startup-costs, founder, incorporationThe Scenario
I have started a business of an IT company that provides services such as Designing, Development and Digital Marketing. We also have some products lined up for release which are our ideas purely and will be made into applications.
The Company
The name of the company was decided by me. The company is not yet incorporated. I started working for this company 5 years back but now I plan to take it seriously and further which I couldn’t in the past because of my Master’s Degree.
The Office
The Office is running at my home itself. It is my room with all the setup. I have borrowed a screen, a printer from my friends for free. I bring in all the office supplies including snacks, toffees, lunch as well (my mom makes it for us even though she is working).
The Furniture
I brought in all the office furniture from my sister’s house. I got it all for free, which should have costed me around 40K if I were to purchase it from the market. Later I bought a chair worth INR 3400.
People
2 of my friends and me are working right now. One of them is the CTO (Technology), the other one is CTA (Tech Architect). All 3 of us left our jobs to work on our own. So, I feel they need to have some ownership in the company but not as much as me. All 3 of us work on our own laptops with an additional monitors attached to them. I am the CEO and handle everything including Design, sometimes backend, Frontend, Keeping in touch with the Client over email and phone, Decisions, Project Discussions, Vision of a project etc. The CTO and CTA have not invested any money or pay for any expenses except sometimes when we eat snacks or dimsums.
Q1. How much of the company should they own just for leaving their jobs, working day and night on backend and sometimes project discussions?
The Expenses
All the setup and recurring expenses of the company like Internet, Hosting, Domains, Business Cards, Electricity and everything else are being paid by my parents. I use a credit card to make these payments or they give me cash. Additional accessories like Printer cartridges, mouse, keyboards etc. and all eatables like snacks, disposable things etc. are all the things I buy (from my parents money). So, in a way all the seed money is coming from my parents.
Q2. Should my parents own some part of the company because they are paying for everything and have spent like 30K in 2 months?
Incorporation I plan to get the company incorporated within this week. I want it to be Pvt. Ltd. with 2 directors being my elder brother (NRI) and sister. I can ask for help from them for money, marketing or advice any time.
Q3. Is Pvt. Ltd. the best way to go for this?
Q4. How much of the company should they own as directors?
More Questions
Q5. I want to have the Products as a separate entity or a subsidiary under the main company so if anyone invests in the Product, they will not be investing in the parent company. Is this a good approach?
Q6. How much should I own as the CEO of the company?
Q7. How much is the absolute amount I should keep aside for the company for growth and expenses?
Q8. Once the money starts coming, how should I pay for the electricity, internet expenses as right now my parents are paying for it? Should I pay from my profit share or from the money kept aside for the company?
Q9. How do I give back the money my Parents have spent in the initial months (Jan-March)?
Q10. Do I absolutely need to appoint a CA for filing taxes or managing accounts?
Q11. Can we have the same people in a Parent company and its multiple subsidiaries with different amounts of ownership? Ex: Me having 40% in parent company but 30% in a subsidiary of this parent company.
Q12. If a subsidiary makes money, should any amount of it go to the parent company? If yes, how is that decided?
Q13. Can the dilution in case of investments be prior decided for every member? For ex: Member A will be diluted 50%, and remaining 5 members will be diluted 10% from their total share, making a total of 100%? Is this possible?
Q14. Should I pay a fixed salary to the CTO and CTA incase no money is earned by the company? Should I sign an agreement with them? If yes, which one?
Q15. If I pay for something ex: Internet totally used for the company from my personal account, can I withdraw money from the Company account right away or at the end of the fiscal year?
Thanks a million in Advance.
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