Founded your venture? Want to know how you can draw the salary?

When entrepreneurs decide on the key things to be taken care of while starting up a venture, he or she would find varied notions around the globe, but certainly, one thing that the founding members should figure out is to know how you can draw the salary?

Pvt Ltd Company

For a Co-founder to withdraw salary from his Private Limited Company, there are basically 3 situations:
1. you decide to act as the employee of the company, then the way you can be paid is a salary. Here you would, like any other employee, need to enter an employment contract with the company and receive remuneration. In addition to this remuneration, based on this Employment Contract, and a specific clause for bonuses, you may be paid a bonus at either regular intervals or on the achievement of certain goals.
2. You act as a consultant; Consultancy fees are paid for your expertise in management and your time.
3. Shares are a good way of driving remuneration in the form of dividends.

Partnership firm 

The partners (co-owners) share the profit or loss. Based on each partner’s individual share of the results, a standard deduction is made to calculate the surplus. The Partners can share the surplus as their salary, Rather, the partners do pay income tax on the money withdrawn. Profits and liabilities are split evenly between partners or, if partners have differing investment percentages, per what was agreed in the initial legal partnership agreement.


Options are similar to that of Pvt Ltd Company. Dependent upon their percentage of investment, partners will receive a salary.

Sole Proprietorship

As a sole proprietor, how much money you take out of your business is entirely up to you. You are still liable for taxes and, because the government does not distinguish between you and your business, you are also liable for all business losses, liabilities and debts. You can draw everything that you are making out he company, but you will be liable for taxations on the whole amount.

One Person Company

One Person Company is a separate Legal Entity and OPC will have a separate PAN. Hence the Director of OPC can get the salary from the company. This salary is taxed under Income Tax rules for a salaried individual.

We at Wazzeer have helped quite a number of startups in Contracts and Agreement drafting for the same purpose, why not we jump on a call to discuss the details?

Let’s connect!

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Kanak S
Kanak S
4 years ago

Hi Wazzeer, I am amazed by the facts, thanks for keeping startups like mine updated.

Jennifer Vijay
Jennifer Vijay
4 years ago

Thanks for keeping us well planned. Do you guys provide a package for these compliance?

Sabrina Warren
Sabrina Warren
4 years ago

I think this is a blog that co-founders should have a read. Being a part of a more than 1 founding member team it is critical that we share our piece of pie logically.

Brijesh Sathya
Brijesh Sathya
4 years ago

As an entrepreneur knowing these, was never in my checklist, good that you guys listed it.

Reply to  Jennifer Vijay
4 years ago

Yes, we do. Depending on the type of entity, we provide a personalisation while designing the package. We kind of like it best for you. 🙂