Selection of Appropriate Business Structure

• Choose a tax-efficient entity type such as private limited company, LLP, or public company.
  
• Consider tax implications of ownership structure, liability, and capital requirements.
  
• Evaluate startup incentives and tax holidays available under the Income-tax Act.
  
• Select a structure aligned with future funding, compliance, and expansion plans.
  
• Proper entity selection helps optimize tax liabilities from the beginning.
  

Initial Capital Planning and Shareholding

• Design the capital structure to avoid unnecessary tax on share premiums.
  
• Ensure compliance with provisions under section 56(2)(viib) for share valuation.
  
• Allot shares at fair market value to avoid scrutiny and future tax exposure.
  
• Register and validate shareholder contributions to avoid classification issues.
  
• Maintain proper records and agreements for equity and preference shares.
  

Tax Registration and Compliance Setup

• Apply for Permanent Account Number (PAN) and Tax Deduction Account Number (TAN).
  
• Register for GST, TDS, and professional tax, if applicable.
  
• Set up accounting systems aligned with statutory tax reporting requirements.
  
• Ensure bank account and business address match with tax records.
  
• Avoid delays in statutory registrations to prevent interest and penalties.
  

Utilization of Deductions and Exemptions

• Plan early capital and revenue expenditures to claim preliminary expense deduction under section 35D.
  
• Structure R&D activity to claim benefits under section 35 and other applicable provisions.
  
• Evaluate eligibility for startup tax benefits under section 80-IAC.
  
• Consider tax holidays for SEZ units or infrastructure businesses, if relevant.
  
• Document all expenses carefully for audit and tax claims.
  

Maintaining Proper Documentation and Audit Readiness

• Maintain accurate records of incorporation expenses, legal fees, and consultant payments.
  
• Ensure board resolutions, contracts, and financial statements are documented.
  
• Keep track of share issuance, statutory filings, and tax return timelines.
  
• Prepare for tax audits by setting up compliant accounting practices.
  

Early recordkeeping ensures smooth assessments and lowers future tax risks.