 emerging tourism destinations of India, homestays form 13 percent of the total accommodation. Building a hotel involves frequent investments; homestays, on the other hand, are created out of rooms which already exist within a property or an entire property in itself, hence involving nominal or no expenditure. Since travelers nowadays are on the lookout for an offbeat approach to learning more about a place or a destination, this concept seems both, lucrative and appealing at the same time. 


The Ministry of Tourism classified fully operational terms of Bed and Breakfast/ Homestay facilities as ‘Incredible India Bed and Breakfast/Homestay Establishments’. The idea behind this is to provide a clean and affordable place for foreigners and domestic tourists including an opportunity for foreign tourist to stay with an Indian family so as to experience Indian customs and traditions.


Incredible India Scheme of Bread and Breakfast regularizing Homestay License:

  1. Speaking of classification, Homestay Establishments is grouped as :
  • Gold
  • Silver

     While the government of Rajasthan only considers Gold and Silver, Kerala, for instance, has a Diamond category added to the homestay too. 

  1. Facilities and services provided will be checked by the Regional Classification Committee. 
  2. Once approved by Ministry of Tourism, will be duly publicized. A directory of such establishments shall be prepared. Short-term training courses in hospitality sector will also be patronized
  3. It is important to get a license that the owner of the homestay (along with family) shall reside in the same establishment
  4. Homestay Establishment is expected to maintain the required standard. Any serious faults will be reported to the Department of Tourism and the Department is free to take any action including cancellation of the classification.
  5. The Committee may recommend a category either higher or lower than the one which you are applied for. In case of category higher than the one you are applied, you will have to deposit the required fee for the recommended category. However, in case of a lower category, there will be no refund of the extra fee.
  6. Any changes in the facilities of the unit should be reported to the Ministry of Tourism, Government of India within 30 days.
  7. After this, a recognition certification will be given to the owner.



Who can apply for  Homestay License?

  1. Individuals or families who own a house of good quality in the state and can spare at least 2 rooms for tourist accommodation.
  2. The classification will be given only in those cases where the owner/promoter of the unit along with his/her family is physically residing in the same unit.
  3. A maximum number of rooms for offering to the tourists shall be limited to 5.
  4. At least one of the family members should be able to communicate in English.
  5. The houses in areas of tourism importance will get priority.

 


Application Form:

Application must be collected from the State Tourism Department Head office or from other concerned district offices. The application for Homestay License must be sent along with the requisite fee to the State Ministry of Tourism. Applications can even be sent to the district level. This makes easier for the establishment in small towns and rural areas. 

 


Mandatory requirements at the time of submitting application form:

Along with the duly filled form, you would require:

  1. Proof of ownership/lease of the building.
  2. Location plan showing access to the building from the major roads.
  3. Plan and elevation of the existing building.
  4. One hard copy and one soft copy of the photographs of the building including the interiors.
  5. Police Clearance Certificate from the Local Station House Officer

After submission of application form, the representatives of the district government come in for a surprise inspection, following which a homestay is recognized and rated as per facility available. The process of acquiring an electrical connection is the same as that of a home, so it varies from state to state. The whole process might take a couple of years. 

 


Application format for an establishment of homestay:

  1. Name of the Homestay Establishment.
  2. Category applied for
  3. Name and address of the promoters/owners with a note on their background
  4. Complete postal address of the Homestay Establishment
  5. Details of the Homestay Establishment.
  6. Photographs of the building including interiors showing types of facilities available, bathroom, living room, bedroom, parking etc.
  7. Details of payment of application fee
  8. Checklist details as per Annexure II
  9. Consent of acceptance of the regulatory conditions (please enclose a copy of the prescribed undertaking as per Annexure III duly signed by the owner of the establishment)

 

Conclusion:

Still, in its nascent stage in India, homestays are gradually increasing their presence to meet the existing demand. To list a homestay establishment on any directory, offline or online, procuring Homestay License would be necessary.

We at Wazzeer are budding entrepreneurs just like you with a bigger vision to transform the industry. Wazzeer simplifies things for you. If you have a business plan and wish to take a leap come on board with us. Get to know about the nuances related to incorporation and starting your business in a hassle-free way.

 

Our experts are right here to align your ideas with reality, to kick-start the procedure to acquire  Homestay License, Let’s Connect -> “Get your Wazzeer”

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Business Formation, NGO Registration

On an average, the time consumed to register societies is around 30 days’, which is not an affordable thing for entrepreneurs. With the given regulatory environment, in this blog, we will unleash strategies you can utilize to speed up the registration to kick-start early.

 

Step 1: Get clarity if your Idea qualifies to be charitable

 

Definition of Charitable purposes – Business ideas with an objective of either:

  • Relief of poverty,
  • Education,
  • Advancement of religion and
  • other purposes beneficial to the community not coming under any of the preceding heads.

 

Step 2: Meet the team size criteria

 

The founding team should consist a minimum of 7 members. Also, ensure that the members have following documents in place:

  • Valid IP Proofs
  • Valid Address Proofs

 

Step 3: Name the society such that it can be approved by registrar

 

Before you get fixated on a name, we advise you to check is the name can be approved by the registrar. Wondering how? Well, these are the criteria for society name selection:

  • The name should be unique and not similar to already registered Societies.
  • The name must not suggest patronage of the government of India.

 

Step 4: Keep Office Address related documents in place

There have been cases were registration process got delayed by weeks, because of property related documents. We advise you to have these documents in place:

 

  • Electricity or Water bill
  • In case you own the place, then keep property papers intact
  • Landlord NOC

 

Step 5: Get Memorandum of Association (MoA) drafted by experienced professionals

 

MoA is a legal document that constitutes details of:

  • The name of the society
  • The objective of the society
  • Details of governors, council, directors, committee, or other governing bodies.

MoA is a document that will be submitted for many business-related registrations in future. Also, this document can be accessed by the public. For MoA to meet the quality benchmark, getting the same drafted by a qualified professional is advised.

 

Step 6: Draft Rules and Regulations governing society compatible with MoA

 

This document will address:

  • Details of membership and subscription
  • Planning for meetings
  • Criteria for governing bodies appointment
  • Planning auditor appointment
  • Dispute resolution strategy
  • Dissolution strategy

Note, Along with MoA, submit a copy of rules and regulations of the society certified by at least three governing bodies. If you miss on this, you might have to face a delay.

 

Step 7: Keep required documents in tact

 

List of documents apart from MoA, Rules & Regulation, office address details and member details,  there are a few documents that will be required for registration:

  • Request letter signed by founding members addressing Registrar requesting registration.
  • Proceedings of the first meeting (general body meeting conducted to set the rules and regulations)
  • Declaration by the president of the society
  • A sworn affidavit from the President or Secretary, declaring the relationship between the subscribers.

 

Step 8: Be available to pay fees on time.

 

Once you submit all the documents as discussed in above steps, you will have to pay a fee of INR 50 or such smaller fees from time to time.

Follow the steps listed above diligently, and if the registrar is satisfied he or she would approve the registration of your society.

 

As a closing note, a Couple of questions that founders of societies generally tend to ask:

 

Q1. Is it mandatory to register a society?

 

No, but the advantages of registration is –

  • NGO is recognized only after registration
  • Low risk
  • Limited liability for members
  • Society can be vested upon,
  • Society and members can sue anyone,
  • Society can purchase property in its name,
  • Exemption from income tax,
  • Considered as separate entity from members,

 

Q2. How can a society be dissolved?

 

A Society can be dissolved by:

  • its members,
  • the Registrar,
  • the Court or
  • by the Government.

 

Q3. Under what circumstances can a registrar dissolve a society?

 

 The registrar of societies (as per the respective state acts) can dissolve a society. These circumstances may be:

  • The society has done unlawful activities
  • According to the memorandum of association governing the society:
  • Society’s object clause has not been fulfilled
  • Office of the society has ceased to be in state of registration
  • Members of the society are below the required number of seven
  • Society has ceased to function for a particular period of time
  • Society has been declared insolvent(not able to pay its liabilities).
  • Society’s activities are against the Governmental or the state policy
  • Society has become insolvent
  • Society has contravened any law or the provisions of the Societies Registration Act 1860

 

Q4. Is it necessary that the society maintains its books?

 

Yes, it is necessary that proper books of account with respect to:

  • All sums of money received and expended by the society and the matters 
  • Respect of which the receipt and expenditure takes place;
  • All sales and purchases of goods by the society; and
  • The assets and liabilities of the society

 

The charitable organization can maintain books of accounts from the following three methods of accounting:         

  • Cash Basis of Accounting
  • Accrual Basis of accounting
  • Hybrid/Mixed basis of Accounting

 

Q5. Should Balance sheet and annual list of governing body be filed with registrar?

 

Yes, Balance sheet and annual list of governing body after dedicated auditing have to be filed with the registrar by 14th day succeeding the day on which the annual general meeting of a society is held.

 

Q6. How can Wazzeer help in this matter?

 

We at Wazzeer are young entrepreneurs just like you with a bigger vision to transform the industry, precisely speaking we things simple.

You would get access to a pool of professionals who have worked in this field that have a minimum of 5 years’ experience.

We provide a clear quotation, no hidden charges. As we kick start, you see the updates real time. The ball is on your court all the time. So, let’s connect -> “Get your Wazzeer”

 

 

 

 

 

 

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