ALL ABOUT HUF FORMATION

HUF Formation

A Hindu Undivided Family (HUF) is a kind of an entity that could be a launching pad to the entrepreneur who wishes to have a smoother foray into the world of business, thanks to the tax benefits and lesser compliance requirements.

HUF is a unique type of legal entity which derives its roots from Hindu Law. HUF is an entity as a family, which consists of male lineally descended from a common ancestor. The members of the family would also include their spouses and unmarried daughters. Given the nature of the entity, the relation of HUF’s arises from status and not legal contracts. This article seeks to guide the aspiring entrepreneur on the formation of a HUF.

Members

A HUF could be formed by a married couple, whose child would be integrated into the entity after his/her birth. The entity cannot be formed by a person of another religion, except for Sikhism and Jainism.

On a detailed note, the members of a HUF include a Karta, members, and coparceners. The Karta heads the family and is vested with the decision-making responsibilities. Any male member could play the role of a Karta with the consent of the family members.

A coparcener is a person who is entitled to his/her share of the property. A coparcener is classified into the following hierarchies:

• A first-degree coparcener could be a first-time holder of ancestral property.
• A second-degree coparcener includes the sons and daughters of the family.
• A third-degree coparcener includes the grandsons and granddaughters of the family.
• A fourth-degree coparcener includes the great grand-sons of the family.

The HUF wouldn’t cease to exist on the death of a sole male member. It would continue to function with the existing female members. However, a widower to a Karta cannot be considered as an heir to the throne.  An adopted child is entitled to membership but cannot be a coparcener.

HUF Deed

HUF may be formed with or without a legal deed, though it is always advisable to pursue a business with a written document. With respect to a HUF, a legal deed consists of details pertaining to membership of the HUF, the source of funds, and the likes of it. The Deed acts as proof of the existence of the entity that has been formed.

The document should include a declaration by a family member with respect to the name of the Karta, powers vested with the Kartha, and the entitlement of the Kartha to hold the transactions on behalf of its members. In addition to it, the document should state the capital that was invested in forming the HUF.

PAN

Followed by the formation of a deed, the Karta is required to obtain a PAN Card, which is an important document for pursuing financial transactions. The application for PAN must be made in Form 49A, either online through the NSDL website or through manual means.

The PAN Card must be used by the entity for the filing of income tax returns and claiming applicable deductions. The application for PAN and income-tax return should consist of the signature of the Karta.

Separate Bank Account

As implicit as it might sound, it is mandatory for a HUF to function with a bank account, wherein the funds of the entity can be maintained. The bank account must be strictly maintained for business purposes, and shouldn’t include the savings of any member.

What is NET WORTH ?

Net worth is your assets subtract your liabilities. Okay, if that resonates with you, that's great ! But let me start in more relatable terms.

Your net worth is everything you own minus how much debt you owe. Some spend money like their credit card is limitless or like they don't have a large mortgage in their name. Sure, the bank might not come after you like a shark but that doesn't mean they won't eventually get back the money that you owe them.

Spending habits CANNOT only consider money that you have but has to consider money that you owe. An expensive dress, t-shirt or luxury car should only be purchased when your net worth allows, not when your credit card limit does.

#finance #personalfinance #inflation #goals #money #smallbusiness #savings #financialfreedom #education #growth #future #atfs

Difference between Bookkeepers and Accountants

There is often a misconception that bookkeeping and accounting are the same thing. While they both work to assist you with your finances, there are some important distinctions between the tasks of a bookkeeper and an accountant. From the outset, it is important to understand that both bookkeepers and accountants are integral parts of your business. While their tasks can sometimes overlap, there are definitely certain aspects of your business that you would specifically entrust to an accountant, and others that you would give to your bookkeeper.

In simple and very general terms, a bookkeeper will likely be the person that assists you with the ongoing financial recording and transactions that keep your business running smoothly. Your accountant, on the other hand, will be the person who analyses the data produced by your bookkeeper, reports on it, and is best suited to give you financial advice. Your accountant will also have a strong understanding of your taxation requirements, and will be best able to assist in that area.

In order to understand more comprehensively the benefits that both bookkeepers and accountants can offer to your business, it can be helpful to be aware of the tasks that each could be expected to undertake.

Bookkeepers, as previously stated, are instrumental in the ongoing financial upkeep of your business.

Some tasks that are regularly undertaken by your bookkeeper can include:

• Processing invoices, receipts, payments, and other financial transactions
• Processing and maintaining your payroll system
• Preparing initial financial statements
• Reconciling accounts and preparing reconciliation reports
• Managing your accounts receivable and accounts payable, i.e. amounts owing by debtors, and amounts owing to creditors
• Calculating GST
• Preparing and lodging your BAS
• Designing, establishing and reviewing accounting systems

There are a wide variety of other tasks that a bookkeeper can undertake, and much like the tasks outlined above, they are generally related to the ongoing maintenance of your financial records.

While an accountant will also be qualified to assist you in these areas, it is important to be aware that there is likely to be a substantial difference in fees charged by bookkeepers and accountants. In order to best utilise your budget, extensive consideration into which tasks are to be delegated to a bookkeeper or an accountant is advised.

The role of an accountant in your business, while potentially encompassing some bookkeeping tasks, is often more advisory and analytical in nature. An accountant will be in a position, through analysis of past performance, to offer financial projections and advice on future financial elements of your business.

Further services offered by your accountant can also include:

• Taxation advice and planning
• Business establishment assistance
• Auditing
• Corporate reporting and compliance
• Superannuation fund advice
• Financial management advice

While not an exhaustive list of an accountant’s services, the tasks outlined here serve to highlight the analytical and advisory nature of their position.

Given that there are substantial differences between the services offered by bookkeepers and accountants, it can be seen that both are important to the growth of your business. Instead of viewing them in a ‘bookkeepers vs accountants’ situation, it is important to understand that your accountant and bookkeeper work best together to serve the financial requirements of your business.

Why is Financial Accounting Important for your Business

There are multiple transactions that take place during the year therefore, it is important to have a record of those transactions. Financial accounting helps internal and external stakeholders make better business decisions. Without financial accounting, decision-making can have a negative impact on the company’s performance. This is the reason the importance of financial accounting cannot be neglected.

Maintaining Financial Transactions
Every business needs to keep a record of the transactions it makes irrespective of its volume. Accounting uses a double entry system which means there are always two accounting entries for a transaction. A double entry system records both sides of a transaction which have two equal and opposite effects in at least two different accounts.

For example, if you purchase a machine in cash (for Rs.100000), you debit machinery account and credit the bank account.

Fulfilling Tax Obligations
Maintaining books of accounts makes it easier to pay tax. The reason being, all bills, and other transactions are recorded and kept in one place. You do not need to make corrections at the last moment. Thus, an organized Balance Sheet, Cash Flow Statement and Profit and Loss Statement can benefit in planning tax returns.

GST Annual Return Form GSTR 9 and GSTR 9A Notified by CBIC

What is GSTR-9?

GSTR 9 is an annual return to be filed once in a year by the registered taxpayers under GST including those registered under composition levy scheme. It consists of details regarding the supplies made and received during the year under different tax heads i.e. CGST, SGSTand IGST. It consolidates the information furnished in the monthly/quarterly returns during the year.

Form GSTR-9

Download GSTR-9 Form - https://goo.gl/T9ZSvz

Compliance calendar for the month of September

Completing compliances on time are an important part for any business. This calendar will help you complete all your compliances on time.

If you are a salaried employee, you can claim HRA or House Rent Allowance. Here is how you can do it.

COMPLIANCE CALENDAR FOR THE MONTH OF AUGUST 2018

Dear Friends, Please Find Here Compliance Calendar for the month of August'18. This is for common compliance. For Trade/Industry specific compliance kindly refer relevant Law. Please keep checking Circulars/Notifications or Press Releases for any Change.

The Government has extended the last filing date deadline to 31st August 2018. If you haven’t filed your tax return, take the opportunity and file through ATFS. #incometax #returnfiling #duedate #compliance #taxreturn

Remembering Kalpana Chawla on her 56th Birth Anniversary

17th March 2018 is the 56h birth anniversary of Kalpana Chawla, the famous astronaut who is known to be the first woman of Indian origin in space. Had it not been the unfortunate Columbia shuttle crash, she would still be making India proud with her remarkable achievements.

 Although she is not alive, her determination, courage and exceptional personality never cease to amaze us. She went to space twice, first in 1997 and second time in 2003. It was the unfortunate Columbia mission when the shuttle disintegrated while re-entering the earth’s atmosphere and the world lost 6 great astronauts including Kalpana Chawla, who will be remembered forever by us. 

Remembering the wonder woman on her birth anniversary, here are some quotes from the lady that will inspire you to the core: 

1) I was not born for one corner. The whole world is my native land. 

2) When you look at the stars and the galaxy, you feel that you are not just from any particular piece of land, but from the solar system. 

3) The coolest thing for me is the experience of floating and not feeling my weight and hanging by a window just after sunset and watching the stars in the big black dome of the sky as the earth moves underneath. 

4) Do something you really want to do. If you’re doing it just for the goal and don’t enjoy the path, then I think you’re cheating yourself. 

5) If you want to do something, what does it matter where you are ranked? Nor does being a woman make a difference. 

6) The journey matters as much as the goal. 

7) I’ve always been very determined. I don’t get easily discouraged. 

8) Some of the senior people, the very senior astronauts, shook my hand and said, ‘K.C. you did a great job. Don’t let anyone tell you different.’ 

For all shares purchased 6 months prior to 31st Jan are exempt to capital gain tax till 31 July. They will be taxed after 31st July only. #Budget2018

Tax Saving options other than deductions u/s 80C for the A.Y 2018-19

I hope these tax saving tools will help you in cutting down your taxes. Money saved is Money earned.

GST Return Forms Due Dates for July 2017 to March 2018 for registered persons having aggregate turnover of upto 1.5 crore rupees in the preceding financial year or current financial year

GST Return Forms Due Dates for July 2017 to March 2018 for registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or current financial year

KEY HIGHLIGHTS OF THE COMPANIES (AMENDMENT) BILL, 2017. -Team ATFS

Revised GST Return Forms Due Dates for July 2017 to March 2018

Know all about Limited Liability Partnership (LLP)

Know all about Digital Signature (DSC)

5 Tips for Beginners to avoid losses in stock market

If you want to invest in stock market then you yourself do analysis of the companies and don't follow your friends, relatives or brokerage firms blindly.

Always remember one thing, no one else will worry more for your money then you yourself. So only after your analysis take the decision of your investments. Of course, you can discuss your analysis with other investors and take their view.

If you don't have time for analysis or you feel you cant do analysis then it will be better to invest in mutual funds.

Many new investors gets attracted towards purchasing low value stocks. They feel that this companies are new and may grow in future but this is not the case.

In some cases, this companies are in existence from many years but its shares are valued low because of its poor performance. So check the past performance before you make your investments.

All successful investors have one common quality and that is patience. To purchase the stock at the right price , you need to have patience. When we have money, we tend to make wrong investments in a hurry.

If you are a long term investor then you have to give time to your investment to perform. This does not mean that you investment in low performing companies and wait for years to perform.

Mr.Warren Buffet , one of the successful investors in the world said that he has more money then his investments but he waits patiently for the right opportunity.

Many investors in the beginning itself start with large amount of capital. As you are new in the market, you may don't know many practical things and since you lack the expertise , there are chances of losses. 

That's why start with small amount of capital in the beginning.

Many beginners work on tips given by others which is wrong and nowadays many scams are coming out related with this business.

and in the first tip itself i mentioned that you should do your analysis before making any investments.

Top 10 Movies That Inspire You To Be An Entrepreneur

10 MOVIES ON ENTREPRENEURS THAT MIGHT JUST INSPIRE YOU TO SET OUT ON A BUSINESS JOURNEY YOURSELF.

THE SOCIAL NETWORK

2010’s The Social Network tells the story of Mark Zuckerberg and his invention of Facebook. It’s hard to think of a time now where Facebook wasn’t a central feature in everybody’s lives, and the film is an excellently crafted and at times challenging look at the sacrifice, dedication and overall struggle that it can be to truly make it to the top of the business ladder.

CITIZEN KANE

Not only is Citizen Kane one of the top movies on every ‘greatest ever’ list in history, it is also one of the very earliest and very best films that showcases the exciting journey of a true entrepreneur.

The 1941 Orson Welles classic is loosely based on the life of William Randolph Hearst, whose quest for power and fortune takes several twists and turns along the way.

MONEYBALL

Moneyball is one of the most underrated films of the last few years, telling the story of the revolutionary tactics that the Billy Beane, the general manager of the Oakland A’s took to try to transform the fortunes of his team.

Rather than simply drafting the best players, Beane tailored his roster to specific team needs, and the small parts blended to create something special. A perfect business lesson!