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Business Formation

Estonia’s business regulation is very flexible, in fact, some call it as the perfect solution for entrepreneurship, for reasons like a flat income tax and no annual corporate tax. The country has been capturing Indian entrepreneur’s attention for its low starting-up and running costs. Recently, we at Wazzeer have notices this pattern – startups working in futuristic areas such as Bitcoins, Internet of Things (IOT), Privatization of Outer Space, Drones, Robotics, Virtual Reality, Med-Tech and Medical Devices, and Nanotechnology are considering incorporating parent company in Estonia and thereafter operate from their desired countries. In this blog, we will be looking into different factors that differentiate Estonia, and compliance involved in starting a business. PS: We will be looking only into Private Limited Company incorporation in Estonia.

 

Why do entrepreneurs consider incorporating a business in Estonia?

 

  1. Profit of an Estonian entity is not taxed until distribution
  2. Flat tax system
    1. Corporate Income tax on profit distribution is 21%
    2. Capital gains tax (paid on distribution) is 21%
    3. Branch tax is 21%
    4. Personal Income Tax is 21%
    5. Royalties paid to non-residents are subject to 10% tax at source
    6. VAT is 20%
    7. Land tax varies between 0.1% and 2.5%
  3. No Annual Corporate Tax
  4. Easy and Quick Company registration process
  5. No need to hire a third-party representative or hire a local director
  6. Digital signing is sufficient to execute compliance requirements remotely
  7. Minimum Capital requirement – EUR 2,500
  8. Estonian workforce speaks both English and Russian
  9. Specific support programs for women entrepreneurs – Quin, ETNA
  10. Strong public and university research system
  11. Protection for minority investors
  12. Ease of cross-border trading
  13. Ease of resolving insolvency
  14. Ease of enforcing Contracts

 

How to Incorporate a company remotely?

 

Step 1: Apply for an e-resident identity – Estimated cost is around EUR 100, and takes about 1 day

  • Apply for e-resident status
  • Get digital ID card

Step 2: Check company name availability –  Estimated cost is around EUR 145, and takes 0.5 days

  • Name availability can be checked on rik.ee
  • The name should be unique and distinguishable
  • Apply to Commercial Register

Step 3: Preparation of incorporation documents – Cost effective procedure that might take 2-3 days

  • Acquiring of required documents
    • Founders Documents – identity proofs and address proofs; Minimum 1 Shareholder (any nationality); Minimum 1 director (any nationality)
    • Details of office location and postal code
    • Company’s email address
  • Details of business activities
  • Drafting of Articles of Association
  • Memorandum of Association
  • Notary of operations

Step 4: Open Bank Account – Minimum cost procedure which will take upto 1 day

  • Bank account is opened in the name of the company
  • Make initial contribution of subscribed shares

Step 5: Register for VAT at Estonia National Tax Board – No cost procedure which will take 3 days

  • Applicable only if taxable turnover of the company exceeds EUR 16K
  • Otherwise, it is not required

Step 6: Register employees with the Employment Register – No cost procedure which will take 0.5 days

  • Register employees with Estonian Tax and Customs Board
  • Should be done simultaneously with previous procedure

We at Wazzeer have developed a tested process which enables us to help Indian entrepreneurs to start and run their business in Estonia seamlessly from India. We have helped startups in virtual currency space in registering a business in Estonia. Our solution is one of a kind reason being we are in your neighborhood and we know we are accountable. We would be happy to help you.

 

 

 

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Business Formation, Partnership Firm

We at Wazzeer, have written several blogs tied up to Partnership Firm, this time we thought we will take a strategic approach, to provide all information at one place. A master blog that will guide you and partners to start a partnership firm with confidence. 

 

Definition

A partnership is an association of persons carrying business. The partners are the individuals who have agreed to share the profits of the business carried on by all or any of them acting for all.

Partnership firms have an option to register their firm with the Registrar or not, but if the partners do not have a legal contract – Partnership Deed in place, the firm is considered as Partnership at Will. If there is Partnership Deed in place, then it is called Particular Partnership.

 

Relationship of Partners

Major features:

  1. Every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm.
  2. Duties and rights of partners are determined by the contract between the partners
  3. In absence of a Contract, all the partners are entitled & liable for an equal share in loss & profit in absence of any agreement
  4. A partner cannot transfer any part of the property of firm till the continuation of the partnership.

 

Relationship of Partners to Third Parties

Major features:

  1. A partner is the agent of the firm for the purposes of the business of the firm.
  2. The partners in a firm w.r.t contract between the partners, extend or restrict the implied authority of any partner.
  3. To bind a firm, a partner or other person on behalf of the firm shall be done or executed in the firm name or
  4. A partner has authority, in an emergency, to take up actions for protecting the firm
  5. Joint liability of partners for acts of the firm
  6. Measures to take when the act of fraud takes place

 

Incoming and Outgoing Partners

Main features:

  1. With respect to the Contract binding the partners, provisions regarding retirement and appointment are laid out.
  2. A retired partner is not liable to any third party who deals with the firm without knowing that he was a partner.
  3. A partner may not be expelled from a firm by any majority of the partners, it could differ only if there are respective clauses covered in the contract.
  4. An outgoing partner may carry on a business competing with that of the firm subject to contract
  5. The right of an outgoing partner in certain cases to share subsequent profits

 

 

Dissolution of Firm

Main features:

  1. Voluntary Dissolution by agreement: A firm can be dissolved with the consent of all the partners or in accordance with a contract between the partners.
  2. Compulsory Dissolution: A firm is dissolved if,
    1. by the adjudication of all the partners or of all partners but one as insolvent or,
    2. by the happening of any event which makes it unlawful for the business of the firm to be carried on or for the partners to carry it on in partnership.
  3. Dissolution on the happening of certain contingencies: Subject to contract between the partners a firm is dissolved
  4. Dissolution by notice of partnership at will: The firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm.
  5. Dissolution by the Court. At the suit of a partner, the Court may dissolve a firm.
  6. Rights of partners post-dissolution of the firm
  7. Mode of settlement of accounts between partners
  8. Payment of firm debts and of separate debts
  9. Return of premium on premature dissolution
  10. Other restraints

 

 

Registration of Firm

Main features:

  1. Registering of the partnership firm requires the Partnership Deed
  2. Registrar if satisfied that the provision of section 58 have been duly complied with he will record an entry of the statement in a register called the Register of firms,
  3. Recording of alterations in firm name and principal place of business
  4. Noting of closing and opening of branches
  5. Noting of changes in names and addresses of partners
  6. Recording of changes in and dissolution of a firm
  7. Recording of withdrawal of a minor
  8. Effect of non-registration

 

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Business Formation

The announcement of ‘Zero Fees for Registration of Companies having authorized capital up to INR 10L’ was a ‘Yay!’ moment for many.  Entrepreneurs, swayed by this amendment, little did they know the complete story, were under an impression that Ministry of Corporate Affairs had uprooted the registration expense altogether. With an additional reason to enjoy, entrepreneurs celebrated the implementation of the new rules on 26th of January, 2018. In this blog, we at Wazzeer intend to turn all the stones to help you understand the true meaning of “No Company Registration Fee”

 

Reviewing the proposed changes:


The main objective behind the proposed amendments to the Companies Act, 2013 was to open a door for entrepreneurs to register their businesses with ease and at a quicker rate. Two major processes or changes that were brought in place were:

 

  1. Discard the lengthy time taking Name Approval process (e-form INC -1) and get an electronic platform to get this done (RUN facility – Reserve Unique Name)
  2. Reduce the expenses incurred by entrepreneurs to register business – Introduced ‘Zero Fees for incorporation fees for Companies having Authorized Capital up to INR 10L)

 

Uncovering the actuals:

 

  • The Ministry has amended the fees payable to the Registrar to incorporate the companies.
  • The Companies claimed the benefit of Zero Fees for incorporation shall maintain the status of small companies till one year. Therefore, the companies could not increase its Authorized Capital above INR 10 lakh within the span of 1 year from its incorporation.
  • The fees payable to States were not reduced or eliminated i.e. the Stamp Duty on MoA and AoA of the companies would stay intact.
  • Charges that remain in place are:
    • Fee for Company Name Application
    • Company Registration Fee (Based on Authorised Capital / Number of Members of the Company on Memorandum – Form No.INC-32-SPICe),
    • Filing Fee for documents such as Memorandum of Association (Form No.INC-33-SPICe) and Articles of Association (Form No.INC-34-SPICe),
    • Stamp duty payable to the state government on registration of Memorandum and Articles of Association based on authorized capital, declarations, affidavits etc.


We at Wazzeer have helped businesses in various sectors start smoothly without hassle. We would be very excited to help you kick your business and thereafter too. So let’s connect ->  “Get Started!”

 

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Business Formation

Bitcoin was the first decentralized digital currency to be introduced on the darknet by an unknown programmer using the pseudo name – ‘Satoshi Nakamoto’ in 2009 as an open-source software. The system works peer to peer & transactions take place among users directly without intermediary or brokers. Now, Bitcoin is one of the most popular virtual currencies in the world. Many countries including Russia, China, Japan, United States, Denmark, Sweden, South Korea, Netherlands, United Kingdom, France and Australia are among Bitcoin-friendly countries. In the last year, its return has been around 300%.

The funny thing about bitcoins is they don’t exist anywhere, even on a hard drive. One cannot even point to a digital file, and say “this is a bitcoin”. Instead, there are only records of transactions between different addresses, with balances that increase and decrease.

For its operation, Bitcoin makes use of the Blockchain Technology, a more or less incorruptible digital ledger that can be programmed to record details of financial and non-financial transactions. Blockchain works on the basis of client-server technology. Transactions are entered through the servers and client accomplishes the task of verifying and updating the records based on inputs from transactions. Blockchain technology ensures security by using encryption technology through public and private keys. It solves two most challenging problems of digital transactions- controlling the information and avoiding duplication.


Global Recognition of Bitcoin:

  • Bitcoin is legal and regulated in the USA.
  • The European Court of Justice has ruled that exchanging bitcoin should be exempt from value-added tax in the same way as traditional money.
  • Japan has officially recognized bitcoin as money or legal tender with effect from April 1, 2017.
  • Inland Revenue Authority of Singapore (IRAS) has issued tax guidelines for Bitcoins stating that businesses that choose to accept virtual currencies such as Bitcoins for their remuneration or revenue are subject to normal income tax rules.
  • In Switzerland, Zug becomes the first town in which you can pay city fees (taxes) in bitcoin. Swiss National Railway SBB sells bitcoins at all its offices.
  • The South Korean Central Bank recognizes Bitcoin as a commodity, making South Korea world’s third-largest market for cryptocurrency trading.
  • Bitcoins are illegal in Afghanistan, Bangladesh, Ecuador, Bolivia & Republic of Macedonia.


Current Use of Bitcoin in India


Despite the Reserve Bank of India’s repeated calls for caution against the use of virtual currencies, a domestic Bitcoin exchange reported in September 2017 that it was adding over 2,500 users a day and had reached five lakh downloads. This highlights the growing acceptance of Bitcoin as one of the most popular emerging asset class. People are buying bitcoins from digital currency exchanges by credit cards. In India, purchase of bitcoin is generally done through Zebpay exchange, which links bank account for quick transfer and requires users to submit their KYC forms. Unocoin is another exchange in India which allows people to trade in bitcoins. Other platforms include Coinsecure, Bitxoxo and Bitcoin India.

HighKart.com became the first e-commerce site in India to exclusively accept bitcoins as a payment method. WERWIRED, a Bangalore-based geospatial, security, and entertainment consulting company offered bitcoins as a mode of payment for its customers. Castle Bloom, a salon in Chandigarh, became the first physical outlet to start accepting the digital currency. Buysellbitco.in, an online portal dealt in buying and selling of bitcoins in India. However, it was raided by the Enforcement Directorate. The preliminary investigations found it to be in violation of the foreign exchange laws.

Post demonetization, leading Bitcoin exchanges in India witnessed a rise in user base by up-to 250%. Zebpay alone witnessed a 25% surge in its revenue. People are jumping into trading of Bitcoins without clearly understanding its functioning mechanisms and related security risks.

Risks Involved



There are certain risks involved in the use of virtual currency. These are:

  1. Volatility risk: The value of the virtual currency is determined by the public’s interest in it and is based strictly on supply and demand. There is no official organization or mechanism controlling the volatility.
  2. Liquidity risk: It is difficult to trade virtual currency for money, i.e., legal tender. No official regulators or central bank oversees the trading platform.
  3. Technological and operational risk: Virtual currency may be exposed to hacking and theft. The security of digital wallets and virtual currency trading and transaction platforms is not guaranteed. Users may experience a total loss of assets as well. Stored in digital form, virtual currency is prone to losses due to hacking, loss of password, compromise of access credentials, malware attack etc.
  4. Legal risk: Virtual currencies are not regulated. There is also no legal framework to protect consumers who buy goods or services using virtual currency.
  5. Money Laundering & Dubious Crimes: There was a contention that black money hoarders may have restored to virtual currencies and bitcoins to launder their cash, during the demonetization drive in November 2016. A number of reports pointed out a surge in domestic bitcoin trade and moving from black economy to the Dark Internet. Bitcoin is also being used for dubious purposes such as arms, and narco/ drugs trafficking in India. The Supreme Court of India has demanded the government and the RBI to check bitcoin transactions so as to ensure they aren’t used for money laundering or terrorism funding.
  6. Tax Evasion: As awareness and adoption of bitcoins grow in India, the authorities are concerned about the potential for abuse by tax evaders and money launderers. Income tax authorities and the Enforcement Directorate, an economic law enforcement and intelligence agency, are especially looking into significant investments into buying the cryptocurrency.

Legal Status of Bitcoin

Bitcoins cannot be classified as regular financial instruments such as ‘currency’, ‘security’, ‘derivative’ or ‘negotiable instruments’ as these instruments are currently defined under Indian law. Likewise, virtual currency is unlikely to be classified as either a payment system or a pre-paid instrument, unless requisite changes are made by the parliament for this purpose.

However, Bitcoins can be considered to be the following:

  1. A “computer program” as defined under the Indian Copyright Act. The definition states that it is “a set of instructions expressed in words, codes, schemes or in any other form, including a machine-readable medium, capable of causing a computer to perform a particular task or achieve a particular result”.
  2. The General Clauses Act, 1897 defines the term movable property as property of every description, except immovable property. The immovable property has been defined to include land, benefits arising out of land or things attached to the earth or permanently fastened to anything attached to the earth. Therefore clearly, a computer program, and by logical extension, Bitcoins can be considered as movable property.
  3. Furthermore, Bitcoins can also be considered as goods according to the Forward Contracts (Regulation) Act, 1952 which defines goods to mean “every kind of movable property other than actionable claims, money, and securities”.


It is important to note that although Bitcoins can be reasonably classified as movable property and more specifically as computer software, this position has not been tested in a Court of law.

Being classified as ‘Goods’ may give rise to certain direct and indirect tax-related implications, such as the applicability of sales tax on the transfer of virtual currency, the applicability of services tax on mining of virtual currency, is considered a service, and applicability of income tax on income arising on sale of virtual currency. However, the taxability of virtual currency still remains a grey area, rendering the regulatory environment governing virtual currency even more uncertain.

RBI’s Stance

RBI has time and again stated that bitcoin and other cryptocurrencies are not legal tenders. In fact, they contain huge risks without any regulation and support. In this regard, RBI has issued multiple warnings to the public regarding the potential economic, financial, operational, and legal, customer protection and security related risks associated with dealing with them.


For instance, RBI in its Report dated June 27, 2013, stated that that virtual currencies schemes provide a financial incentive for virtual community users to continue to participate, and are able to generate ‘float’ revenue for their owners and also provide a high level of flexibility regarding the business model and business strategy for the virtual community. In view of the observations made in the Report, it was stated that the regulators are studying the impact of online payment options and virtual currencies to determine potential risks associated with them. Similarly, RBI vides its Press Release Dated February 1, 2017, clearly stated that it has not given any license/authorization to any entity/company to operate such schemes or deal with any virtual currencies. Pursuant to the issuance of these advisories, the Enforcement Directorate even conducted raids against operators of trading platforms of virtual currencies in India, creating an atmosphere of regulatory uncertainty for the particular industry.


Virtual currency, as a medium of payment, is not recognized under Indian laws. While RBI has not declared dealing in virtual currency as illegal, it hasn’t introduced any regulatory framework governing it as well. RBI has also stated that it is examining the issues associated with the usage, holding and trading of virtual currencies under the existing legal and regulatory framework of India, including foreign exchange and payment systems laws and during such period, the user, holder, investor, trader, etc. dealing with virtual currency will be doing so at their own risk.


Therefore, while presently virtual currencies are not per se considered ‘illegal’ in India due to lack of any legislation, regulation or guideline prohibiting or governing its use/trading, it appears that dealing in virtual currencies is generally frowned upon by the regulatory authorities. Particularly with the linkage being drawn between cryptocurrency and breach of anti-money laundering laws, it is evident that the Government of India has a cautionary attitude towards dealing with virtual currency, thereby further increasing the risks attached with their operations in India. In fact during the Budget speech, 2018 the Government announced ‘that it would take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.’


Bitcoins may have generated handsome returns but at the same time, it is associated with high risk and an uncertain future. It will be interesting to see whether Bitcoin and other such virtual currencies, will be classified as currency or commodity. If it is classified as a currency, RBI will regulate all its dealings, while if it is a commodity, SEBI will be the leading regulator.


We at Wazzeer have helped businesses in various sectors start smoothly without hassle. We would be very excited to help you kick your business and thereafter too. So let’s connect -> “Get Started!”

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Business Formation

The year welcomed the implementation of 15 major amendments in Companies Act, called as the ‘Companies (Amendment) Bill, 2016’ which was passed by the Lok Sabha on 27th July 2017 and by the Rajya Sabha on 19th December 2017. The major objective behind the proposed amendments was to address areas of disclosures, accountability investor protection, corporate governance. Today we will be looking into the proposed changes one by one.

The Companies (Amendment) Act, 2017 received the President’s assent on 3rd January 2018, proposing a slew of changes to strengthen corporate governance and make doing business in India easy. Some of the key changes introduced by the Amendment Act are as follows:

  1. Amendment in the Definitions: The Amendment Act has modified the definitions of terms like ‘Significant influence’, ‘Joint Venture’, ‘Holding Company’, ‘Subsidiary’, ‘Key Managerial Personnel’, and ‘Related Party’, etc.

 

  1. Relaxation in Incorporation: Members of a company can now be held severally liable for payment of debt in cases where the number of members falls below the required limit and the company continues to carry on the business for more than six months. The Amendment Act, 2017 has also extended the time limit given to a company to establish a registered office, after its incorporation, from 15 days to 30 days. Further, according to the Amendment Act, a duly authorized employee of the company can now sign any document/proceeding/contract requiring authentication by the company or on behalf of the company.

 

  1. Issuance of Shares: Issue of shares at a discount, which was earlier prohibited, is now allowed provided it is carried out in accordance with any guidelines/directions/regulations specified by the RBI. Further, the restriction over sweat equity shares not be issued within one year of commencement of business of the company has also been done away with.

 

  1. Private Placement Process: The process of issuance of shares through a private placement has been made simpler and multiple private placements have also been made possible.

 

  1. Declaration and Payment of Dividends: According to the Amendment Act, while calculating the profits of a company for declaration and payment of dividend, any amount representing unrealized gains, notional gains or revaluation of assets shall now be excluded.

 

  1. Harmonization with Regulatory Bodies such as SEBI & RBI: The Amendment Act has now empowered SEBI to prescribe the information required to be stated in the prospectus by a company. Additionally, the provisions which dealt with ‘insider trading’ and ‘forward dealing’ have been omitted as pre-existing SEBI regulations on the subjects are wide enough to cover all such instances.

 

  1. Corporate Social Responsibility (CSR): The words ‘any financial year’ have been replaced by the words ‘immediately preceding financial year’ for determining if a company had specified net worth/net turnover/net profit to constitute a CSR committee. The Ministry of Corporate Affairs has been empowered to prescribe any exclusion from the calculation of net profit of the company. Furthermore, now companies have been given freedom to spend the CSR amount in areas other than their local area of business.

 

  1. Changes Impacting Directors and Key Managerial Personnel (KMP): The Amendment Act has modified various provisions relating to Directors and KMP including, but not limited to, the definition of KMP, the residency requirement of a Director, etc. Vacation of office by a Director is no longer required in case of default by a company in filing financial statements or annual returns.

 

  1. Independent Director: An independent director is now permitted to have limited pecuniary relationships with the company without compromising his independence. He can now receive remuneration and make transactions with the company not exceeding 10% of his total income. In addition to this, the restriction on being appointed as an independent director in case he/she or his/her relative is a KMP or an employee of the company or its holding, subsidiary or associate company during any of the preceding three financial years will no longer apply.

 

  1. Loan Advanced to Director: The Amendment Act has also made possible for companies to advance a loan or give guarantee/security to entities in which a Director is interested subject to prior approval of the company by a special resolution; and utilization of the loan by the borrowing entity for its principal business activity.

 

  1. Loan and Investment by Companies: The Amendment Act, 2017 has clarified that a company is now allowed to give loan to its employees in excess of the specified limits without passing a special resolution, which was earlier mandatory.

 

  1. Conducting Business and Compliances: The Amendment Act has clarified that a company is not required to state its indebtedness in the annual return filed by it, which was earlier necessary. Every company is also required to place a copy of the annual return on its website. The Amendment also facilitates flexibility in convening Annual and Extraordinary General Meetings. The requirement relating to ratification of auditors by the members of the company at every AGM has been removed by the Amendment Act, 2017. Further, Government approval will no longer be required for payment of the managerial remuneration in excess of the specified limits.

 

  1. Audit Committee & Nomination and Remuneration Committee (NRC): The Amendment Act has stated that instead of listed companies only listed ‘public’ companies should be required constitute an Audit Committee and NRC. In addition, prescribed class of companies will also be required to constitute these committees. This means that a listed ‘private’ company will no longer be required to constitute the NRC.

 

  1. Relaxation on Default in Repayment of Deposit: Under the 2013 Act, a lifelong ban was imposed on a company from accepting deposits from its members for a default made in the past, even for reasons that were beyond the company’s control. The Amendment Act relaxes this stricture by introducing a cooling-off period of 5 years from the date of remedying the default.

 

  1. Punishment of Fraud: The quantum of punishment will now be imposed taking into account the size of the company, the nature of its business, public interest, nature and gravity of default, recurrence of default, etc. After the Amendment, the penalty for fraud, which involves an amount of Rs. ten Lakh or 1% of the turnover of the company, is imprisonment for a minimum term of 6 months which may be extended up to 10 years and a fine equal to the amount involved in the fraud, but which may extend to 3 times the said amount. On the other hand, frauds below the new threshold have a reduced punishment. Penal provisions for small companies and one person companies have also been reduced.

 


These amendments made by the Amendment Act, 2017 will come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. Therefore, it is suggested that the companies should take note of these changes made to the 2013 Act so that they can effectively reap the benefits of the same.


We at Wazzeer have helped businesses in various sectors start smoothly without hassle. We would be very excited to help you kick your business and thereafter too. So let’s connect -> “Get Started!”

 

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Business Formation
With loads of memory piled up, this is the very first time that our CEO Mr. Chandan Kumar who is also the Cofounder of Wazzeer opens up to a public platform to pen down the story behind Wazzeer – #WazzeerKaStory
Please note: The following article was originally published on https://www.linkedin.com/pulse/wazzeer-why-we-do-what-chandan-kumar/ 


“Why LegalTech?” is something we are often asked. After all, with a background in management and technology, this is not a field that comes naturally to you.

The truth is, we were fed up with the problems we were facing ourselves taking care of the legal, accounting and compliance matters for our venture – Castling Consulting. Things seemed far from organized and transparent, and a new surprise would come out of nowhere. This seemed to be the case with a number of entrepreneurs we knew.

Diving deeper, we realized that this was more of a problem with the way information flowed rather than the quality of professionals (at least in our case). In the absence of ‘best practices’ and a defined information sharing mechanism, the industry has been running far from its optimized efficiency.

We decided to solve this!


A different approach

Technology has been at the core of our vision for Wazzeer. However, we took a very different approach to build what we believe to be essentially a technology company. We decided not to focus on technology for some time and instead channelize our energy and resources to build capabilities and processes.

The legal, accounting and compliance industry, if we look at it, is made of people who are extremely smart and well educated. The way law works, more often than not, there is no defined process to do anything. Every professional has a different approach to every work that exists. This probably is the largest white-collared but largely unorganized sector (at least in the Indian context). The nature of laws and its interpretation offers a wide range of ways to do that work. Best-practices are rare in the industry.

We were very clear that we want Wazzeer to stand for the quality of service that we would want for ourselves. Envisioning was easy; delivering showed a whole new world of challenges J. Positive from this was, if we solved this, we would be building something we could be proud of.

We decided to focus on three strategic things:

  • Getting the right professionals (Lawyers/ CAs/ CS)


Often online ventures are measured in terms of the number of brands, vendors or professionals they have on their platform. It was tempting for us to focus on getting every Lawyer, CA or CS onboard. However, stepping into the clients’ shoes made us realize that the number of professionals was nothing more than a hygiene factor. What mattered was the quality.


We focused on building a network of handpicked partners (yeah, we consider them as our partners). We have developed a selection and onboarding process, which boils down to whether we would trust the professional with our own work or not?

  • Coming up with the ‘best-practices’


For the last two years, we have been focusing on defining the best way to deliver every process. Working with a wide site of work types and professionals from across the country, we have seen a range of processes first hand. We have been busy observing, asking questions and taking notes to come up with the detailed process and information needed to get every type of work done in an efficient way (and virtually, in most cases).


It has been a challenging but rewarding effort. We have observed the customer satisfaction level improving and positively impacting the repeat work from them.

  • Technology and automation to enhance efficiency


With the processes defined and the best professionals doing it, our efforts have been to get the technology to support them. We have been observing every step and figuring out what is the best way to automate things without adding to the complexity.


A lot of work has been going in the background for a year now and we very recently launched a part of our platform. We are moving fast on this and adding features every week. The objective is to leverage tech automation to reduce the possibility of errors and enhance convenience.


Not to limit to just scratching the surface

Our efforts are already showing positive results for us. One of the key objectives we identified was not to limit ourselves to just the business incorporation and registrations like most of the other online players.

Leveraging our network, we have delivered work like legal support for M&A deals, funding compliances, drafting and implementing ESOP policies, FDI related compliances, legal advisory on crypto-currencies and ICOs, accounting for companies with all types of business models, RBI compliances, etc.

The journey, however, has just started. An extremely dedicated, efficient and determined team at Wazzeer is striving to change the way the industry works.

And in all this, we are guided by something we have adopted as our way of working: We do not just deliver services. We build relationships.

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Business Formation, LLP

Entrepreneurs, in general like flexibility or rather I should say a mix of that and a mix of this, and while choosing an entity type to register their business expectations is no different. Today we will be looking into one such thing, choosing LLP as an entity for registering one’s business.  The gist of this blog will be around the 3 aspects of LLP an entrepreneur should consider keeping in mind before registering one.


LLP is, again, a mix and match of two entity types – Company and Partnership. To talk about the major distinguishing features or to put it classy manner ‘The USPs of LLP’ – all partners have a form of limited liability for each individual’s protection within the partnership; partners have the right to manage the business directly; limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP’s employees or other agents.


Aspect #1 – Characteristics of LLP

  • LLP has perpetual succession separate from its partners
  • Duties and rights of partners strictly governed by the LLP Deed Agreement.
  • In absence of LLP Deed Agreement, the duties and rights will be governed by the LLP Act.
  • Liability of the partners limited to their agreed contribution in the LLP
  • No partner would be liable for actions of other partners.
  • If LLP and the partners are found to have acted with an intent to defraud creditors, both wil be facing unlimited for all debts or other liabilities.
  • No limits to the number of partners of an LLP



Aspect #2 – Advantages of LLP

  • Separate legal entity
  • Easy to establish
  • Minimal legal and procedural requirements
  • Perpetual existence of LLP
  • No minimum capital limit
  • No maximum number of partners limit
  • LLP and partners are separate from each other
  • Easy to wind up
  • No requirement to maintain statutory records except Books of Accounts



Aspect #3 –Disadvantages of LLP

  • LLP cannot raise funds from public
  • No separation of management from owners
  • RoC returns filing penalty is higher



Difference between LLP and other entities



We at Wazzeer have helped businesses in various sectors start smoothly without hassle. We would be very excited to help you kick your business and thereafter too. So let’s connect -> “Get Started!”
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Business Formation

If you are reading this, then you are on the right track to get that dream HR Consultancy business kick off. The industry could be a fight, but with some domain knowledge, you could go to places. Starting your thought process from a compliance point of view. If you are first time entrepreneur, then spending reasonable time planning for these is considered a must. We will be looking into the Top 10 Compliance to plan for before starting a Recruitment Agency.

Required Compliance work

1. Register your Business:

There are various entity options for registering your consultancy as a business:
  • Sole Proprietorship
  • Partnership Firm
  • One Person Company
  • Limited Liability Partnership
  • Private Limited Company

Details on this one can be found here.


2. Registering for Goods and Services Tax:

It is a must for your business to be registered for Goods & Services Tax. The current GST rate for manpower recruitment services is 18% (not covered under RCM under GST) and if the business turnover is more than 20 lakhs one has to register GST.  The good part is, it can be done by business owners online and the process is simple.


3. Registering with the Ministry of Overseas Indian Affairs:

Definitely required if your business is helping Indian individuals for overseas employment. The application of becoming a Recruiting Agent must be submitted to the concerned office of the Ministry of Overseas Indian Affairs in the prescribed format along with supporting documents. Specifically, the agents which have been registered with the above can recruit Indian Citizens for employment abroad as per The Emigration Act, 1983. The application for registration is accompanied by a fee of Rs. 25,000 and a guarantee deposit worth Rs. 50 lakhs in a bank.


4. Business banking Account:

To carry out any transactions you would be requiring a business bank account. Based on the entity type you choose to register your business, different documents will be required to submit as proof. This account will be essentially a one-stop financial reference for your business operations and as well for the government.


5. ESI & EPF Registrations:

As your consultancy will be involved with hiring candidates and helping the employers getting the suitable pick, Employee Provident Fund and Employees’ State Insurance registration is mandatory. ESI provides medical insurance and security for the person insured as well as for the members of his family. If your company has at least 10 employees at the time of registration, this shouldn’t be missed at any cost for the well being of your employees. All you would be needing is quick registrations for obtaining EPF and ESIC Code No for the establishment of your recruitment agency.


6. Maintenance of employee registers:

The placement agencies shall maintain the records of all the domestic workers and other workers or employees being contracted by them for purposes of employment The record shall consist of the following

  • Name and address of the employer under whom such domestic worker or employee is working.
  • The period of employment
  • The rate of wages and the mode of payment of the wages.
  • Displacement allowance payable.
  • Passport size photograph of the employer and the worker.
  • Nature of work and the working hours.
  • Copy of contract


7. Payroll Processing :

  • Endeavor to ensure proper reception of the emigrant by the employer in the country of employment.
  • Should maintain proper books of accounts, Memorandum of association, Rules, Bye-Laws as the case may be and the details of the office bearers of the organization and details of persons employed by agency
  • Payroll processing and Quarterly Vendor Audits of the Contractors
  • Preparation & submission of quarterly, half yearly, annual returns, and accounts.


8. Taking care of work ethics and Labour Laws:

  • Necessary and timely inspections to be done with the Assistant Inspector of Labour
  • Making sure whether the work-seeker is or will be employed by the employment business under a contract of service or apprenticeship, or a contract for services, and in either case, the terms and conditions of employment of the work-seeker which apply, or will apply;
  •  Proper contracts stating the length of notice of termination which the work-seeker will be required to give, and which he will be entitled to receive from in respect of particular assignments with hirers
  • Paying special attention to offer letters, having mentioned the rate of remuneration payable to the job-aspirant; details of the intervals at which remuneration will be paid and other amenities
  • If an agency knowingly sends, directs or takes any girl or woman to any place for immoral purposes or to a place where she is likely to be morally corrupted, legal actions will be taken in that case.


9. Paying attention to ITR fillings:

  • Punishment of imprisonment for not less than six months and which may extend up to a period of seven years or fine up to 50000 rupees or both shall be given to any licensee who:
  • Charges or receives himself or through another person, for his services, any sum greater than the prescribed fee
  • Fail to maintain records and accounts of the workers placed by the agency


10. Agreements and Contracts:

There are various instances where the business is put to deal with the third parties. To give you an instance, say you have developed the platform to carry out the business on when you plan to license the same for client usage, Software license agreement would be required.  On a similar note, there are a couple of other agreements that will be required, to list a few:

  • Vendor Agreement
  • Cofounder’s Agreement
  • Trademark License Agreement
  • Terms of service
  • Privacy Policy

Getting a helping hand before taking a jump into the legal formalities will not only save your time but will also ensure mental peace. Wazzeer helps professionals like you to start a business smoothly -> Get Started!

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Business Formation

Recently, there has been a series of amendments made to the Companies Act, 2013. The sole objective of these changes was to encourage startups to formally register their startups with ease. With due consideration to the changes the new rules, we will look into Top 3 things that new ventures should be aware of before incorporating.


  1. Incorporation of Company at Zero Fees

  • The Ministry of Corporate Affairs (MCA) has announced that there will be no fees for incorporation of a company for Simplified Proforma for Incorporating Company Electronically (SPICe) forms, e-Memorandum of Association (e-MoA) and e-Articles of Association (e-AoA).
  • The company will have to pay only the necessary Stamp Duty, which is applicable at a rate depending on the state of incorporation.

 

  1. Reserve Unique Name (RUN) Form

  • The Ministry has also introduced Reserve Unique Name (RUN) forms to simplify the name reservation process of a company.
  • The rules earlier required a company to reserve a name either in advance through the Name Reservation — INC-1 form or directly through the incorporation application (SPICe Form).
  • Now, the RUN form has replaced the INC-1 form.
  • Other features include:
    • RUN form gives the option for only one name for the company, unlike INC-1 which had a provision of six options for the company’s name.
    • RUN form doesn’t require any Director Identification Number (DIN) or a Digital Signature Certificate (DSC)
    • The fees for RUN form is $15.7 (INR 1000), irrespective of whether the name is approved or not
    • The approved name is valid for up to 20 days and 60 days from the date of approval for a new company and an existing company, respectively.
    • The proposed companies can apply for the reservation of name using the RUN form and they will be intimated of the approval by the MCA through email. However, it has been suggested that RUN form be used when there is an ambiguity about the name because of its similarity to existing companies or Limited Liability Partnerships (LLPs).
    • If the name is unique, a company can apply for the name directly with the SPICe form. This would save time and money for the applying company.

 

  1. Director Identification Number (DIN)

  • The new rules of MCA specify that a new company can apply for DIN only through SPICe forms.
  • For an existing company, MCA specifies the use of form DIR-3 to add a new director. This form has a provision for furnishing the CIN of the company and a declaration of the addition of a director.

 

In conclusion, these reform by the Indian government towards enhancing ease of doing business is a huge step. On the same note, in case you are planning to start up your business in 2018, with the help sector expertise that brings to the table, I am sure Wazzeer can deliver this service seamlessly from any remote location. Do let us know if you need a hand -> “Get Started”

 

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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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