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 JV

The Chennai real estate market is growing by leaps and bounds. It is a known fact the property market in Chennai is growing tremendously in tandem with the overall growth of the economy.
At such a time if you have land/s that you’d like to use productively it would be a good idea to consider joint venture development with a reputed residential builder. What’s in it for me? You might ask. If you were to sell the land directly then it would definitely fetch you a good price. However, if you choose to jointly develop the land with a good residential builder then not only do you get a percentage of the total square feet built but also cash advance. In other words you don’t entirely lose your property in Chennai instead you will own a few flats units.
In general the profit share ratio is 40:60 (owner / builder) and in some rare cases 50:50. This way the owner doesn’t have to worry about losing his property entirely and also about funds required to construct the apartment building in Chennai. For the builder he saves on the cost of purchasing land, which constitutes the major investment in a residential project.
Big residential apartment builders in Chennai consider joint venture only if the grounds available is more than 3 grounds, but there are smaller builders who consider smaller plot areas.
Some points to be kept in mind:
  • Landowner will have to execute a general power of attorney (GPA) favoring the builder
  • GPA must be on stamp paper of suitable value
  • Joint venture development agreement must be drawn before the builder starts construction
  • Joint venture development agreement will include complete details of the size, share, amenities and facilities, materials to be used, car parking allotted per apartment, etc. And also, the financial transaction details such as advance paid and the possession date.
  • Upon receiving the approved plan the owner must ensure that an allocation agreement stipulating his share of the property is executed.
  • On completion of the construction before possession the owner can get a certified engineer and measure the square feet allotted to him.
Should there be a breach on the part of the builder the GPA can be cancelled. So if you own a hot property in Chennai then you might want to consider joint property development with any of Chennai’s leading residential builders.

VAT in realty
Value added tax (VAT) has always been a cause of perplexity to the real estate buyers. While some builders are recovering VAT from the customers, there are others who are not charging their customers at all. This has led to much confusion for the property buyers as to whether VAT needs to be paid and if it does need to be paid, what should be the amount.
The VAT system replaced the sales tax system with the objective of simplifying the tax regime and to avoid the problem of double taxation. VAT is a multi-stage tax levied at each stage of the value chain with the provision that tax credit will be allowed for the tax paid at an earlier stage.
Under the VAT structure, there are two categories of rates - four percent or 12.5 percent. The idea behind this was to bring about uniformity in the levying of tax by different States and simplify the complex structure under the sales tax system. Different States have enacted the VAT Act for their State along with certain variations. While some States have moved away from the basic rate structure, some have introduced certain exemptions and concessions for the benefit of specific sectors.
In Karnataka, the real estate developers or builders have an option to charge VAT to the customers under two schemes. The first one is the composition scheme where the builder pays four percent of the construction cost as VAT. In this case, he does not claim anything from the individual owners.
Under the second scheme, the builder can collect 12.5 percent of 70 percent of the cost of construction from the individual owners. This works out to 8.75 percent of the total cost of construction. VAT is applicable only to materials and 70 percent of construction cost is representative of the materials cost in construction. VAT is calculated on the cost of the flat, parking space cost and amenities.
While some may think that it is unfair for buyers where the builder opts for the second scheme, it is not so. In the first case, although the builder is paying VAT himself, the additional burden will be passed on to the owners by way of a higher price. Similarly, where the builder is recovering VAT from the owners, the price of the flat would be lower to that extent since VAT is an additional cost to the buyer. Failure to do so may render him uncompetitive in his overall pricing.

ABOUT JOINT VENTURE

After all, in a JV you have to take into account another persons attitude, decision-making process, (or inability to make a decision), whether they have a logical and sensible mind ... the list goes on.

So, getting into a JV must have a good payback for you.

A JV Agreement sets out what each party will contribute, both money and effort, and sets out each party’s obligations. It also sets out what happens if the parties 'fall-out' with each other as well as the division of profits or losses.

We want to involve more developments and expansions in the upcoming projects. You might benefit from their knowledge of new technologies and get a better quality of service.

Builders:
Usually the most problematic issue will be the property with a clear title with proper owners / mediators for a positive development. The builder’s aim might be to strengthen their business from a guaranteed volume of sales. We carefully screen Members and the support and education provided are very effective.

Land Owners:
Usually the most basics reason revolves around something you don't have. Some of them may be:
  1. I own land ... have capital & capacity to borrow ... but no experience.
  2. I have capital & capacity to borrow ... partner has land ... both have no experience.
  3. I am 'time poor' ... work full time and can't be personally involved ...
Mediators:
Mostly undergoing issues for the mediators may be:
  1. I have a property and the owners are good not finding a good builder.
  2. I work part-time and I am personally involved for the property which my client is having for the JV
  3. I have just mediated for selling and buying… what is this joint venture?
Do not choose the wrong partner.
  1. Someone who has a pattern of dishonesty, a pretty big sign that they do not is when they don't completely answer your probing questions into their own business affairs and financial history.
  2. A partner who is not transparent with you is dangerous and a Partnership Killer.
  3. Someone who is dysfunctional in areas that is important in a successful real estate joint venture.
  4. Someone who has nothing to contribute to the partnership.
  5. Someone who is lazy and won't contribute.
  6. Someone who is too busy with a million other things and will never actually have the time to contribute to your partnership.
Choosing the Right Partner.
  1. You want someone who is honest and who has integrity. That is actually no small challenge in this day and age.
  2. Your partners should be people you respect and admire.
  3. Each partner should be someone with whom you have a kindred spirit.
  4. Obviously, you need to get to know someone before you jump into a partnership with them.

The Purpose of the Joint Venture:
The knowledge and experience of the individuals you will bring into the partnership will depend on the purpose of your venture.
For example, if your partnership is to develop raw property for sale to builders or other buyers, you would want credentials like these, although this is not at all-inclusive:

Developing Raw Property in Chennai Joint Ventures:
  1. An excavator who has experience sufficient to do the dirt work;
  2. An engineer/surveyor with sufficient experience to be able to do all the engineering and surveying required for the platting work;
  3. A utilities man, if the excavator does not have the experience, who can install the utilities properly and to code (power, sewer, cable, phone);
  4. An asphalt company that can pour beautiful roads throughout the project;
  5. A real estate lawyer who knows real estate and all the contracts and negotiations involved;
  6. A Realtor who can sell the lots to builders or individuals; and
  7. A person or persons with financial resources both cash and credit.
  8. An experienced inspector or builder who knows how to inspect;
  9. An experienced contractor/builder who can do great rehab work;
It is difficult to lay down these principles and rules and expect that a group of people could simply do it without years of experience in successful partnerships and real estate investing. It is critical that you draft a very good partnership agreement that clearly spells out all the rights and obligations of each partner and how each will share in the rewards. You've got to have an exit strategy, both for success and for failure. You need a good business plan in writing and well planned spreadsheets (three, one for the best case scenario, one for the worst case scenario, and one for the most likely scenario). Someone has to be good at conducting partnership meetings, addressing conflicts among partners, and resolving challenges.

Do these things and you will have a Powerful & Successful Joint Venture in Real Estate, and you will make a lot of money in the next five years.

For all these reasons we are now guiding you and giving you a solution in the name of CHENNAI JOINT VENTURES.


About Joint Venture Development

A joint venture involves two or more businesses pooling their resources and expertise to achieve a particular goal. The risks and rewards of the enterprise are also shared.

The reasons behind forming a joint venture include business expansion, development of new products or moving into new markets, particularly overseas.

Your business may have strong potential for growth and you may have innovative ideas and products. However, a joint venture could give you:

    More resources
    Greater capacity
    Increased technical expertise
    Access to established markets and distribution channels


Entering into a joint venture is a major decision. This guide provides an overview of the main ways in which you can set up a joint venture, the advantages and disadvantages of doing so, how to assess if you are ready to commit, what to look for in a joint venture partner and how to make it work.

People who have invested in a site have many options. One is to retain the site for some time and wait for good capital appreciation. Another option is to construct a house. The owner has to arrange for the finances, and supervise the construction of the property, apart from getting the required approvals.

A third, and now popular option, is to enter into a joint development agreement with a builder. The land is provided by the owner. The builder constructs the houses or flats. A certain percentage of the area is earmarked for the owner of the site. The balance area or flats are sold off by the builder directly. This way, it suits the needs of both the parties.

The owner of the site does not have to get into the nitty gritty of constructing the property, nor has he to arrange for funds for construction. At the same time, the builder gets access to land and does not have to shell out money for purchase of land.
Usually, cost of land constitutes a substantial part of the cost of a project, and as such this expense is saved for the builder. The funds of the builder do not get blocked. This is also fast mode of development of property.

The builder and the owner of the site develop the site on a joint venture basis. The site owner usually gets between a 30 and 40 percent share, and the balance goes to the builder. The exact percentage depends on the terms of agreement.

The site owner has to execute an irrevocable general power of attorney (GPA) in favour of the builder. The GPA should be registered on a stamp paper of appropriate value with the registrar in order to be legally binding on both the parties.

The stamp duty payable for this kind of GPA given to the builder under a joint development agreement is Rs 1,000. This may vary from State to State. After this, the parties enter into a joint development agreement. The builder then proceeds with the construction of the flats and getting the necessary approvals.

In case there is a breach of contract on the part of the builder, either financially or otherwise, the site owner has a right to revoke the GPA. In case the builder breaches the joint development agreement, the site owner can revoke the power of attorney.

The owner needs to take measures to protect the property till the project is completed and handed over to him. Once the plan is approved, the owner should get an allocation agreement done recording the constructed area which comprises his share and the area going to the builder.

Once the building is ready and the allocation agreement is done, it is better that a deed of declaration is executed recording the constructed area. This should reflect the area constructed for the site owner under the joint development agreement.

Builders usually insist that the owner executes a single sale deed in favour of the prospective buyers identified by them in respect of the undivided share of land.

The site owner or his legal heirs will be entitled to dispose off the constructed property delivered to him under the joint development agreement.

The owner can retain his share of the built-up area or may sell it off at a later stage.
Legal Aspects
The developer is not a transferee/purchaser coming within the purview of Section 53-A of the Transfer of Property Act, 1882.
The developer does not buy any land or property from the owners.
The right to develop the property granted to a developer as provided in the development agreement does not constitute a contract to a transfer of any immovable property as between the owner and the developer, to attract the provisions of Section 53-A of the Transfer of Property Act, 1882 between them.
The developer only nominates the prospective buyers. The developer enters the property only for the purposes of development of the property and not as a purchaser/ transferee. The GPA given to a developer is only to enter into agreements with the prospective buyers for and on behalf of the owner and not for executing the sale deeds. There will be a restrictive clause in the GPA to this effect.
Only the prospective buyers are the purchasers/transferees in respect of the flats/ apartments purchased by them together with the corresponding shares of undivided interests, rights and titles in the land.
The prospective buyers of flats/apartments are never put into possession of them before the sale deeds are executed and registered in their favour and hence (i.e. there is no scope for invoking the provisions of Section 2(47)(v) read with Section 45 of the Income Tax Act, 1961 and the provisions of Section 53-A of the Transfer of Property Act, 1882).
It is only the developer who develops the land by the construction of flats/apartments together with common ways, infrastructure, amenities and facilities both for the owners of land as well as for the prospective buyers of flats/apartments and his profit margins are assessable as business income.

* * *
The basic legal concepts, principles and practices in relation to the property development transactions in general and those covered by what is popularly known as "Joint Development Agreements (JDA)."

The tax incidence of the same is also discussed in detail.

Owner of land: A single owner or a group of co-owners own certain land.

Conversion: Such land may be agricultural in nature and they get `converted' by suitable orders of the competent statutory authorities for use for non-agricultural purposes i.e., for the development of sites, flats, apartments, townships etc.

Offer of developer: A property developer approaches the owners and offers the following:

a. To construct for the owners certain specified extent of built-up area of flats/apartments together with the right to use certain common areas, facilities and amenities. In addition, a specific amount may also be offered to the owner, by way of a refundable or a non-refundable advance.

b. In return for the same, the owner agrees to sell a specified share/percentage of undivided interest in the land to the prospective buyers nominated by the developer. The owner also grants exclusive rights of development of the land to the developer.

The developer is granted the rights to construct for himself certain extent of built-up area and own it. The developer is authorised and empowered to sell his share of the built-up area together with the corresponding shares of undivided interest in the land to the prospective buyers and appropriate to himself the entire sale proceeds as his own.

Acceptance and execution of development agreement: The aforesaid terms are accepted by the owners and the development agreements are entered into between them and the developers. Under these agreements the developer by himself does not purchase any immovable property from the owner and it is the prospective buyer who buys a specified share of the undivided interest in the land from the owner.

Therefore, these agreements between are purely contractual and commercial in nature and hence the provisions of Section 53-A of the Transfer of Property Act, 1882, has no application since the developer by himself is not a transferee or purchaser of any immovable property.

Popularly known as joint development: Even though it is only the developer who develops the property and constructs the buildings and the owner only receives his share of built-up area, the above arrangement is popularly known as "joint development."

Developer to nominate buyers: The developer is authorised to exclusively nominate the prospective buyers and enter into agreements with them, fixing the sale prices and considerations payable by them.

G.P.A to developer: A General Power of Attorney is given by the owner to the developer authorising and empowering him to carryout the following:

To represent the owner before appropriate statutory authorities and obtain necessary permission, approvals and clearances.

To enter into agreements for the sale with the prospective buyers of the developer's share of the built-up area together with corresponding undivided share and interest in the land.

To execute and register the deeds of absolute sale and conveyance in favour of prospective buyers in pursuance of the agreements entered into with them with a clear stipulation that this power will be exercised after the owner's share of construction is completed and handed over to the owner with occupancy rights (read next paragraph for further clarity).

No power given to developer to execute sale deeds and possession to prospective buyers before sale: The developer is not given any power to execute sale deeds in favour of the prospective buyers. Once the developer completes the construction of the specified built-up area of flats/apartments for the owner as per the agreed specifications and dimensions, and on handing over the same to the owner with `occupancy' rights (being granted by the competent statutory authorities), the sale deeds are executed by the owner himself in favour of the prospective buyers.

In the alternative, only at that stage the owner gives a separate General Power of Attorney to the developer to execute and register the sale deeds on behalf of the owner to and in favour of the prospective buyers.

At no stage before the actual sales are effected are the prospective buyers put in possession of the flats/ apartments sold to them.

Developer's right to entry is only licence, not possession: It will be specifically provided that the development and construction and such right of entry is only a licence coming within the purview of the provisions of Section 52 of the Indian Easements Act, 1882.

It will be clearly provided and recorded that the legal and physical possession of the property shall only be with the owner till the same or parts of it are sold to the prospective buyers. The developer is only permitted to enter the property for the purpose of development. Not being the purchaser or a transferee, the provisions of Section 53-A of the Transfer of Property Act, 1882, have no application to him and the aforesaid right of entry to the developer constitutes only a `licence' coming within the meaning of the term under the aforesaid Section 52 of the Indian Easements Act, 1882.

Separate agreements for flats/apartments: The developer enters into separate agreements with the prospective buyers for the construction and sale of flats/apartments to them fixing the consideration payable by them for the same. These agreements are entered into by the developer on his own and not as a G.P.A holder for the owner.

Registration of agreements-benefits available: The development agreements and agreements to sell entered into with the prospective buyers can be registered with the appropriate registration authorities of the State Government under the Registration Act, 1908.

They will get the benefit of entry into Book-I maintained in the Registrar's office. Such entry will ensure that there is a public notice to these documents and their contents.

Whenever any encumbrance certificates are obtained on the immovable property, there will be entries recording the execution of these documents. The General Power of Attorney given to a developer by the owner can also be registered in the same manner. When the fact of this GPA is recorded in the aforesaid registered agreements, there will be "public notice" to these GPAs also.

As the GPAs are given to the developer for `consideration', they will become irrevocable as such a move will be treated as creating an agency coupled with interest to come within the purview of the provisions of Section 202 of the Indian Contract Act, 1872.

There will be a suitable clause in the GPA to indicate that the same is irrevocable. The total cost of stamp duty and registration fee payable on these documents is very nominal in all the States.

Stamp duty

As per the provisions of the Indian Stamp Act,the stamp duty may vary according to state to state and is payable as stamp duty for an Agreement or Memorandum of an Agreement if it relates to giving authority or power to a promoter or developer by whatever name called, for construction or development of or sale or transfer (in any manner whatsoever) of any immovable property.

Taxation

In the hands of the owners, the chargeability to tax the gains made by them will be treated as follows:

a.Only as and when the flats or apartments constructed by the developer on the developer's share of the land is sold or transferred to the prospective buyers, capital gains can be taxed on the owners in the years in which such sale or transfer takes place.

The consideration for the sale of the developer's share of land will be equal to the cost of the flats or apartments built by the developer for the owners. On the occupancy of these flats or apartments being given to the owners after the completion of the construction of the same as per the specifications and dimensions mutually agreed to between the owners and the developer, the consideration to be given to the owners becomes fully discharged.

b.When the owners get more flats or apartments than what they can personally use and occupy, they effect sales of such additional flats or apartments. When such sales are made, the following position will emerge:

If the sales are made within three years from the date when occupancy was given to the owners, the further gains made by them on sale of the super built-up area will be treated as short-term capital gains and if the sale of the super built-up area is effected after a period of three years after taking possession, the gains will be treated as long-term capital gains.

However, it is to be noted that the consideration for the sale of undivided share of the land relating to the owners' share of apartments will be taxed as long-term capital gains only as the same were always held by the owners and transferred at any time to the developer or his nominees.

Where the owners retain one flat each out of the total number of apartments allotted to them towards their share, each of them will be entitled to claim exemption under Section 54F of the Income Tax Act on the cost of construction of such retained apartment, subject to other conditions under Section 54F being fulfilled by them.

Land and stock-in-trade


i. It is possible for the owners to treat their land as stock-in-trade of a business in property transactions carried on by the owners before they enter into development agreements with the developers. Such conversion of their capital assets (land) into stock-in-trade can be evidenced by suitable entries in the books of accounts of the owners supported by other contemporaneous documents executed like sworn affidavits etc.

It will only be a natural course of action to be adopted by the owners as the owners will invariably be left with such surplus flats/apartments as mentioned above and sales of the same have to be made on commercial basis only.

ii. The capital gains arising to the owners on the date of such conversion to stock-in-trade will get quantified at that stage itself but tax is levied only when sales or transfers of such stock-in-trade take place subsequently.

This is because in such cases only the provisions of Section 2(47)(iv) of the Income Tax Act, 1961, read with Section 45(2) come into operation and there is no scope for invoking provisions of Section 2(47)(v) and (vi) of the Income Tax Act, 1961, or any reference being made to Section 53-A of the Transfer of Property Act, 1882, through Section 2(47)(v).

The profits and gains arising out of such conversion into stock-in-trade will be governed by the provisions of Section 45(2). It should be clearly noted that subsequent sales or transfers will be of stock-in-trade only and provisions of Section 2(47) of the Income Tax Act, 1961, cannot be invoked for such subsequent sales or transfers of stock-in-trade.

Business income


iii. The profits and gains earned on subsequent sales effected by the owners of their surplus flats/apartments (other than what are kept for their own use) will be taxed as business income only.

In the normal course, these sales would have been made within a period of three years from the date of completion of the project and they would have been subjected to tax as "short-term capital gains" only and the tax incidence would have been the same on the owners.

It is to be noted that the above treatment of land of the owners as stock-in-trade will avoid all the risks and problems arising out of such interpretations that an agreement to sell by itself constitutes a `transfer' within the meaning of Section 2(47)(v) read with Section 45 of the Income Tax Act, 1961, as held by the Bombay High Court in the case of Charturbuj Dwarakadas Kapadia vs CIT (2003) 260 ITR 491 (Bom).

There will be no scope for invoking the provisions of Section 2(47)(v) and (vi) in such cases as they will be governed by the provisions of Section 2(47)(iv) read with Section 45(2) only.
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8 comments:

  1. Catherine21:09

    Available Sqft Range- 345-474- 448- 547 Double Bedroom ,single Bedroom Flats Near 7H Bus Stand Opposite to Church Near DAV School. All basic amenities available. Per Sq Ft Rs.4200/- Rate Negotiable Free site visit arrange Contact no: cetherin: 9003082496


    City : Chennai
    Area : Anna Nagar chennai -600101
    Looking for / Available : Available
    Category : Real Estate
    URL :
    Date posted (dd-mm-yyyy) : 23-11-2008

    ReplyDelete
  2. Anandh Anu22:27

    Near Sholinganallure World Class INFORMATION TECHNOLOGY Platform
    Great appreciation,enjoy
    panoramic view of OMR World class IT hub areas Perumbakkam & Sholinganlallur
    Chennai CMDA approved Residential plots for sale.WIPRO ½ km from
    HCL1/2 km facing 40 ft wide Road East facing CMDA approved in Perumbakkam
    residential plots. Call 91-9841517994

    ReplyDelete
  3. Ganapathy00:21

    DTCP plot for in Venkadeshwara(polivakkam)

    1.Near Thiruvallur to Sriprerumandur High Road. 2. 4 km Thiruvallur Railway Station. 3. 5km Collactor Office and Government Hospital 4. Near Ranga Nagar Housing Plant 5. TCL Company Back Side. 6.The sorrounding house site occpaide by MNC company empolys 7.High appreciating layout 8. Sweet Ground water 9.1800 Sqt Plot Available 10. Rate Per sqt. Rs.175/- Contact:Ganapathy 9943165025
    City : Chennai
    Area :
    Looking for / Available : Available
    Category : Real Estate
    URL :

    ReplyDelete
  4. Ganapathy00:36

    Gani Nagar (polivakkam) at Thiruvallur
    1.Near Thiruvallur to Sriprerumandur High Road. 2. 4 km Thiruvallur Railway Station. 3. 5km Collactor Office and Government Hospital 4. Near Ranga Nagar Housing Plant 5. TCL Company Back Side. 6.The sorrounding house site occpaide by MNC company empolys 7. High appreciating layout 8. Sweet Ground water 9. 2700, 2400, 1800 Sqt Plot Available 10. Rate Per sqt. Rs.250/- Contact:Ganapathy 9943165025
    City : Chennai
    Area :
    Looking for / Available : Available
    Category : Real Estate
    URL :
    Date posted (dd-mm-yyyy) : 26-11-2008

    ReplyDelete
  5. Thanks for providing us information on such a important topic.
    Laptop

    ReplyDelete
  6. Anonymous21:04

    2 plots side by side, 40' x 74', DTCP approved, with clear papers, in Balaji Nagar, near Kamakshi Hospital, Pallikarnai, Chennai.
    Please contact: Krisna on mobile no.9381882622 (Chennai)

    ReplyDelete
  7. Anonymous21:07

    2 plots side by side, 40' x 74', DTCP approved, with clear papers, in Balaji Nagar, near Kamakshi Hospital, Pallikarnai, Chennai.
    Please contact: Krisna on mobile no.9381882622 (Chennai)

    ReplyDelete
  8. Its very nice to read your blog which is related to my searches.Thanks for posting this sap recruiting details here. I also got more details from this topic , have a view on this also please...!
    Used Cars Sale in Chennai Mrjalebi is one of the most popular free classifieds site in India, you can also directly contact the sellers and sell your old goods as per the cost you like.

    ReplyDelete

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New business?
However small
it may be,
success requires
proper planning,
preparation and
insight.

YOUR
RIGHTS In business, there are no
guarantees. There’s simply
no way to eliminate risks
associated with starting an
enterprise. But you can improve
chances of success with good
planning, preparation and insight.
Find out what to consider when
starting a business.
Drawing up a business plan
It’s important to draft a
comprehensive and thoughtful
business plan. Much hinges on
it: Outside funding, credit from
suppliers, management of your
operation and finances, promotion
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and achievement of your goals
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Creating a business plan will
force you to think about key issues
before you start your enterprise,
such as raising money and your
projected start-up costs and
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you figure out if your idea is
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Naming
The core of naming a business lies
in understanding the trademark
law. Trademarks help consumers
identify the makers of the goods
or services. Often, the name of
your company may also be used
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name, you may wonder. But if you
choose something too similar to a
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■ Distinctive
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pronounced
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■ Distinguish you from your
competitors
Partnerships
Many people opt for partnerships
with their friends or relatives for
doing business, because they
feel very comfortable dealing with
people they have known for a long
time. But before you do, create
a Partnership Agreement which
should include the following:
■ Amount of equity invested by
each partner
■ Type of business
■ How profit and loss will be
shared
■ Each partner’s pay and
compensation
■ Distribution of assets on
dissolution
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dissolving the partnership
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Financing A new business
Money can be raised either by
borrowing it from a friend, family
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There’s no hard and fast rule on
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If you are going beyond family
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If you take a loan, you will
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All about you
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Business licences and permits
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There is no universal rule for
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The biggest consideration is
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Be mindful of employment
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or her employment agreement.
It mentions the kind of work the
employee will do, for how long,
and at what rate of pay. Please
consult an attorney who can
advise you about Confidentiality
and Non-Competition Agreements,
and clauses pertaining to
ownership of inventions, exclusive
employment, termination,
minimum wages, bonus,
arbitration and jurisdiction.
In almost all business dealings,
every time you or your company
agrees to take some action or
make a payment in exchange
for anything of value, a legal
contract is created. Make sure
that you and the other party
agree on the meaning of any
potentially ambiguous words or
phrases. Even a misplaced (or
unnoticed) punctuation mark can
dramatically change the scope of
your rights and obligations under a
contract. Watch out for commonly
misused words. When you agree to
bimonthly payments, for instance,
do you understand that you will be
paid every other month? Or do you
expect to be paid twice a month?
Some business agreements may
be simple enough for the regular
person to draft, while others may
require the help of a lawyer.
Advertising
If your advertisement is deceptive,
you’ll face legal problems even
if you had the best intentions
while framing it. In addition, if
your advertisement contains a
false statement, you have already
violated the law. The fact that you
didn’t know ‘the information was
false’ is irrelevant. Advertisements
should conform to laws and
should not go against morality,
decency and the religious
susceptibilities of people.
Business Advisors
Finally, the key to success for any
entrepreneur is to have the best
set of advisors, not necessarily
the most expensive but the
ones you can trust totally. These
may includes lawyers, chartered
accountants, insurance advisors,
and bankers among others.

Decide on the meaing of potentially
ambiguous phrases. Even a misplaced
punctuat ion mark can change the
scope of your rights and obligations..