A private limited company is best suited for small businesses. The liability of the members is limited to the number of shares that are held by them and these shares cannot be publicly traded.
HERE ARE A FEW POINTS THAT WILL HELP YOU SAVE TAXES IF YOU OWN A PRIVATE LIMITED COMPANY
- One of the easiest ways to save tax is by paying salary to the directors
- Profits can be shared as salary instead of sharing as dividends
- Sitting fee can be paid to the directors for attending board of committee meetings
- Assets can be categorized as capital assets in the balance sheet of the company when they are purchased.
Here’s how bookkeeping your company’s records will help you save taxes.
- Bookkeeping refers to the organizing, storing and accessing the financial information of a company. Keeping a record of the company’s rent expenses and preliminary expenses like drafting of MOA and AOA, cost of documents, fees paid to ROC, stamp duty etc helps to save taxes in a Private Limited Company.
- If a family member is involved in your business, bookkeeping their salary as an expense will save you taxes
- Bookkeep the entertainment expenses incurred on your company
- Expenses that are incurred on the company while meeting clients for dinner, lunch etc
- Vehicle and fuel expenses incurred on the company for business purposes
Proper documentation of the above-mentioned expenses can save 30% of your taxes. Always ensure to bookkeep every expense that is incurred on your company so that you can make maximum benefit out of it. Paying lesser taxes gives your company better advantages of making more profits.