Starting a proprietory firm in father’s name

POSTED BY manish ON May 1, 2012 12:31 am ONE COMMENT

Hi,
I am a working professional in 30% tax slab and my wife is also working in 20% tax slab. We are planning to take a franchisee from one of the company on a revenue share basis. While the capital investment and monthly running expenses would be from my funds, we both cannot take the franchisee in our name since we both are employed. My father is a retired person of 70 years with NIL taxable income. Can i take the franchisee in his name or make him the proprietor of a proprietory firm. The funds required shall be transferred from my accoun to his personal/proprietor account in different intervals. He resides in a different city than the place of proposed franchisee. I intend to take a power of attorney in my name to conduct the operations of the franchisee , including bank account operations etc…is this the correct approach …?What are the tax implications of making such an arrangements..? If this is not the correct way, please suggest alternate arrangements to avoid using of my wife’s and mine PAN number because of our current employment in respective organisation

One reply on this article “Starting a proprietory firm in father’s name”

  1. Dear Manish, first of all you & your wife should gift the basic capital to your father to start the business. As it ‘ll be a proprietary firm, yes it’s possible to do it the same under your father’s name & PAN. My take ‘ll be to take help of a CA to do all the required work for you.

    Thanks

    Ashal

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