Start-ups
are the new arising companies which are in its developing phase. These companies are initially financed, small in size and operated by
an individual or group of founders. These companies’ offer only those services
which not currently available in the market (i.e. they can be termed as
entrepreneur).
Taxation is an important part of your business initiation and mostly
ignored by the new entrepreneurs. But, it goes without saying that a business
cannot afford to ignore their taxes. In fact, filing your income tax also help
you to grow your business.
Startups that are registered as limited liability partnerships
(LLP), partnership firms or private limited companies. If your Startups is sole
proprietorship, then you have to e-file your Income Tax Return on
individualistic level. If you are individual taxpayer, then you can also use
exemption limit or Rs. 2.5 lakh. For other types of taxpayers there is no
exemption limit. They would have to pay the income tax on their whole income.
4
reasons why Startups are suggested to income Tax efiling
(a) To set off losses
First few year for a new business are the warming period. It is
not easy to earn profit for a new business. Any business has to face couple of
years of losses. But the good news is we can cover these losses in upcoming
years. But to do so, the startup has to e-file their income tax returns with
the losses to be able to set them off later.
(b)To apply for
loans
If one is an Individual Taxpayer, a startup is required to submit
their income tax returns at the time of applying for loans. Income Tax efiling
works as a proof for company’s existence, which is why they’re required in case
a loan is required.
(c)To receive
funding
Funding is an important means for a startup to raise capital.
There are angel investors. These investors would require the startup’s previous
years’ income tax returns to understand the company’s book value and decide how
much funding can be given to it. This, again, makes filing income tax returns
important for a startup.
(d)To resolve
disputes
Wherever
there is a business, clashes can’t be far away. Often, the founders of a
startup end up having differences of views or they just want to part ways cordially.
In either case, or to solve any other argument with external parties like
investors, the startup would have to rely on their income tax returns to solve
money-related issues in the dispute. These are the four primary reasons why Startups should file their income tax returns. It’s not something that has to be done too frequently and the benefits are many.
Check out EtaxAdvisor that helps with an easy way to e-file income tax returns. For any other query contact us at contact@etaxadvisor.com
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