Navigating Statutory Compliance for Multiple Companies: How Should I Handle Employee Allocations and Taxes?

Dear all, I am working for an MD who has three companies in his name, with a total of 80 employees. The address of all the companies is the same, and they operate from one premises. There is no distribution of employees among these companies. The companies specialize in pest control contracts in various parts of India. The situations are as follows:

Proprietorship Company
- Registered under the Shop & Establishment Act around 1996.
- No business operations, no bank account, no balance sheet, but PF is being paid for 20 employees.

Partnership Company (Self & Wife)
- Registered under the Shop & Establishment Act on 01 Apr 2005.
- All contract business is conducted through this entity, and ESI is paid for 22 employees.

Pvt Ltd Company (Self & Wife)
- Registered under the Companies Act on 20 Oct 2014.
- No business operations, and no employees are listed in this company.

Please guide me on:
1. Is there any issue with paying PF from the proprietorship company that has no business, bank account, etc.?
2. Should we transfer the PF employees to the partnership company?
3. How many employees should be listed in the Pvt Ltd company to avoid any statutory compliance problems? How should we allocate these 80 employees between the partnership company (B) and Pvt Ltd company (C)?
4. Professional Tax has not been paid for the partner since the registration of the partnership company. She is also a Director in the Pvt Ltd company. How much Professional Tax should we pay now?
5. How many employees should be covered under workmen's compensation?

Thanks & Regards,
K S Patwal
[Email Removed For Privacy Reasons]

Complex Company Structure and Compliance Issues

You seem to be sitting on a time bomb. I do not know why your employer has created a complex structure. Maybe he was misadvised. There are some unclear points, but I guess the final advice should only be given by a consultant who has studied all aspects in detail.

Dear all, I am working for an MD who has three companies in his name, with a total of 80 employees. The addresses of all the companies are the same, operating from one premises. There is no distribution of employees among these companies. The company takes contracts for pest control in different parts of India. The situations are as follows:

(A) Proprietorship company - registered under the Shop & Establishment Act around 1996 - No business, no bank account, no balance sheet, but PF is paying for 20 employees.

I do not understand how there can be a proprietorship business with no business, no registration, and no bank account. Such a company does not exist according to the law. So, how is the PF paid? To which account is the cheque given (you are no longer allowed to give cash)? How is this recorded in the books of accounts?

(B) Partnership company (self & wife) - registered under the Shop & Establishment Act on April 1, 2005 - all contract business is conducted here - paying ESI for 22 employees.

Out of the 80 employees, 20 are in the first company, and 22 are in the second. What about the balance? Where are salaries paid?

(C) Pvt Ltd company (self & wife) - registered under the Company Act on October 20, 2014 - No business, no employees shown in this company.

As I see, there will definitely be a problem. You can't pay a salary out of one company and PF under another. You may be liable to pay PF again for these people (and definitely for those who are in neither list), liable for professional tax, and liable for TDS and income tax on payments (assumed) to be made for employees of one company working for another.

Guidance Required

Please guide me on:

(1) Is there any problem in paying PF from a proprietorship company with no business, no bank account, etc.?

(2) Should we shift the PF employees to the partnership company?

(3) How many employees should we show in the Pvt Ltd company to avoid any statutory compliance problems? How to distribute these 80 employees between the two companies (B) & (C)?

(4) Professional Tax has not been paid for the partner since the registration of the partnership company. She is also a Director in the Pvt Ltd company. How much PT should we pay now?

(5) How many employees should we show for workers' compensation?

Thanks & Regards,

K S Patwal

[Email Removed For Privacy Reasons]