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Hello Everyone! I have been associated with a national level HR org as its business partner. Mutually we have decided to part ways and I plan to be in the same line but on my own. Can you please guide me as to what are the necessary documentations I need to have to offer - Recruitment, Temp Staffing, Payroll management services? I am applying for a fresh trade licence, service tax reg., registering for ESI and PF, PTax. Can I use my PAN card for propreitory firm? Any thing else I need? Please advise.

From India, Guwahati
What you need to do is to speak with a good chartered accountant. Preferably one who has assisted others open similar businesses in the past.
Also, you write that you want to open a recruitment business as a proprietor firm? Like I said, before you commit such a blunder, please speak with an experienced chartered accountant. They will never advise you to open a recruitment business as a sole proprietor. Because, essentially you will never have legal protection for your personal assets.
Finally, again, please spend the money and speak with an experienced chartered accountant. Believe me, it will be the best money you will spend for your business - EVER!

From India, Gurgaon
Hello again,
Thanks for the advise, I shall surely do the same. Actually my father had started North Eastern Management and Labour Consultancy Services in Guwahati, when I came in we decided to partner with this Organisation as it gave me a platform for HR activities.
As is the case, the Organisation felt it was time to let go and I was left in the lurch. I have 6 years experience in this work and I did not want to start in a new area all over again. I have a month's time on my hands and need to make good of my contacts I have developed. I hope things will not be too overwhelming. When you suggest not to start it as a proprietory firm, what advise do you have for me? Should it be a private company? Partnership or something else?

From India, Guwahati

You flatter me by asking what structure your business should be. Thank you.

However, my answer is still the same - consult an experienced chartered accountant.

I am not trying to stonewall your question. Believe me, the reason that 85% of small businesses go bust is because they were not structured correctly to begin with. I know that at this stage you're thinking I am only a small fry. Why should I speak with a CA and pay their fees. But, nothing can be further from the truth.

You are getting into a business. And, take away the warm and fuzzy service component, the end-game is profitability and legal protection. End of story!

And, the worst advice we can take is from other 'experienced' entrepreneurs who've set up ventures before us. While their inputs on operations, sales, marketing, hiring, firing, cost structures etc... will indeed be invaluable, they are not experts at structuring businesses. They will only be able to advise you based on their experience and what little they think they know.

I could have answered your question the first time I replied. But, I purposefully pointed you towards the experts. Because, that is exactly what I did. Yes, it did cost me a bomb to pay my CA. But, today, when I see my peers flounder due to a hasty and 'grapevine' induced structure, I really feel sorry for them because they didn't heed my advice to begin with - all so that they could save a few thousand rupees. Now, its ended up costing them each at least 10 times what they thought they had 'saved'.

So, once again, please speak with an expert. Believe me, you'll thank yourself later that you did!

From India, Gurgaon
Thanks so much Gaurav, I did speak to a tax consultant (not a CA!) about the ocumentation part and he suggested I go through the following things- Trade Licence, Service Tax registration, Labour Licence, ESIC reg and PF reg...the approx cost would be 59k plus two drafts for ESIC (1 and half year) and PF (monthly). Did you do the same?
Do I need the Labour licence if I dont have the mandatory 20 emps to show for? How does it work??

From India, Guwahati
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