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Demystifying Value Investing
  • Article, India

Demystifying Value Investing

Do you wonder what is meant by value investing? Let’s take an example to understand this better. You and your friend buy a new television. You feel that your television is a better value buy than your friend’s because you got a good discount. However, it’s important to note that both of you might define value in a different way. Your friend might feel that her television is a value buy as it is a brand she likes and it has the latest features for the same price.

Likewise, the investors who do ‘value’ investing could have varying reasons for thinking that a particular stock is a ‘value’ buy for them. To define it, ‘Value Investing’ means selecting stocks that are trading at a lower price than their intrinsic value. Basically, you are choosing stocks that are undervalued.

The best value investors

Usually the mutual fund experts or managers who manage multiple stocks on a day to day basis are the best investors whom we could emulate. Mostly, fund managers abide by the value investing approach for managing their funds and all of them would define value in their own way. Even though all ‘value’ fund managers buy the stocks which they feel are actually worth a lot more than their current price, they wouldn’t agree on what is called as ‘good’ value. So, how do these definitions differ? Read on to find out. 

The differences

Suppose there are two fund managers – A and B, who handle the best equity-diversified funds. Both of these are large-cap funds that invest money in large, blue-chip companies where the managers are following value investing. However, last year, A’s fund surpassed B’s fund. Wonder why? The reason is because of the difference in how they define value. A’s strategy was to pick stocks with strong fundamentals but they were being traded at a huge discount as compared to their intrinsic value. As per A, that is value investing. B also did value investing in his own way. He researched a lot and picked stocks that were trading lower as compared to others. This is also value investing. So, both the Mutual Fund managers followed value investing; however, their definitions of value were very diverse. That is why their funds performed in a different way.

Value investing styles
Relative

The relative value investing style or method is when the fund managers do a comparison of a stock’s price ratios to a particular benchmark. Examples are ratios like price-to-earnings ratio, price-to-sales ratio, price-to-book value ratio, etc. So in this case, the value is relative to a benchmark or standard. In case a stock is getting traded at a lower price when compared to an index, it is called to be undervalued. In this scenario, the benchmark could include any of the following:

  • The Stock’s Historical Price Ratios – If a stock’s price is being traded at a lower price than its historical price ratio, then it is undervalued. Mostly, these stock prices are lower because of some ‘bad news’ or may be ‘negative vibes’ which might be floating in the market.
  • The Industry or Sub-sector – When a stock is being traded at a much lower price as compared to other stocks in the same industry, then it is considered as undervalued. Thus, it’s important to make sure that the company’s fundamentals are strong, similarly as its competitors, who are trading at a high price.
  • The Market – The benchmark mostly used by value investors is the broad market index or the market. A company which has strong fundamentals might go down as the overall industry could be in a bad phase. This scenario is common in cyclical industries like IT and consumer durables. For example, a few years ago, IT company stocks went down heavily because of the rupee appreciation and the panic that it would adversely affect the margins in the IT companies. However, fund managers took this as a buying opportunity.
Absolute

Absolute value investing is when the investors are not comparing a stock’s price to any set benchmark. Instead, they analyse the company’s worth in absolute terms. They buy the stock in case it’s trading at a lower price than this absolute value. These type of investors find a company’s value by means of factors like the company’s assets, its balance sheet, and growth projections, instead of competitors. They also examine if any private buyers, like other firms, have already invested in the stock.

Stay out of the box The major point to note here is that value investing is not falling for the bandwagon effect. In case there is some stock in which most people are investing in, then usually, a value investor would avoid it. Value investors like Warren Buffet have amassed so much wealth by not following the herd mentality. A value investor understands the real value of a stock and how he can benefit by investing in it when people are ignoring it.

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7 Tips for Women Who Wish to Start A Business
  • Article, Bahrain, India, Oman, Saudi Arabia, Singapore, U.A.E

7 Tips for Women Who Wish to Start A Business

These days, women have loads of opportunities and the required abilities to start a business – be it full-time or part-time. Social media has also helped in changing the perception and women these days are taking the risks and becoming entrepreneurs.  There are many women who are also quitting their full-time jobs and starting their own ventures. So if you’re also thinking of starting your own enterprise but confused about how to go about starting it, then read on. We have collated seven tips for you, which would help you to kick-start your business.

1. Prepare an impressive pitch:

The first step before you start talking to your network or looking for investors, you must prepare a good pitch. You should know which product you are selling and why a customer should spend their money on it? So do you know what an elevator pitch is? Your pitch should be such that it is impressive yet not long. It should be crisp and something that grabs your attention quickly. It should also be something that enables people to understand your product or service and how the customers would be benefitted using it. Think of how your product is filling the gap in the market and giving what has been lacking.


2.  Study your market in detail:

After the sales pitch, do a detailed study on the customer base, that is, who will buy your product or service. What’s the size of your customer base? Are you targeting a niche customer base or generic one? Find answers to these questions first and then decide to present your idea to your potential investors.


3. Upskill yourself on financial aspects and knowledge:

Before making a sales pitch to investors, you must be confident with numbers, financials and data. Managing a business is not possible without mastering the financials of your venture; in fact your data and numbers should be on your fingertips. In case you’re not so confident about the financial aspects, you must upskill yourself and learn this from someone experienced and good at it. You should have answers to questions such as “What are the capital requirements of your business over time?”; “What are your gross margins?”; “What’s the time frame you are looking at for a break-even?” etc.


4. Don’t think twice and ask for help if needed:

You should not hesitate to look for help and advice in case you are have any doubts in how to set up your business. In this, networking is a very critical skill that should have so as to flourish in the entrepreneurial world. You must confidently tap into your network of acquaintances and friends, which is crucial to run your own business.


5. Have a useful board of advisers:

Having a board of advisers in an early stage in your company could really benefit your company’s image. While deciding the board members, make sure that you pick experienced people who can act as trusted advisers in your venture. These investors can advise you in all decision-making process and could even take you to your initial customers. So to start with, check and invite individuals from your own network who might have relevant experience. After deciding the board members, you could plan in-person or even virtual meetings on a periodic basis for discussing important issues.


6. Create a hiring roadmap:

Make a list of people you will require in your company in the coming 1 year or so and then start finding and hiring them. These people could be working with you full or part time or could be working for equity till the time you get some funding.


7. Work harder and faster than others!

Last but not the least, get ready to work harder than your competitors, or what you have done earlier. Do you know that most of the small business owners or entrepreneurs put in over 60 hours every week? Also, be ready for the inevitable failures or setbacks. It’s all part of the game. You must also not ponder too much and delay making the decisions, as others might launch the same product or service before you.

So, starting your own venture might have multiple challenges but if you keep these tips in mind, you’re surely off to a great start!

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Singapore Is Ranked as World’s Most Competitive Economy
  • Article, Singapore

Singapore Is Ranked as World’s Most Competitive Economy

While the world’s economy is facing downtrend and going through a bumpy ride, Singapore has been ranked as the world’s most competitive economy. As per an updated global league table, Singapore has beaten the top economies across the globe to become the most competitive economy. The Global Competitiveness Report series provides an annual assessment of long term economic growth and drivers of productivity.

Singapore beats the United States of America to emerge at the top spot in the ranking of 141 economies. The last time the country took the top spot in the rankings was in the year 1999. Singapore scored 84.8 out of 100 and secured the top spot. The US scored 83.7 in comparison to last year’s score of 85.6. The US lost the top spot due to uncertainties and effects of trade war

Current Year Ranking

EconomyLast Year Ranking
1Singapore2
2United States Of America1
3Hong Kong7
4Netherland6
5Switzerland4
6Japan5
7Germany3
8Sweden9
9United Kingdom8
10Denmark–


As per the report, the performance of Hong Kong improved and it rose four spots to claim the third place. This report is prepared on the basis of responses received in the first quarter of the year i.e. before the political turmoil began in the country. The report appreciated Hong Kong’s macroeconomic stability and financial system. The Netherlands jumped two spots to fourth place and Switzerland fell by one place.

According to the statement from the World Economic Forum, “Singapore improves from an already high base. The country is ranked first for infrastructure – one of the index’s 12 assessment pillars.” The country is also ranked number one for two other index pillars; labour markets and citizen’s healthy life expectancy years.

The Minister for Trade and Industry Chan Chun Sing said that the top rankings of the country reflect the strong fundamentals of Singapore’s economy which keeps it ahead of its competitors. He also added that even after topping the rankings charts, the success shall not be taken for granted. He said that the country must persevere to remain ahead in the world that is full of economic uncertainties and equip the country’s workers with right set of skills to remain competitive.

According to the report, Singapore ranks third when it comes to skillsets for the current workforce and 28th when it comes to skills of the future workforce. When it comes to market efficiency, financial stability and financial system, the country scores really well. The report further stated that Singapore is behind only Finland when it comes to the quality of public institutions. The report said that the country lacks commitment to sustainability and ranks 124th on the Freedom of the Press Index.

The report highlighted that if Singapore aims to become a global innovation hub it needs to promote entrepreneurship. The country ranks 93rd when it comes to hiring foreign labour and it needs to be improved.

CIMB Private Banking economist Song Seng Wun gave a statement that the number one ranking in terms of world’s most competitive economy showcases the will power of the policymakers in Singapore who aim to make the country the most preferred place to do business. However, he further added that Singapore needs to learn to work with the constraints that surround it.

Mr. Song gave the example that a small population of 5.6 million in Singapore has attracted top technology companies like LinkedIn, Facebook, Google, etc. to set up their offices in the country. But the local talent of the country may not provide them enough expertise which they require. This is the gap that needs to be filled between the current and future workforce through learning.

Lawrence Loh, National University of Singapore Business School’s Associate Professor said that Singapore is a global investment hub and it helped the economy get the top rank.

Another reason for the rise of Singapore as the most competitive economy is the slide in the performance of US. The report stated that “even after the weaker performance by US this year, it is still the most competitive economy of the world. US is still the top place for business dynamism and second in terms of innovation capability pillar”.

There is absolutely no doubt that Singapore is the top country to set up the business. If you are looking for company formation in Singapore, you can contact IMC Group. We provide expert assistance in setting up various types of companies in Singapore. In addition, we assist every registered company by providing them accounting services in Singapore. For more information, you can get in touch with IMC Group.

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All about finding GST rate and raising correct GST invoices to consumers
  • Article, India

All about finding GST rate and raising correct GST invoices to consumers

Goods and Services Tax (GST) came into effect in 2017 and since then it is mandatory for all the businesses in India to create GST-compliant invoices; both on paper and electronically. It is an integrated system of buyers and sellers, wherein one person’s supply must match another person’s purchase.

Issuing a proper GST invoice is of paramount importance for successful return filing. Therefore, in this article, we will tell you everything about the GST rate, GST invoice and how to raise GST-compliant invoices to consumers.

Before we get into technicalities, some basic concepts must be understood well.

Who should issue GST Invoice?

Every GST registered business needs to provide GST-complaint invoices to its customers for the sale of goods and/or services.

GST Rates

GST came into effect with a five-tier tax slab in order to demarcate the essential and luxury goods. The slab rates are as follows:

  • NIL – No GST is imposed on commodities like sanitary napkins, colouring books and drawing books for children, salt, cereal grains like wheat, oats, etc.
  • 5% – Imposed on items like biogas, natural cork, cashew nuts, kites, etc.
  • 12% – Imposed on items like notebooks, ketchup, pickles, diagnostic kits, plastic beads, etc.
  • 18% – Imposed on items like sports goods, aluminium foil, set up boxes for televisions, computer monitors (not exceeding 17 inches), headgears, power banks, etc.
  • 28%. – Imposed on items like aerated waters containing added sugar, non-alcoholic beverages, cigars and other tobacco products, paints and varnishes, granite, perfumes, cosmetics, etc.


You can easily find the GST rates on various goods and services on the GST website. Below mentioned are steps to find the GST rates.

  • Log on to the official page of Central Board of Indirect taxes and Customs i.e. https://cbic-gst.gov.in/index.html
  • From the top menu bar, click on the “Service”  From the drop-down, select “GST Rates”option.
  • Once the page opens, you can use the search bar to find the GST rates of the required goods and services. You can also find the pdf file for the rates on the right-hand corner of the page.

 

Based on the GST tax rate, the business needs to prepare GST-compliant invoice. For every business having a valid GSTIN (GST identification number), an invoice must be issued by the supplier to its customers at the time of sale of goods or services. In order to claim Input Tax Credit and refunds, supplier must produce a valid invoice mentioning appropriate details.

What are the mandatory fields a GST Invoice should have?
  • Name, address and GSTIN of the supplier.
  • Tax invoice number and date (Tax invoice will have a unique number for a financial year).
  • Buyer’s or recipient’s GSTIN, name and address, if he is registered. If the buyer or recipient is not registered and the value of taxable supply is more than Rs. 50,000 then the invoice should have the following details:
    • Name and address of the recipient
    • Address of the place where the goods or services are to be delivered
    • State name and state code
  • Details of the goods and services supplied in terms of description, quantity (number), unit (meter, kg, etc.) and the total value.
  • The taxable value of the goods or services supplied after adjusting the discount, if any.
  • HSN code of goods or Accounting Code of services.
  • Applicable rate and amount of GST based on the transaction made i.e. CGST, IGST, SGST, UTGST and cess.
  • Details of place of supply along with the name of the state, in case of inter-state trade or commerce.
  • Details of the delivery address where the place of delivery is different from the place of supply.
  • Clear mention on the invoice, if GST is to be paid on the reverse charge basis.
  • Signature of the supplier or his authorized representative.


The supplier has to raise 3 copies of invoices at the time of supply of goods. The supplier will keep the original copy while the duplicate copies will be with the transporter and recipient of goods. In the case of supply of services, 2 copies will be issued; one for the supplier and other for the recipient.

What are the other types of invoices?
  • Bill of Supply – Bill of supply is just like the GST invoice except that it does not contain any tax amount as the seller cannot charge GST to the buyer because the goods or services provided by the registered businesses are exempted or the registered person has opted for composition scheme.
  • Consolidated Tax invoice – This type of invoice is issued when the value of goods or services supplied is less than Rs. 200. A consolidated tax invoice is also issued in situations where the registered person does not issue an invoice.
  • Receipt Voucher – This type of invoice is issued when the GST registered supplier receives the value of goods or services in advance from the customers for future supply.

Apart from the above-mentioned scenarios, a proper invoice should be issued. Failure to raise a correct invoice is an offence and would attract penalties under the GST law

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  • Article

Should you opt for In-house or Outsourced Accounting?

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Complete Guide for a Foreign Company to do Business in Australia
  • Article

Complete Guide for a Foreign Company to do Business in Australia

About Australia

Australia crowns to be the largest country in Oceania and also boasts of being the world’s sixth largest country with an area of approximately 7.7 million square kilometres. The country comprises six states and two territories namely, the Australian Capital Territory (which includes Canberra, the political capital of Australia), New South Wales, Northern Territory, South Australia, Queensland, Victoria, Tasmania, and Western Australia. Australia shares close neighbourhood with Indonesia, Papua New Guinea and East Timor.

The country is known to have one of the strongest, open, flexible and most competitive economies in the world. In fact, it is one of the largest economies in the Asia Pacific region following China, Japan and Korea. Along with the strong economic growth, Australia also enjoys low inflation, which makes it all the more attractive for investors for doing business in the country.

Australia ranks 18th in the World Bank’s, Ease of Doing Business Report 2019. This is a testament to the country’s forward-thinking approach to business, protection of intellectual property rights, sound business regulatory environment and openness to global commerce.

This article covers everything you need to know about doing business in Australia, right from understanding the country’s tax and legal compliances to knowing about the types of business entities that can be formed.

Doing Business in Australia

Australia ranks on 12th position in the world economy and enjoys the 6th highest per capita GDP. Major sectors that contribute to economic growth include mining-related exports, banking, manufacturing, telecommunications, tourism and agriculture.

MNCs consider Australia as the best place for setting up their regional headquarters as the country offers them an opportunity to easily target the dynamic Asia Pacific region. It is also a leading financial centre in the Asia Pacific region.

The corporate tax rate in Australia is 30% which is very competitive as compared to other major economies. Moreover, it offers cost advantages to businesses in terms of office space, industrial land, utilities, transport infrastructure, etc.

In addition, the Government in Australia welcomes and encourages foreign investment. Also, the legal framework and government policies are very liberal and transparent.

Types of Business Entities for Incorporation in Australia

You can incorporate the following types of business entities in Australia:

  • Private Proprietary Company (Limited Liability Company)
  • Limited Liability Partnership
  • Australian Trading Trust
  • Public Limited Company
  • Branch
  • Representative Office


Depending on the type of entity that you choose to incorporate, the timeframe for incorporation, rules and regulations vary. Every type has its own advantages and disadvantages. Therefore, one must analyse all the conditions before incorporating a business entity in Australia.

Benefits of Registering a Company in Australia

Some of the advantages of registering a company in Australia include:

  • Quick business registration within a weeks’ time owing to simple and direct rules
  • Multiple trade agreements with other nations
  • World-class infrastructure
  • Educated and skilled labour force
  • Incentives offered by The Australian Trade Commissions (Austrade) helps international companies source goods and services in the country. It also aids in identifying potential investment projects and strategic business partners.
  • Safe environment to conduct business and trade
  • Advanced nation
  • Suitable location in the Asia Pacific region for conducting research and development


Tax Registration and Filing in Australia

Australian domestic corporations have to pay corporate income tax on worldwide income, including income earned by their foreign branches. Some of the important things to consider in relation to taxation in Australia are:

Tax Structure

Percentage
Corporate Income Tax Rate  30%
Capital Gains Tax Rate30%
Dividends30%
Interest paid by Australian Branch of Foreign Bank to Parent5%
Royalties30%
Construction and Related Activities5%
Goods and Services Tax10%
Fiscal Year in Australia1 July to 30 June
Companies with year-end of 30 JuneTo file returns by the following 15 January


Australia’s Double Taxation Treaties

Australia has double taxation treaties with many countries throughout the world including Singapore, India, Canada, France, Germany, Indonesia, Malaysia, South Africa and the United Kingdom among others.

If you are a company in Australia and looking for company formation in Dubai or company formation in Singapore, you may get in touch with IMC Group.


Legal and Compliance Requirements in Australia

All incorporated entities in Australia are required to comply with the below mentioned laws:

  • In order to form a limited liability company, the minimum requirement is 1 shareholder and 1 director. Non-resident investors have to appoint 1 director living in Australia.
  • For trust to function as an alternative to a trading company, they have to get registered with the Australia Companies Registrar and tax authority.
  • If all the trustees of a trust company are living outside the country, they have to appoint an Australian resident as a trustee or as a public officer.
  • Limited liability partnerships must comprise of general partners whose liabilities extend up to their personal assets along with a limited partner whose liability only extends to their contribution. In addition, a minimum of 1 general partner must be an Australian resident.
  • Public limited companies must have a minimum of 3 directors out of which 2 must be Australian residents.
  • All branches in Australia are required to appoint a local agent who can accept services and notices on behalf of the foreign company. In addition, a branch is also required to have a registered address in Australia.
  • Representative offices are restricted from engaging in activities that amount to carrying business.

Company Secretarial Compliance in Australia

Before starting a business in Australia, you need to comply with the below mentioned laws:

  • All companies in Australia are required to keep minutes book that records the following:
    • Resolutions passed by the members or directors without a meeting.
    • Proceedings and resolutions of the members and directors of the company in meetings.
    • In case the company is a proprietary company having only 1 director then the making of declarations of the director.
  • The minutes of the company should be kept at the registered office or the principal place of business or any other place in this jurisdiction approved by ASIC.
  • The chairman of the meeting should sign the minutes.
  • Written consent must be taken from the director or secretary of the company for the appointment of such position as well as shareholders.
  • All registered business entities in Australia should receive an Australian Company Number.

Accounting Services

All companies in Australia have to follow International Financial Reporting Standards (IFRS) for accounting. The responsibility of developing, issuing and maintaining accounting standards for entities in the public as well as the private sector is on the Australian Accounting Standards Board.


Auditing Services

As per the Australian law, large proprietary companies have to prepare annual financial reports and a directors’ report, get their annual financial statements audited and send these reports to the shareholders. The companies are also required to file the annual financial reports with ASIC unless a specific exemption applies to them. Even representative offices and branches are required to get their financials audited.

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Complete Guide for a Foreign Company to do Business in Germany
  • Article

Complete Guide for a Foreign Company to do Business in Germany

About Germany

Germany is a federal parliamentary republic located in the central part of Northern Europe. It is strategically located and shares borders with Denmark, Poland, Czech Republic, Switzerland, Austria, France, Luxembourg, Belgium and Netherlands.

Germany is having the largest economy in Europe. Moreover, it has a social market economy, meaning it embraces the spirit of free enterprise but at the same time imposes controls and other measures to establish fair competition within the country. The economy of the country is driven majorly by the manufacturing sector. In addition, many technology-driven companies in the service sector also contribute to the economy. Moreover, Germany is also one of the largest exporters in the world.

Germany ranks 20th in the World Bank’s, Ease of Doing Business Report 2019 and 25th in the Index of Economic Freedom. This is a testament to the country’s forward-thinking approach to business, protection of intellectual property rights, sound business regulatory environment and openness to global commerce.

This article covers everything you need to know about doing business in Germany, right from understanding the country’s tax and legal compliances to knowing about the types of business entities that can be formed.

Doing Business in Germany

Germany has the largest population in entire Europe and therefore enjoys the largest consumer market in the European Union. It enjoys good trade relations with other countries in the world including Singapore, Middle East and India. The process of incorporating a company in Germany can be tedious hence it is advisable to take help from professionals who can guide you to smoothly incorporate a company in Germany.

Types of Business Entities for Incorporation in Germany 

You can incorporate the following types of business entities in Germany:

  • Limited Liability Company (having suffix GMBH)
  • Regular Partnership (having suffix OHG)
  • Limited Partnership (having suffix KG)
  • Stock Company (having suffix AG)


Depending on the type of entity that you choose to incorporate, the rules and regulations vary. Every type has its own advantages and disadvantages. Therefore, one must analyse all the conditions before incorporating a business entity in Germany. 

Benefits of Registering a Company in Germany

Some of the advantages of registering a company in Germany include:

  • World-class infrastructure
  • Protective government regulation
  • Innovative nation
  • Advanced technology
  • Educated and skilled labour force and human capital

Tax Registration and Filing in Germany 

Business entities such as limited liability companies and stock corporations having a place of management in Germany have to pay corporate income tax on the worldwide income unless otherwise mentioned in tax treaties. Some of the important things to consider in relation to taxation in Germany are:

  • The tax year is the calendar year.
  • The due date of filing the annual tax returns is 31 May of the year following the tax year.
  • The due dates of prepayments of trade tax are 15 February, 15 May, 15 August and 15 November.
  • The due dates of corporate income tax are 10 March, 10 June, 10 September and 10 December.
  • The German group of companies are required to consolidate their taxes as per the German tax law.

Tax Structure
Corporate Income Tax Rate15%
Capital Gains Tax Rate15%
Trade Tax Rate14%
Branch Tax Rate15%
Value-Added Tax (VAT)

Standard Rate – 19%

Reduced Rate – 7%

Dividends25%
Interest0%
Royalties from Patents, Know-how15%
Branch Remittance Tax0%

Germany’s Double Taxation Treaties

Germany has double taxation treaties with over 90 countries including Singapore, India and Middle East nations like the United Arab Emirates, Dubai, Iran among others.

If you are a company in Germany and looking for company formation in Dubai or company formation in Singapore, you may get in touch with IMC Group.


Legal and Compliance Requirements in Germany

All incorporated entities in Germany are required to comply with the below-mentioned laws:

  • All incorporated entities have to prepare their financial statements including balance sheet and profit and loss statement towards the end of the financial year.
  • Although there are no foreign exchange controls, payment transfers exceeding € 12,500 from or to Germany must be reported.
  • Reporting must be done for any participation in direct investment from or to Germany, equal to or exceeding 10%.
  • While carrying € 10,000 in cash and crossing a non-EU border, it is mandatory to fill customs form.
  • Based on the size of the entity, the disclosure requirements by the German Commercial Code vary.

Company Secretarial Compliance in Germany

Before starting a business in Germany, you need to register your business with the German commercial registry.

Other requirements include:

  • All companies in Germany are required to have a registered office of their own.
  • It is mandatory for large companies to submit their financial statements including balance sheet, profit and loss statement, notes and management report, along with audit certificate to the German commercial registry and publish the same in the German Federal Gazette.
  • It is mandatory for small companies to submit their balance sheet and notes to the German commercial registry and publish the same in the German Federal Gazette.
  • Medium-sized companies have to only file their financial statements at the German commercial registry and publish the same in the German Federal Gazette.

Accounting Services

The accounting requirements in Germany are prescribed by the German Commercial Code and the German General Tax Code. It is mandatory for all the companies to prepare proper books and accounting records in accordance with the German regulations.

Auditing Services

As per the German law, medium-sized and large companies have to get their annual financial statements audited. Companies can either opt to use International Financial Reporting Standards (IFRS) or German Generally Accepted Accounting Principles (GAAP) for accounting. However, those companies whose securities trade in a regulated market have to prepare consolidated financial statement using IFRS, based on the provisions of the EU International Accounting Standards (IAS) Regulation.

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Top Reasons Outsourcing Your Bookkeeping Services to India
  • Article

Top Reasons Outsourcing Your Bookkeeping Services to India

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How AI is Being Used by Accountants Today
  • Article

How AI is Being Used by Accountants Today

AI started in the year 2015 and the business world was spellbound with the technology, pulled in by headlines that attracted a huge range of emotions from excitement to fear mongering.

Today, after five years into the journey to enhance tax and accounting workflows using data, analytics and AI, we can say that the real-world advancement of this technology is much more heartening — and constructive — than either of those previous narratives would suggest.

The reality is that AI is not going to take the jobs and it is surely not doing your taxes. However, it will certainly help tax and accounting experts in keeping up with the onslaught that the new tax legislation brings in. It will also assist in handling tax code amendments and global trade disruption that otherwise would be challenging for them. It is making this happen by streamlining the monotonous, cyclic, labour-intensive tasks and releasing time and brain space for tax professionals to think more strategically and bring more value to the table for their clients and colleagues.

This pattern has been observed across almost all areas of knowledge work and not just in the accounting field. More clarity has been gained through our introducing a range of new AI-powered research tools particularly for tax, legal and accounting experts that the value of this technology as it advances would be focused directly on productivity. To sum it up, the technology that so many people dreaded would replace human beings is in reality creating better opportunities for more getting billable hours applied to greater value/cost activities and less on menial tasks that no one really wished to do in the first place.

Handling information overload

When look at the second phase of AI integration into knowledge tools, we begin to understand the technology that it not only reads and interprets text, but it also surfaces meaningful insights from any particular text. An example of this from presently available technology would be the application which can scan legal briefs or memoranda and utilising AI to advise other applicable cases to include or weak cases to ignore based on rational analysis of the underlying case law.

This technology is surely not a substitute for the legal and accounting professional; however, it is certainly a tool which enables making their workflow easier, manageable and also serves as a precious gut-check for their labour-intensive case selection processes and tasks. This capability is becoming more and more appreciated as knowledge workers are overwhelmed with more data.

The future of AI

As we look towards the upcoming phases of development for AI in terms of tax and accounting and other similar knowledge-intensive sectors, it is clear that the technology would ensue a similar evolutionary route. The technology that is used these days to find meaningful insights out of unstructured data sets is being created now to aggressively monitor for anomalies and detect any possible risks. That capability would open the path to more complex, predictive scenario projection and analytics, and, eventually make the automation of many of such capabilities possible.

There are AI skeptics would say that job losses are not far behind, but this constricted view of the world overlooks the human capability to do more things and develop our capabilities along with technology. Through history, as technologies have developed, our capability to do more with the time we have achieved through improved efficiency has grown with it. This would continue in the AI future, thus opening up new heights of achievement that would have seemed impossible just a few years back.

 

How will AI effect the tax and accounting profession?
The key trends for AI in tax

So you must be wondering about how AI or artificial intelligence is going to affect you and your company? Jordan Kleinsmith, who is the Product Innovation Lead for tax and accounting professionals at Thomson Reuters, says that the key AI trends for tax and accounting can be categorised into two main areas; one, assisting the workforce to do their existing tasks more efficiently and aiding them to discover new services they can offer to their clients. AI-enabled programs help the professionals to process more number of returns in lesser time because it can help in answering various questions on complex topics much faster. When the professionals would have this spare time to spend with their clients along with AI, then they can find newer ways to serve their clients, which can help in maximizing both the company’s top and bottom line.


What would AI look like in my routine work?

The most common impact of AI in the tax and accounting sector is in the area of research. The Tax Cuts and Jobs Act (TCJA) introduced almost 3,000 new pages only to the federal tax code, which doesn’t include that of the individual states. Assuming that a CPA would understand each characteristic of all of those changes, particularly those with clients located in multiple states, would be impractical. Rather, we can facilitate the workforce to find the solutions they are looking for in a much simpler way. Instead of typing in keywords and scrutinising through the information, the employees can just type their question in English, like you do in the Google search engine. This kind of feature would help to create a user-friendly system, which is what AI does. These things enable the right solutions to be found in much lesser time, and your company doesn’t need to be anxious about the information’s reliability as it’s coming from the best and trusted sources.

However, if AI is to be more extensively used by tax and accounting companies, then it has to become more and more accessible. When it was introduced, only big firms that had in-house capabilities worked with AI. But today, as more software is easily available for purchase such as Thomson Reuters Checkpoint Edge, many smaller organisations can also try this technology and the overall industry could take advantage from the increase in quality.


How does AI work and how is it different than other technologies?

One of the key features that makes AI different is the user’s capability to participate in a more natural dialogue with this technology. Rather than engaging in a continuous back and forth search process, AI utilises predictive search to help in getting to the exact question you are asking and accordingly put the best sources on top of the search, so that you could get the required information in much lesser time. This technology is also capable of suggesting concept markers of various topics that the searcher might also be interested in learning, and which could eliminate the need of another separate search in most of the situations.

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How to Setup Your Own Software Company in India
  • Article, India

How to Setup Your Own Software Company in India

India has witnessed an expansion in the establishment of new software companies. Due the tech-movement throughout the world, there are more and more software firms in the market today. Setting up a software company may be very interesting but also could be challenging in some respects, because of the legal procedures and complexities. You could be in a hurry to build a path breaking software product, to get customers for it, to design out-of-the-box workstations, etc.

However, it’s always advised to first understand that the regulating statute applicable for the software companies under the New Companies Act, 2013. In this article we will be talking about how to register a private limited company in software field in India? We will also discuss the legal formalities to start a software company and do a company formation in India.

Basic steps for registering a software company in India

The first step to register your own software company is to identify a unique and descriptive name for your firm and then get it registered with the Registrar of Companies. After the name is registered, the next step is to get a Company Identification Number or CIN. Then the next step is to submit all the needed legal forms and documents before the Registrar of Companies (RoC). Please remember to be as descriptive in the submissions as possible. Make sure to include the name of all the shareholders, funds, the total amount of share capital and all the other important information. Post the verification and approval of your submitted documents, you would be legally owning your software company. The last step is to apply for a certificate of registration.

The legal procedures to set up a software company in India

The legal formalities for setting up a software company or company formation in Delhi requires two broad steps – one, the pre-registration procedure and the second is the post-registration process.

The pre-registration procedure includes the following steps:

  1. Get your Directors Identification Number or DIN: The first step for starting your software firm in India is identifying the directors. In an ideal situation, the number of directors have to be between two and eight, not more not less. It is mandatory for all the directors to have a separate DIN. The directors can get their DIN by giving their documents of identity proof such as Passport, PAN card, Voter’s ID and residence proof documents such as Ration card, EB bill, etc.
  2. Reserve and register a Company Name with the Registrar of Companies:For registering the intended company name for your new software firm, you are required to find a good and suitable company name to check if the name you prefer is available or not. In case it is not available, you might have to look for alternative names while keeping in mind the relevant MCA guidelines for the naming process.
  3. Apply for the Certificate of Incorporation: Next, you must apply for getting the Certificate of Incorporation. At this juncture, you have to draft a Memorandum of Association (MoU) while also including the firm’s first directions and operations thereof. For applying, you need to submit the duly-filled application along with the form 1A and upload it on the official website of the relevant department.
  4. Get your Digital Signature Certificate (DSC): According to the provisions of the Information Technology Act, 2000, a software company must mandatorily have a valid Digital Signatureon the documents that are submitted electronically. This also ensures the authenticity and also the security of the documents which are filed electronically.

Steps for setting up a software company
  • The first step is to provide a brief description of your business; for example, the type of product, sector, target customers and the type of technology you would be using. You need to mention all details related to that particular software like how it is going to be developed and what is the supply to the market, etc.
  • Then, you need to select the form of your company; for example, whether it is a sole proprietorship or private firm or a partnership. The main factor that determines the form of your company is the size of it, the range of company’s risk, the target market and the budget. You must plan as per your goal and decide if you would operate nationally or globally.
  • Now, select your region and get relevant knowledge to update yourself regarding the business laws applicable in that perspective region.
  • Register your software firm under ROC. When registering, it is mandatory to file an application to the same office where the head office is located.
  • Select the place where you are thinking of setting up an office. Post getting the certificate from ROC, you can begin hiring employees for your new company.
  • It is always recommended to register your company in the state or region Department of Employment for legal hiring and also for offering jobs. If you apply in one state, it would offer you to do the hiring from anywhere in India. But in case you do not register, then there might be problems in your hiring process.
  • Lastly, you must register under Software Technology Parks India (STPI). This would help you to reap the entire legal benefits and other advantages like tax breaks, etc.


In case you need professional advice or assistance to carry on the legal procedure to form a software company, please get in touch at [email protected] with us. We would be happy to help.

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