Hi,
I am opening a travel agency.I am not sure about the business type I must go for.I wanted something where I have the maximum tax benefits and less tax liability.I might plan to add my father in my business( not yet decided )Something that I can pass on to my kids once I am not there.
Please guide me properly so that i can move further in a safe a secure manner.
The funds are limited and I dont want to enter into a something where I am just spending for my incorporation and the main domain for which I am starting this business gets neglected.
I have read about Sole Proprietorship that is tax as an individual however Profit Sharing gets taxed at the same time LLP the Profit Sharing is not get taxes however the income tax is flat 30.90%… so all this confusing me a lot.In a travel business the maximum transactions are on cash basis e.g. the Agencies that are not IATA certified get the tickets issued though a IATA certified Travel agency and the those agencies charge everything in cash.The reason for that is very simple as they issue the tickets for a non IATA travel agency thus once the tickets get issued the charge becomes non refundable from airlines end thus to be on safer side and avoid any post issuance cancellation done by the non IATA travel agency, they make it sure that there money remain safe.

Please help and guide me to decide that should I opt for.I would appreciate of someone can call me. I got to know about you people from one of my friend and on the basis of that and keeping faith on your genuineness I want a help from you.

Thanks & Regards

Sandeep Mamgain
(mytravellersparadise.com)

Comment by Sandeep— September 24, 2011 #

In a partnership, the partners have unlimited liability for debts. In a private limited company, the liability of the members (shareholders) is limited to the amount they have paid for their shares. If the company is liquidated, the members cannot be asked to contribute any more money to the company. It is the liability of the members which is limited, not the liability of the company. Also, there may be tax advantages in converting - the profits of a partnership are taxed on the profits taken out by the partners. They are taxed as individuals. A company pays corporation tax and dividends may be a tax efficient way of distributing profits. A limited company may also be a better way of conducting business if the owners want to incentivise employees - employees can be given shares (there are tax beneficial ways of achieving this). This is easy to achieve with a company but tricky/ impractical in a partnership. A limited company structure also allows an easier 'exit' route - shares can be sold to new owners quite easily. In terms of management, it can be easier to manage a company. A partnership can often be difficult to manage - everyone can want a say.

Other advantages of private limited company include:

a) Shareholders have limited liability. As a result more people are prepared to risk their money, than partnership.

b) More capital can be raised as there is no limit on the number of shareholders.

c) Control of the company cannot be lost to outsiders. Shares can only be sold to new members if all shareholders agree.

d) The business will continue even if one of the owners dies. In this case, shares will be transferred to another owner