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You’ve chosen the perfect name for your startup and decided on the right business structure. What’s next? Before you can open a bank account, pay employees, or file taxes, you need to secure two critical identification numbers: PAN and TAN.

For a new founder, understanding these two numbers is the first step toward building a financially compliant and credible business. They are the foundational pillars of your company’s financial identity in India.

This guide will quickly break down what they are and why you need them.

What is a PAN? (Permanent Account Number)

A PAN is a unique 10-character alphanumeric identifier issued by the Indian Income Tax Department. Think of it as your business’s primary financial ID card. It’s used to track all financial transactions and is mandatory for nearly every significant business activity.

Why does your startup need a PAN?

• Opening a Business Bank Account: No bank will open a corporate account without a PAN in the company’s name.
• Filing Income Tax Returns: This is the primary purpose of a PAN. All tax filings for your company are linked to this number.
• Making High-Value Transactions: Any payment exceeding certain limits requires the quoting of a PAN.
• Applying for Registrations: You will need your company’s PAN to apply for other registrations, including GST and TAN.

A PAN is not just for individuals; every legal entity, including a Private Limited Company or an LLP, must have its own separate PAN.

What is a TAN? (Tax Deduction and Collection Account Number)

A TAN is another 10-character alphanumeric identifier, also issued by the Income Tax Department. Its purpose is highly specific: it is used exclusively for all matters related to TDS (Tax Deducted at Source).

Why does your startup need a TAN?

• Deducting TDS: If your business is required to deduct TDS on payments like salaries, rent, or professional fees, you must have a TAN.
• Depositing TDS: You cannot deposit the tax you’ve deducted to the government’s account without quoting your TAN.
• Filing TDS Returns: All quarterly TDS returns must be filed using your TAN.

In simple terms: if your company pays anyone and is required to deduct tax from that payment, you need a TAN.

The Bottom Line: PAN First, Then TAN

The process is sequential. You must first apply for and receive your company’s PAN. Once you have the PAN, you can then apply for a TAN.

Securing these two numbers is a non-negotiable first step in setting up your startup’s financial and compliance framework. It signals that you are a legitimate and serious business entity.

Feeling overwhelmed by the paperwork? At InPursuit, we handle the entire PAN and TAN application process for new startups, ensuring it’s done quickly and correctly. Contact us for a free consultation and let us help you build your business on a solid foundation.

As a startup founder in India, you’re juggling a dozen critical tasks, from product development to fundraising. Amidst the chaos, it’s easy to overlook a crucial financial responsibility: TDS (Tax Deducted at Source).

Getting TDS wrong is not just a minor accounting error; it can lead to significant interest, penalties, and even prosecution from the Income Tax Department. Understanding your obligations from day one is essential for maintaining a clean financial record and avoiding costly mistakes.

This simple guide will break down the basics of TDS for you.

What Exactly is TDS?

TDS is a mechanism introduced by the Indian government to collect tax at the very source of income. It requires the person or company making certain types of payments (like salary, rent, professional fees, or payments to contractors) to deduct a specific percentage of that payment as tax before releasing the final amount to the recipient. This deducted amount is then paid to the government on behalf of the recipient.

When Does a Startup Need to Deduct TDS?

Your startup is required to deduct TDS if you make payments for specific services that exceed certain threshold limits in a financial year. The most common payments a startup makes are:

• Salary (Section 192): TDS must be deducted if an employee’s total annual salary is above the basic exemption limit. This is the most common TDS obligation for any business with employees.
• Payments to Contractors (Section 194C): If you pay a contractor for carrying out any work (including advertising, broadcasting, transport, etc.), you must deduct TDS if a single payment exceeds ₹30,000 or the total payments in a financial year exceed ₹1,00,000.
• Professional or Technical Fees (Section 194J): When you pay fees to professionals like consultants, lawyers, or freelancers, TDS must be deducted if the total payments exceed ₹30,000 in a financial year.
• Rent (Section 194-I): If your startup pays rent for office space, TDS is applicable if the total annual rent exceeds ₹2,40,000.

Your Key Responsibilities as a Founder

Compliance with TDS involves more than just deducting the tax. Here are your core responsibilities:

1. Obtain a TAN: Before you can deduct TDS, you must obtain a Tax Deduction and Collection Account Number (TAN). This is a mandatory 10-digit alpha-numeric number.
2. Deduct the Correct Amount: Ensure you are deducting tax at the rates specified in the Income Tax Act for each type of payment.
3. Deposit on Time: The TDS you deduct must be deposited with the government by the 7th of the following month.
4. File TDS Returns: You are required to file a quarterly statement (TDS return) detailing all the TDS deductions and deposits made during that quarter.
5. Issue TDS Certificates: After filing your returns, you must issue a TDS certificate (Form 16 for salary, Form 16A for other payments) to the person whose tax you have deducted. This is proof that the tax has been deposited on their behalf.

The Bottom Line

TDS compliance is non-negotiable. It requires meticulous record-keeping and a clear understanding of the rules. For a busy founder, managing this process can be a significant drain on your time and focus.

Don’t let compliance become a bottleneck. At InPursuit, we provide end-to-end management of your TDS obligations, from correct deduction to timely filing of returns. Contact us for a free consultation and ensure your business stays compliant from day one.

Labour Law Compliance for Indian Startups: A Simple Checklist

As a startup founder, hiring your first employee is a monumental milestone. It’s a sign of growth and the first step toward building a team. However, this step also brings a new set of responsibilities that are often overlooked: labour law compliance.

Navigating the web of central and state labour laws can be complex, but getting it right from day one is crucial to avoid legal risks, financial penalties, and to build a foundation of trust with your team. This guide provides a simple checklist of the most essential labour law registrations and compliances for an early-stage startup in India.

The Essential Labour Law Checklist

While there are numerous laws, here are the foundational registrations you need to consider as you start hiring.

1. Shops and Establishment Act Registration This is one of the most basic and mandatory registrations for any commercial establishment. It is governed by state-specific laws.

• What is it? It regulates the working conditions of employees, including working hours, rest intervals, holidays, and leave policies.
• Who needs it? Virtually every business, including offices, retail stores, and IT firms.
• When? You must apply for this registration within 30 days of commencing business operations.

2. Provident Fund (PF) Registration The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, is a social security scheme designed to provide retirement benefits.

• What is it? A mandatory contribution scheme where both the employer and employee contribute a portion of the employee’s salary to a fund.
• Who needs it? Any establishment with 20 or more employees. However, startups can opt for voluntary registration even with fewer employees to offer this benefit.
• Key Compliance: Monthly deposit of PF contributions and filing of monthly and annual returns.

3. Employee State Insurance (ESI) Registration This is a social security and health insurance scheme for Indian workers.

• What is it? It provides medical, sickness, maternity, and disability benefits to employees.
• Who needs it? Non-seasonal factories with 10 or more employees, and other establishments with 10 or more employees (in most states), where the employee’s monthly wage does not exceed ₹21,000.
• Key Compliance: Monthly deposit of ESI contributions and filing of half-yearly returns.

4. Professional Tax (PT) Registration This is a tax levied by the state government on professionals and salaried individuals.

• What is it? The employer is responsible for deducting Professional Tax from the employee’s salary and remitting it to the state government.
• Who needs it? All employers. The rules and tax slabs vary from state to state.
• Key Compliance: Obtaining a PT registration number, monthly deduction and remittance, and filing of periodic returns.

Other Important Considerations

While the above are the primary registrations, you should also be aware of:

• The Payment of Bonus Act, 1965: Applicable to establishments with 20 or more employees, mandating the payment of an annual bonus.
• The Payment of Gratuity Act, 1972: Applicable to establishments with 10 or more employees, providing for a gratuity payment to employees who have rendered continuous service for at least five years.

The Bottom Line

Labour law compliance is not an area where you can afford to “wing it.” Getting these foundational registrations and processes in place before you hire your first employee will protect your business from significant legal and financial risk. It sends a clear message to your team that you are a professional and responsible employer.

Feeling unsure about where to start? At InPursuit, we handle all these registrations and ensure your ongoing compliance is managed flawlessly. Contact us for a free consultation and build your team on a solid, compliant foundation.

One of the first and most fundamental decisions a new founder in India must make is choosing the right legal structure for their business. This choice has long-term implications for everything from your personal liability and fundraising ability to your annual compliance burden.

The three most common structures for startups and SMEs are Sole Proprietorship, Limited Liability Partnership (LLP), and Private Limited Company (Pvt Ltd). But which one is right for you? Let’s break down the key differences.

1. Sole Proprietorship

This is the simplest and most common form of business, owned and run by one individual.

• Best for: Freelancers, consultants, and very small, single-owner businesses that are just starting out and want to test an idea with minimal setup costs.
• Key Features:
  • Easy & Inexpensive Setup: Requires minimal registration, often just a GST registration if turnover thresholds are met.
  • Full Control: You are the sole owner and make all the decisions.
  • Unlimited Liability: This is the biggest drawback. There is no legal distinction between you and your business. If the business incurs debt, your personal assets (like your home or car) can be used to settle those dues.
  • Difficult to Fund: It’s nearly impossible to raise equity funding from investors as a proprietorship.

2. Limited Liability Partnership (LLP)

An LLP is a hybrid structure that combines the ease of a partnership with the liability protection of a company.

• Best for: Professional service firms (like CAs or consultants), family businesses, and startups with multiple co-founders who want a simple structure with liability protection.
• Key Features:
  • Limited Liability: Your personal assets are protected from the business’s debts. Your liability is limited to the capital you’ve contributed.
  • Separate Legal Entity: The LLP is legally distinct from its partners.
  • Lower Compliance: Compared to a Private Limited Company, an LLP has fewer compliance requirements (e.g., board meetings and statutory audits are not always mandatory).
  • Difficult to Fund: While better than a proprietorship, most venture capitalists and angel investors still prefer to invest in Private Limited Companies.

3. Private Limited Company (Pvt Ltd)

This is the most formal and scalable business structure, and the preferred choice for serious startups that intend to grow and raise external funding.

• Best for: Startups planning to raise funds, businesses with ambitious growth plans, and any venture that wants to be seen as a credible, established entity.
• Key Features:
  • Limited Liability: The personal assets of the shareholders are fully protected.
  • Separate Legal Entity: The company has its own legal identity.
  • Easy to Fund: This is the only structure that VCs, angel investors, and incubators will invest in. You can easily issue shares to raise capital.
  • Higher Credibility: A “Pvt Ltd” designation carries more weight with clients, suppliers, and employees.
  • Higher Compliance: This structure comes with the highest compliance burden, requiring regular board meetings, statutory audits, and various filings with the Ministry of Corporate Affairs (MCA).

The Bottom Line: Which One to Choose?

• If you’re a solo founder testing an idea with minimal risk, a Sole Proprietorship is a good starting point.
• If you have co-founders and want liability protection with less compliance, an LLP is a solid choice.
• If your goal is to build a large, scalable business and raise money from investors, a Private Limited Company is the only way to go.

Choosing the right structure is a foundational decision. Making the right choice from the start can save you significant time, money, and legal headaches down the road.

Need help deciding? At InPursuit, we specialize in guiding founders through this critical decision and handling the entire registration process. Contact us for a free consultation to discuss what’s best for your vision.

For any new founder in India, navigating the landscape of business compliance can be daunting. At the top of that list is the Goods and Services Tax (GST). Understanding and completing your GST registration is not just a legal requirement; it’s a foundational step that legitimizes your business and enables you to operate smoothly within the Indian economy.

But what exactly is it, who needs it, and how do you get it done without getting lost in the paperwork? This guide will break down everything you need to know in simple, actionable terms.

What is GST?

The Goods and Services Tax (GST) is a single, comprehensive indirect tax levied on the supply of goods and services across India. It replaced multiple cascading taxes like VAT, Service Tax, and Excise Duty, simplifying the tax structure and creating a unified market. For a business, being GST-registered means you can legally collect tax from your customers and claim credits for the tax you’ve paid on your business purchases.

Who Needs to Register for GST?

While not every business needs to register immediately, you are legally required to obtain a GSTIN (GST Identification Number) if you meet any of the following criteria:

• Turnover Threshold: Your aggregate annual turnover exceeds ₹40 lakhs for businesses supplying goods, or ₹20 lakhs for businesses providing services. (Note: The threshold is ₹10 lakhs for certain special category states).
• Inter-State Business: You are engaged in the supply of goods or services from one state to another, regardless of your turnover.
• E-commerce Operations: You sell goods or services through an e-commerce platform like Amazon or Flipkart.
• Specific Business Types: You are a casual taxable person, a non-resident taxable person, or an agent for a supplier.

Even if you don’t meet these criteria, voluntary registration can be beneficial, as it allows you to claim input tax credits and work with larger, GST-compliant businesses.

The GST Registration Process: A Step-by-Step Overview

The process is primarily online through the official GST portal.

1. Part-A: TRN Generation: Visit the GST portal and fill out Part A of the REG-01 form with your PAN, mobile number, and email address. These will be verified with OTPs, and you will receive a Temporary Reference Number (TRN).
2. Part-B: Application Filing: Using the TRN, log back in and fill out Part B of the form. This is where you will provide detailed information about your business, promoters, authorized signatories, and bank accounts.
3. Document Upload: You will be required to upload scanned copies of all necessary documents (see checklist below).
4. ARN Generation: After submitting the application and documents, you will receive an Application Reference Number (ARN) to your registered email and mobile number.
5. Verification by Officer: A designated GST officer will review your application. They may approve it, or they may raise a query if they find any discrepancies.
6. GSTIN Allotment: Upon successful verification, you will be allotted your unique 15-digit GSTIN, and your GST Registration Certificate (Form REG-06) will be available for download.

Documents Required for GST Registration

Having these documents ready will make the process much smoother:

• PAN Card of the business or proprietor/partners/directors.
• Aadhaar Card of the proprietor/partners/directors.
• Proof of Business Constitution (e.g., Partnership Deed, Certificate of Incorporation).
• Proof of Principal Place of Business (e.g., Electricity Bill, Rent Agreement, or ownership documents).
• Bank Account Details (a scanned copy of a cancelled cheque or bank statement).
• Photograph of the proprietor/partners/directors.
• Letter of Authorization/Board Resolution for authorized signatory.

Common Mistakes to Avoid

• Incorrectly Selecting Business Type: Ensure you choose the correct legal structure (Proprietorship, LLP, Pvt Ltd, etc.) as it’s difficult to change later.
• Mismatch in Documents: Ensure the name and address on your PAN, Aadhaar, and bank documents are identical.
• Vague Business Description: Clearly state your primary business activities and provide the correct HSN (for goods) or SAC (for services) codes.

The Bottom Line

GST registration is a critical milestone for any serious business in India. While the process is online, it requires careful attention to detail to avoid errors and delays. Getting it right from the start ensures you are compliant, builds trust with your customers, and sets a solid foundation for your company’s financial health.

Feeling overwhelmed? You don’t have to do it alone. At InPursuit, we specialize in guiding founders through the entire registration process, ensuring it’s done quickly and correctly. Feeling overwhelmed? You don’t have to do it alone. At InPursuit, we specialize in guiding founders through the entire registration process, ensuring it’s done quickly and correctly. Contact us today for a free consultation and let us handle the compliance, so you can focus on building your business.

For founders and HR leaders at Indian SMEs, payroll is more than just a monthly task—it’s a critical function that sits at the intersection of finance, compliance, and employee satisfaction. One of the most significant decisions a growing business faces is how to manage it: keep it in-house or outsource to a specialist?

The answer isn’t always obvious. While managing payroll in-house might seem like a way to maintain control and save money, it often comes with hidden costs and risks. Let’s break down the strategic pros and cons of each approach.

The Case for In-house Payroll

Managing payroll internally gives you direct oversight. You have immediate access to all data and can make last-minute changes on your own schedule.

• Pros:
  • Complete Control: You have full control over the payroll process and employee data.
  • Perceived Cost Savings: No monthly service fees to an external provider.
• Cons (The Hidden Dangers):
  • Compliance Risk: The landscape of Indian labour law (PF, ESI, TDS, Professional Tax) is complex and constantly changing. A single mistake can lead to significant penalties.
  • Time Drain: Your team’s valuable hours are spent on administrative tasks instead of strategic initiatives that grow the business.
  • Hidden Costs: The “savings” are often an illusion when you factor in the cost of payroll software, training, and the salary of the employee managing it.

The Case for Outsourcing Payroll

Partnering with a payroll specialist transfers the risk and the administrative burden to experts whose sole focus is getting it right.

• Pros:
  • Expert Compliance: Specialists are always up-to-date with the latest regulatory changes, dramatically reducing your risk of penalties.
  • Cost-Effectiveness: You eliminate the need for dedicated staff and expensive software. The cost is predictable and often lower than the true cost of an in-house process.
  • Strategic Focus: Freeing your team from payroll allows them to focus on core business activities like product development, sales, and customer service.
  • Scalability: As your company grows and hires more employees, an outsourced provider can scale with you seamlessly.
• Cons:
  • Finding the Right Partner: Choosing a reliable and knowledgeable provider is crucial.

A Simple Checklist to Help You Decide

If you answer “Yes” to three or more of these questions, it’s a strong sign that outsourcing is the strategic choice for your business:

1. Is your team spending more than 5-10 hours per month on payroll tasks?
2. Are you less than 100% confident in your understanding of the latest PF and ESI regulations?
3. Do you plan to significantly increase your headcount in the next 12 months?
4. Have you ever had to correct a payroll error after salaries were disbursed?
5. Would you rather your finance/HR team focus on growth instead of administration?

Conclusion

While in-house payroll offers control, outsourcing offers expertise, efficiency, and peace of mind. For growth-focused SMEs in India, partnering with a payroll expert is often the most strategic decision to ensure compliance and unlock your team’s true potential.

For Small and Medium-sized Enterprises (SMEs) in India’s manufacturing sector, a flexible workforce is essential. Contract labor is often the lifeblood of a factory or workshop, allowing you to scale production based on demand. However, this flexibility comes with a significant and often underestimated compliance burden, particularly regarding Provident Fund (PF) and Employees’ State Insurance (ESI).

Mismanaging these statutory duties for your contract workers can lead to severe financial penalties and legal trouble. This guide demystifies the core responsibilities for manufacturing SMEs.

The Core Question: Who is Ultimately Responsible?

This is the most critical point of confusion. While you may hire workers through a contractor who is responsible for their wages, the law (The Contract Labour (Regulation & Abolition) Act, 1970) is clear: the Principal Employer (that’s you, the SME owner) is ultimately responsible for ensuring that all statutory contributions are paid. If your contractor defaults, the liability falls on you.

Provident Fund (PF) for Contract Workers

PF is a mandatory retirement savings scheme. For contract workers, the rules are straightforward but require diligence from the Principal Employer.

Key Responsibilities for Your SME:

• Verify Contractor Registration: Ensure your contractor is registered with the Employees’ Provident Fund Organisation (EPFO) and has a valid PF code.
• Ensure Timely Deposits: You must ensure that the contractor is deducting the correct PF amount from the workers’ wages and depositing both the employee’s and employer’s share on time every month.
• Check UAN Generation: Confirm that a Universal Account Number (UAN) has been generated for every contract worker, as this is essential for them to access their PF savings.
• The Risk: If your contractor fails to deposit the PF contributions, the EPFO can recover the dues directly from you, the Principal Employer.

Employees’ State Insurance (ESI) for Contract Workers

ESI provides crucial medical and social security benefits to workers. It is applicable to non-seasonal factories employing 10 or more people and for employees earning up to ₹21,000 per month.

Key Responsibilities for Your SME:

• Ensure Worker Registration: You must ensure every eligible contract worker is registered under the ESI Corporation (ESIC) through your contractor.
• Monitor Contribution Payments: Similar to PF, the responsibility lies with you to ensure the contractor is making timely ESI contributions. Ask for copies of the monthly payment challans.
• Provide Benefits: In the event of a workplace accident, it is the Principal Employer’s responsibility to ensure the contract worker receives the necessary support and reports the incident to the ESIC.

Conclusion: From Manual Chaos to Automated Control

Tracking attendance, calculating wages, and verifying PF/ESI payments for dozens of contract workers across multiple contractors using spreadsheets is not just inefficient—it’s a massive business risk. A single mistake or a defaulting contractor can put your entire business in jeopardy.

Automation is the key to managing this complexity. A robust payroll system provides a single source of truth, automates compliance calculations, and gives you the oversight needed to ensure all your contractors are meeting their obligations.

Managing compliance for your factory or workshop shouldn’t be a full-time job. Schedule a free demo with InPursuit Solutions to see how we automate PF & ESI for your entire workforce, including contract labor.

For a fast-growing startup, every hour is dedicated to building the product, acquiring users, and delighting customers. In the rush to scale, critical back-office functions like payroll are often handled hastily with spreadsheets, viewed as a simple task of transferring salaries. However, this approach is filled with hidden risks. Simple, overlooked payroll mistakes can silently drain your budget, create serious compliance issues, and damage team morale.

Here are five of the most common—and costly—payroll mistakes that Indian tech startups make, and how to avoid them.

1. Incorrect Provident Fund (PF) Calculation

The Problem: One of the most frequent errors is calculating the employee’s PF contribution based on their total salary (Cost to Company or CTC) instead of the correct components. According to the law, PF should be calculated at 12% of the employee’s ‘Basic Salary + Dearness Allowance’. Including other allowances inflates the contribution, reduces the employee’s take-home pay, and complicates compliance.

2. Mismanaging Tax Deducted at Source (TDS)

The Problem: At the beginning of the financial year, employees are required to submit investment declarations to help calculate their tax liability. Startups often fail to collect these proofs on time or don’t account for them correctly. This forces them to deduct a higher TDS amount from the employee’s salary, leading to smaller paychecks, unhappy team members, and a scramble for corrections at the end of the year.

3. Forgetting State-Specific Professional Tax (PT)

The Problem: Professional Tax is a small tax on employment, but it’s a major compliance headache because the rules and deduction slabs are different in every single state. It’s an easy detail to miss, but failing to deduct and remit PT on time can lead to penalties and notices from state authorities.

4. Not Having a Clear Reimbursement Policy

The Problem: “My phone bill is a business expense, right?” “Is there a limit on my internet reimbursement?” Without a clear, documented policy, these questions create confusion and inconsistency. This not only wastes HR’s time but can also lead to unfair treatment and disputes within the team, hurting the company culture you’ve worked so hard to build.

5. Poor Record-Keeping for Compliance

The Problem: By law, Indian companies are required to maintain accurate payroll records for several years. Relying on scattered spreadsheets makes this nearly impossible. During an audit or inspection, failing to produce clean, organized records like digital payslips, salary registers, and proof of compliance can result in significant legal trouble and financial penalties.

Conclusion: The Path to Error-Free Payroll

These five mistakes are incredibly common, but they are also completely avoidable. The key is to build a reliable system instead of relying on manual, error-prone spreadsheets that put your growing business at risk.

Ready to eliminate these errors for good? Schedule a free demo with InPursuit Solutions today.