Ravi (Director) 22 February 2014

Taking money out of company

I am in the process of registering a Pvt Ltd. company for my online business. We sell web development and search engine marketing services. We are also getting service tax and IEC code done.

I am not familiar with legal terms so I would be very grateful for a simple explanation.

I am 99% Share holder of the company. Also director.

The lawyer has said to me that after registration is done and we open a bank account, put 1 lakh rupees in the bank account as paid up capital to make a share certificate.

So far it's okay.

Now lets say for example that we earn 50 lakh rupees profit this year.

How can I spend that money personally? How do I pay myself an arbitrary amount? If it just sits in the company's bank account will it be taxed?

Also, if I decide to shut down the company, how will I being the 99% share holder, get the total amount in the bank account? This is my most important question. And will it be taxed twice? i.e company pays tax once and then I pay tax also.

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4 Replies

Ravi (Director) 22 February 2014

I would really appreciate a simple explanation about dividends also and how, and how often do I pay myself (99% share holder) dividends. We will be fully profitable. No question of debts. Also there is no outside investment in the company. 100% self funded/boot strapped.

mohd mahboob (financial assistant) 22 February 2014

Dear Sir,

private co is base on company act.you have to follow all rules and regulation of ministry of corporate affairs.you have to contact to charatered accountant and company secretary for procedure of dividend . you have to take all license related to your business

T. Kalaiselvan, Advocate (Advocate) 23 February 2014

Dear Mr. Ravi, it is better you place and raise further queries from your auditor because, he will be in a better position to apprise you the problems knowing the situation, there is nothing wrong in paying him his fees because you get more useful and gainful and proper advises from him on the subject.