Can a Salaried Person Start a Private Limited Company? The Complete Guide for Aspiring Entrepreneurs

Introduction

Ever wondered if you, as a salaried individual, can start your own company while holding down a full-time job? The answer is a resounding yes! But before you rush into the exciting world of entrepreneurship, there are several factors you need to consider. In this article, we’ll explore the feasibility, legality, and step-by-step process of launching a Private Limited Company (PLC) as a salaried person in India. We’ll also share tips, expert opinions, and real-life examples to guide you in your entrepreneurial journey.

At Filingwala.com, we understand how daunting it can be to balance employment with business ownership, but we’re here to make it easier for you. Whether it’s company registration, trademark services, or tax filings, we’ve got you covered!

Understanding the Private Limited Company (PLC) Structure

A Private Limited Company (PLC) is one of the most popular legal business structures in India. It limits the liability of its shareholders to their shares and protects personal assets from business risks. A PLC is an ideal choice for entrepreneurs looking to start small, grow rapidly, and raise funding without the risks associated with personal liability.

Some key features of a PLC:

  • Requires a minimum of 2 shareholders and 2 directors.
  • The liability of shareholders is limited to the capital invested.
  • Easier to raise funds compared to other business types.
  • Continuity of business even if shareholders change.

Can a Salaried Person Start a Private Limited Company?

The short answer is yes, but the long answer requires understanding the legal, financial, and time management aspects.

The first thing to check is your employment contract. Many companies, especially in sectors like finance or IT, have clauses that restrict or prohibit their employees from engaging in outside business ventures, particularly if the business conflicts with their employer’s interests. So, before filing for incorporation, ensure you review your contract or consult with your HR department or legal advisor.

Important Points to Note:

  • Public Sector Employees: Government employees are not allowed to engage in any private business while employed.
  • Private Sector Employees: Most private sector employees are free to start a company, provided there’s no conflict of interest with their current employer.

Managing Conflicts of Interest

If your side business in any way competes with your employer, you could face legal trouble. The key is transparency. Discuss your plans with your employer, if necessary, and ensure there’s no conflict of interest.

Benefits of Starting a Private Limited Company for Salaried Individuals

Starting a PLC as a salaried person can offer numerous advantages:

  1. Limited Liability Protection: As a shareholder, your personal assets are safeguarded from business liabilities.
  2. Tax Benefits: Salaried individuals can enjoy tax advantages such as lower tax rates on business income, deductions on business expenses, and dividend exemptions.
  3. Access to Funding: Unlike sole proprietorships, PLCs can raise equity funding, making them more attractive to investors.
  4. Separate Legal Entity: A PLC is considered a separate legal entity, ensuring business continuity even if you decide to step down as a director.
  5. Credibility and Trust: The PLC tag gives your business a more professional image, boosting credibility with clients and investors.

Challenges Faced by Salaried Individuals in Starting a PLC

While there are many perks, there are also challenges that come with starting a business as a salaried employee:

  1. Time Management: Juggling a full-time job with a new business can be overwhelming. Many entrepreneurs burn out trying to handle both responsibilities.
  2. Conflict of Interest: Depending on your industry, you may run into legal or ethical conflicts between your job and business.
  3. Initial Capital Requirement: Setting up a PLC requires some capital for registration, compliance, and operational costs.

How to Start a Private Limited Company: Step-by-Step Guide

Here’s a breakdown of how you can start your PLC while being employed:

1. Choose a Unique Company Name

Your company’s name is your brand. It must be unique and comply with the Ministry of Corporate Affairs’ (MCA) naming guidelines.

2. Obtain Digital Signature Certificates (DSC)

To file for incorporation, you’ll need a digital signature certificate for each director. This is crucial for filing online with the MCA.

3. Apply for Director Identification Number (DIN)

You must obtain a DIN from the MCA, which identifies you as the company’s director.

4. File for Incorporation with the Ministry of Corporate Affairs (MCA)

Once the DSC and DIN are in place, you can file the INC-29 form for company incorporation with the MCA. This step involves submitting the Memorandum of Association (MOA) and Articles of Association (AOA).

5. Register for GST, PAN, and TAN

Once incorporated, you’ll need to register your company for Goods and Services Tax (GST), apply for a Permanent Account Number (PAN), and a Tax Deduction and Collection Account Number (TAN).

6. Open a Company Bank Account

Finally, open a separate bank account for your company to manage business finances.

Pro Tip: Consider hiring a legal expert or professional service like Filingwala.com to handle the paperwork. Filingwala offers seamless company registration services, saving you time and ensuring compliance with legal requirements.

At Filingwala, we specialize in helping aspiring entrepreneurs like you navigate the complexities of starting a Private Limited Company. From registration to tax compliance, we handle everything so you can focus on your business idea.

Our services include:

  • Company registration
  • Trademark registration
  • GST filing
  • Income tax filings
  • And much more!

By choosing Filingwala, you’re not just hiring a service provider—you’re gaining a business partner who will help you grow your company efficiently and legally. Visit us at Filingwala.com today to get started!

While the legal process of setting up a company is straightforward, the tax implications can be complex. Here’s what you need to know:

Corporate Taxes

Once your company is incorporated, it will be subject to corporate taxes. This includes the Goods and Services Tax (GST), corporate income tax, and any other applicable business taxes.

Personal Income Tax Implications

If you’re drawing a salary from your company while employed elsewhere, you’ll need to carefully manage your personal taxes. Salaried individuals who own a business may need to file additional tax returns for their company, and income from both sources will be taxed separately.

Real-Life Examples: Salaried People Who Successfully Launched Their PLCs

Many successful entrepreneurs started as salaried employees. Take the example of Kunal Bahl, who worked at Microsoft before founding Snapdeal. His story is proof that balancing a job and entrepreneurship is possible.

Another example is Deepinder Goyal, the founder of Zomato, who started the company while working as a full-time employee at Bain & Company.

Actionable Tips for Balancing Full-Time Employment with Business Ownership

Starting a business while keeping your full-time job can be challenging but manageable with the right strategies:

  1. Time Management: Use productivity tools to manage your schedule. Set specific work hours for your side business.
  2. Delegate Tasks: You don’t have to do everything yourself. Outsource tasks or hire freelancers for roles like content creation, web design, or digital marketing.
  3. Plan Finances Carefully: Allocate a separate budget for business operations, and avoid mixing personal and business finances.

Expert Opinions on Salaried Individuals Starting a PLC

According to Ritesh Malik, CEO of Innov8, “Salaried professionals have the potential to become successful entrepreneurs if they can manage their time and resources wisely.” He emphasizes the importance of building a strong team early on and leveraging professional services to ease the administrative burden.

Similarly, Neha Kant, founder of Clovia, advises, “It’s crucial to have a well-structured plan and keep your employer informed if necessary. Transparency goes a long way in avoiding future conflicts.”

Conclusion: Take the Leap with Filingwala.com

Starting a Private Limited Company as a salaried individual is not only possible but can also be a rewarding journey. With the right planning, legal advice, and financial management, you can become a successful entrepreneur while keeping your job.

At Filingwala.com, we’re committed to helping you every step of the way. From company registration to tax filings, our team of experts is here to make your entrepreneurial journey seamless. Visit Filingwala.com today and take the first step towards building your business empire.


FAQs

1. Can I register a Private Limited Company while being employed?

Yes, as long as there’s no conflict of interest with your employer, private-sector employees can register a PLC.

2. What are the tax implications of owning a company as a salaried person?

You’ll need to file taxes separately for your salary and business income. It’s advisable to consult a tax expert for guidance.

3. Do I need my employer’s permission to start a PLC?

Check your employment contract for any restrictions on outside business activities. In most private-sector jobs, you can start a business without formal permission.

4. How much capital is needed to start a Private Limited Company?

The initial cost can vary, but the legal fees for incorporation can range from ₹10,000 to ₹30,000. You’ll also need to budget for operational costs.

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