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Advantages of One Person Company

One Person Company- New Age Business

One Person Company was introduced in India through Companies Act 2013, a new concept which brought a great relief for many Entrepreneurs.

Section 2(62) defines OPC as a Company which has only one person as a member. He is the shareholder and the Director at the same time.

The process of incorporating OPC is as follows:

  • Minimum paid up capital shall be Rs. 1,00,000.
  • It will have only one person as member.
  • Memorandum of Association of such a company will compulsorily prescribe the name of the person, who in the event of death or disability of the subscriber shall assume his position.
  • The member of the OPC will have the right to change the nominee at any time with due intimation to the Registrar.
  • OPC can be formed as company limited by share capital or limited by guarantee or unlimited company.
  • The words ‘One Person Company’ will have to be mentioned in brackets below the name of such company, wherever its name is printed.
  • One person can form only up to one (1) OPC.
  • An OPC can be formed only by an Indian Resident and citizen.
  • DIN (Director Identification Number) for all the Directors are required.
  • DSC (Digital Signature Certificate) for all the Directors is required.

Benefits of One Person Company: –

Independent Existence:

The One Person Company is considered as a separate legal entity. In the eyes of the law, a company is a person, having a common seal, and perpetual succession. It gets the authority to exercise all the functions of an incorporated person.

Limited Liability:

Unlike public limited company & private limited company , the concept of limited liability of One Person Company in India implies that the liability of the member is will be up to the extent of his share in the company. In an OPC, one person holds the entire share and has complete authority over the operation of the business. So, it can be elucidated that the liability of the person will be to the extent he has invested in the business.

Separate Property:

An OPC will have its own separate property as it gains its own identity and functions as a separate legal entity. The OPC will become the owner of its assets, and the members will not have any insurable rights in the assets of the company.

Transferability of Shares:

OPC has only one shareholder. The issue of transferring a portion of the share does not arise at all because if it is done, the company will cease to be a “one person” company. Transferring all the shares is also not practicable as it’ll change the entire structure of the company as the owner of the company is changing. The issue has not yet been dealt with, and interpretation of the law may provide us with the explanation that in an OPC, transfer of share is not allowed.

Tax Flexibility and Savings:

OPC make a valid contract with its shareholder or directors. This means as a director you can receive remuneration, as a lessor you can receive rent, as a creditor you can advance money to your own company and earn interest. Directors’ remuneration, rent and interest are a deductible expense which reduce the profitability of the Company and ultimately brings down taxable income of your business.

Complete Control of the Company with the Single Owner:

OPC is completely controlled and managed by the Single Owner. It leads to quick decision making and execution. The sense of belonging motivates to grow the business further.

Legal Status and Social Recognition for Your Business:

One person company is the most popular business structure in the world. Large organizations prefer to deal with private limited companies instead of proprietorship firms. Private Limited business structure enjoys corporate status society which helps the entrepreneur to attract quality workforce and helps to retain them by giving corporate designations, like directorships.

Learn more about accounting outsourcing at Aristotle Consultancy.

Seven Ways to Manage Accounts Receivable Efficiently

Efficient Accounts Receivable (AR) controls are an integral part of cash flow management that have serious repercussions on the company’s sales and profits. Accounts Receivable controls must be an integral part of any company’s financial management system. When cash flow problems surface on a regular basis, it is inevitably a sign that Accounts Receivables are poorly managed.

It is better to be prepared with solid policies and procedures and not be placed in the precarious position of repeated cash flow crises. Many companies tend to focus on their sales and marketing and neglect the cash management components such as AR and the associated credit policies, terms of payment, and timely AR collection procedures.Accounting Receivable outsourcing services falls under finance and accounting outsourcing . There are seven steps to efficiently manage Accounts Receivable:

1. Verification of the financial record and credit history of the customer:

Before any credit is issued to a customer a thorough check of the customer’s ability to pay and past record of payments to other suppliers must be ascertained. Before opening an account, the Seller should e-mail an application form that contains the corporate name and address of the Buyer, the names of at least three verifiable suppliers, and the customer’s detailed banking information. This information should then be verified through credit rating agencies such as CRISIL, ICRAor Dun & Bradstreet. All the listed suppliers on the application form should be contacted to verify their experience with the customer. Even after the verification process is completed, it may be prudent to ask for a COD (cash-on-delivery) payment for the first purchase when dealing with a small company.

2. Clear payment terms must be set:

Payments terms must be stipulated on all invoices and statements and clearly visible. The options for payments can be cash-on-delivery (COD), cash prepayment before delivery, net 30-60 days, 1-2% net 30 days (providing a discount of 1-2% if invoicesare paid before 30 days). For export purposes Letter of Credits are used where payment is secured by a bank, or a documentary credit where a promise to pay at a later date is supported by a bank. In general, the terms of payment depend on the creditworthiness of the Buyers.

3. Invoices must be integrated into the accounting software:

Must advance accounting software automate the invoicing process and electronically track orders from purchasing,to fulfilment, to shipping. Automatically produced reports that match purchase orders to invoices ensure timely issuance of invoices and are verified for possible omissions by the accounting department.

4. The advantages of multiple payment options:

Sellers must make it as easy as possible for Buyers to do business with them. Expediting payments in the internet era is facilitated by software that allow withdrawals to be made directly from the Buyers’ bank accounts or credit cards through secure intermediaries like PayPal, Stripe and many others. Even micro transactions can be made through mobile apps on smartphones. The use of both debit and credit electronic payment processors are ubiquitous everywhere. This greatly improves the speed with which money can be moved from Buyers to the Sellers. You can still pay the old-fashioned way – by cheque, and this is still the prevalent form of payment in some industries like construction.

5. The outsourcing option:

For many companies it may be well worth investing in external accounting services offered by reputable companies worldwide. Because accounting can be highly automated through state-of-the-art software, it can be offered from remote locations with much lower human resource costs. Many companies in advanced economies have turned to offshore accounting firms with confidence in the excellence of the services provided. Accounts Receivable collection is a particularly fastidious and time-consuming process that remote or offshore companies can handle with great efficiency and cost benefits.

6. Turning to collections as a last resort:

Sometimes the best efforts and systems of Accounts Receivable management hit a snag. Even the most trusted accounts may start procrastinating on payments, negatively impacting the cash flow of the Seller. Collection policies and procedures, as a last resort, are an integral part of efficient management. Collection procedures by phone, e-mail must be carefully scripted to avoid confrontations and promote payment. This is best left to internal or external experts.

7. Using payment terms as a form of AR control:

No payment terms should be seen as being permanently guaranteed. Companies must perform a regular evaluation of their customers’ payment records to see if they respect the payment terms granted them. Credit must be seen as a privilege that is continued only if it is respected. Buyers with negative payment records must be weeded out early and payment terms changed to curb repeated abuse.

Learn more about accounts payable outsourcing , payroll services , virtual cfo at Aristotle Consultancy.

Accounts Receivable Guide to Managing Cash Flows

There is a direct relationship between your firm’s growth and its working capital requirement. As your sales grow, your level and composition of working capital, namely, Inventory, Receivables, Cash, Payables, Short Term Loans etc. will also change. Accounts Receivables (AR) is one of the major components impacting the requirement of working capital. AR is a result of sales made to the customers on credit. A business can benefit from selling its goods and services on credit, thereby resulting in increased profits but at the same time, credit sales act as a stumbling block of funds and there can also be a possibility of bad debts due to defaults in payments by the customers. Therefore, it is essential for the business to carefully analyze and invoice on credit only to its reliable customers.

Accounts Receivable Outsourcing involves ensuring timely collection of dues from its customers and managing the whole process in an organized and professional manner. AR helps in analyzing deeply the overall health of the business.

Some of the issues faced by businesses today make a compelling argument in favor of outsourced AR management.

  • Despite of rigorous follow ups with the customer, sometimes the business ends up writing off the bad debts since the employees do not find them worth their time.
  • It happens that you decide on aggressive collections say during a quarter or year-end but end up denting the relationship with some customers.
  • Lack of professional awareness on managing working capital issues hampers day to day operations. While everything looks good in terms of incremental sales but slow recovery ends up hitting your profitability.
  • A lot of money parked in accounts receivable reflects on poor business acumen. Investors or lenders do not find such businesses attractive thus hitting your growth and expansion plans.
  • Increased cost of funding from the banks in the form of Over Draft or other Working Capital Loans because of blockage of funds in working capital.
  • Frequent cash squeezes making it difficult for you to honor your financial commitments thereby impacting your credit worthiness in the market.

Conclusion- Good account receivable management is the life blood if not the heart or brain of one’s operations. Poor account receivable management along with other factors have led to falling of great enterprises and with laws such as the Insolvency and Bankruptcy Code in place, it is better that we have the cash flowing and never dishonor on outstanding commitments.

AR management is a professional process which helps you strengthen your receivable position and broadly includes the following activities;

  • Assessing the customer’s credit rating.
  • Advising on matters relating to supplier contracts, invoicing and bookkeeping.
  • Help reach a balance where customers’ needs and the firm’s credit policy are in line.
  • Making recovery faster while maintaining good customer relations ensuring a more collaborative environment.
  • Ensuring Bad Debts are detected in timely manner and advising on ways to mitigate risks leading to ‘debt turning bad’ situation.
  • Timely scanning and monitoring customers for credit risks.
  • Entertaining customer concerns.
  • Collection Management.

Some tangible benefits that do arise on outsourcing AR Management include but are not limited to the following;

  • Strong financial position which leads to increased credit worthiness and decreased financing cost.
  • Receive a summarized report on AR position and recovery with a review of Service Level Agreement (SLA) matrix, performance and Turn Around Time (TAT) compliances.
  • Shortening Payment terms.
  • A Standard Operating Procedure on Bill Dispute Resolution Process.
  • Proactive approach to AR management including early intervention to decrease the amount of avoidable write offs.
  • Increased promoter/senior management efficiency because the time is now allocated to vital activities necessary for growth and smooth operations.
  • Faster recovery of funds and efficient allocation to short term investment avenues such as Government Bills leads to increased Return on Funds or Capital Employed.
  • Time to Time advisory and consultancy relating to good AR management practices.

 

Learn more about payroll services , virtual cfo , finance and accounting outsourcing at Aristotle Consultancy.

Financial Advisory Services: 11 Traits of Top Financial Advisor

11 Qualities of a Successful Financial Advisor

What is a Financial Advisor?

For a corporate, financial advice at the right time and by a right person is an important aspect. If they are earning good amount of profit but they are not investing it on the right place with the right timings, corporate cannot grow for the long run.

And now to fulfill it, a corporate needs a good Financial advisor with all the required traits who can advise them in determining an Investment portfolio and also help in achieving the financial goals. Advisory services tackle all aspects of business from managing finances, marketing your product or service better and more widely, embarking on research and development activities, to improving your operations.

Traits That Successful Financial Advisor Must Have

1. Excellent organizational skills:

A financial advisor encompasses a set of capabilities like to plan, prioritize, and achieve the goals of a corporate. The ability to keep work organized allows to focus on different projects without getting disoriented or lost, thereby increasing productivity and efficiency in the workplace.

2. Knowledge and Expertise:

It’s important to hire a financial advisor whose investment knowledge and educational background meets your requirement. Make sure to ask your potential financial advisor about their planning view for the short run as well as in the long run.

3. A Deep Analytical Ability:

A financial advisor should know that the risk and return relationship drives almost every aspect of a financial plan. Structuring an investment portfolio, the proper way and being able to reallocate the assets as time and goals change is crucial. It is important for a financial advisor to be able to analyze and plan a portfolio in the context of a variety of statics metrics.

4. Goal Clarity:

He should be clear in the goal to take the decision and plan the things in the in the way required.

5. A good leader and a mentor:

A financial advisor should be a good leader and direct the client & its business in the best possible way. He should be a trusted mentor to the clients so that he can guide them in figuring out the mistakes and lead them on the right path.

6. Attentiveness :

As said above, he should be attentive enough so that he can take the right decision in the right time to gain the benefit.

7. Positive attitude:

Your financial advisor should be a person with positive attitude and always can see the company’s future bright. He must have the ability to handle the things with positive attitude, even in the difficult time of the company.

8. Trust:

Trust is the essential key to be a good financial advisor. If he is not trust worthy as a person, how can you trust them to handle your finances? Your financial advisor should be someone that you can feel comfortable forming a relationship with long-term and you can share each and every aspect of your corporate with him.

9. Clear communication:

A good financial advisor must have the ability to explain his words in a layman language. So that a person with any kind of educational background can understand and interprets the things easily. He must have the ability to teach, guide and advise you.

10. Flexibility:

Ever Corporate has their own “wish list” of what they want in a financial advisor. A financial advisor must be flexible enough and have all the techniques so that he can meet their expectations.

11. Affordable:

The most important thing, he should ask reasonable fees while playing the role of financial advisor.

Learn more about payroll services , virtual cfo , finance and accounting outsourcing at Aristotle Consultancy.

Advisory Services: All you need to know about it!

In this competitive era of vast modernization, maintaining your existence in the business industry is a tough task. In every vertical whether it be services, education, legal or business; there is an arduous competition. Every organization is trying to step on its rivals to move ahead and stay at the curve. In this world of prodigious opportunities and complexities, business organizations are looking forward to establish new connections and are finding new ways for innovation.

Running thriving business these days has become a grinding and a frustrating experience. The good news is that it doesn’t have to be the same way now. With adequate advisory services at every step, running a successful business is turning to be a fruitful and exciting adventure. Excited, right? Well you’d be.

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Before diving deeper let’s have a closer look to what advisory services are:

Advisory services are provided with the goal to support undertakings and overcome weakness in specific areas like finance, business, legal etc. A range of business advisors are bestowing best-in-class services to help organizations perform up to the ballpark and become a sovereign. Nowadays, start-ups are showing rapid growth in the industry, but the thing they lack is advisory service. Proper advisory services are required by every organization out there to leave a blemish on the audiences mind and the stakeholders too.

There are a plethora of advisory services like business advisory services , finance advisory services , legal advisory services , investment advisory services, corporate advisory services and much more.

Now that you’ve came across what advisory services are, you must be wondering about. Who business advisors are? So, we’ve got you covered!

What are business advisors?

Business Advisors are proficient and independent experts who use their old-hand techniques and practices to guide and support you in specific business verticals which make a huge difference to your business success.

Importance of Advisory services for your business:

Advisory services are the keys to unlock your success!

Are you aware where your business is going? Are you aware who your target customers are? If you said no, it’s high time. You should definitely look for advisory consultants in order to save your sinking boat.

These days it’s arduous to talk about accounting profession without incorporating the words “business advisory services”. Advisory services are a huge need for every business organization out there. No mater you are a corporate giant or a just born start-up, you need advisory services at every step towards your success.

We’ve listed up some major factors that show how advisory services can help your organization to perform next level.

• Advice on Financial aspects:

Financial aspects are the backbone of every business organization. Whether you want to invest in your previous infrastructure or looking to expand your venture, you need proper financial strategies to remain at the top. Some financial advisors are offering services like investment advisory services, accounting advisory services and numerous others.

• Increase the profit:

If your organization’s profits were good but are suddenly facing downfall, it’s good time to get assistance from business advisories. Business advisors will re-imagine your business structure and with their strong ideation they’ll help you to manage and re-organize strategies to thrust your business like never before.

• Structure and effective business plan:

Business Advisory services will help you to prevent some crucial mistakes that your company often makes while trying to expand its venture. Expanding your venture is a major decision. In some cases, the urge to increase profits forces business owners to take early decisions which in-return brings huge losses and destruction. A proper planning is indispensable before taking such huge steps.

• Identifying market growth:

For business possessors it can be very fruitful, when their business thrive and they’re able to expand their business. But they lack somehow in identifying the market growth. The rigorous pace of growing market is really volatile and business owners face difficulties to cope up with the changing needs and requirements. A reliable business advisory firm can help business organizations with formulated techniques and strategies to conquer the difficulties.

• Technology-driven Solutions:

Technologies are revolutionizing every sector with its fast pace of evolution. Some businesses fail to take the advantages of technology and start losing their customers to others, who are more technologically advanced. Business advisors not only help you to cope with financial difficulties but also muster you for technological advancements to again hold the grasp and rule the market.

Having a reliable advisory firm at your side is a plus point. There are several companies offering best-in-class financial advisory services in Delhi and other regions and you should definitely avail one to charge up your business.

Learn more about accounting outsourcing at Aristotle Consultancy.