Legal Framework for Corporate Social Responsibility

With the introduction of companies’ act 2013, India has become first country to mandate CSR. The fact that CSR initiatives are taken voluntarily, has been ignored and the act has provided for compulsory spending on CSR.

As per section 135 of the new act, Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a CSR committee of the board consisting of three or more directors (at least one shall be independent director). The committee shall

1.        Formulate and recommend to the board a CSR policy

2.        Recommend the amount of expenditure, and

3.        Monitor the CSR policy.

The Companies Act 2013 encourages companies to spend at least 2% of their average net profit in the previous three years on CSR activities. The ministry’s draft rules, that have been put up for public comment, define net profit as the profit before tax as per the books of accounts, excluding profits arising from branches outside India

Applicability: Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

•The Board's report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee.

The Corporate Social Responsibility Committee shall,—

•Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII;

•Recommend the amount of expenditure to be incurred on the activities referred to in clause (a)

•Monitor the Corporate Social Responsibility Policy of the company from time to time.

SOCIAL RESPONSIBILITY AND RELATED DISCLOSURE:

1)        Means of Communication

2)        Various Social Responsibilities fulfilled by Company

3)        Customer care Grievance

4)        Financial Risk Management

5)        Business Environmental Responsibility

Economic growth is possible only through consumption of inputs available in the environment and society. The harnessing of natural resources has a direct impact on the economy, the environment and society at large. Corporate Social Responsibility (CSR) is a concept whereby organizations serve the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations. Corporate social responsibility is not about just giving randomly but about bringing benefits to all the stakeholders, including customers, employees and community at large.

•Respect for Worker’s Right and Welfare: The companies should provide the workplace environment that is safe, hygienic and humane to work. They should be taken care of the heath issues arising out of the work of the organization. It should conduct the training and development program within the organization for the people of the organization.

•Woman Empowerment: Empowering women and achieving gender equality – the goals of the Women’s Empowerment Principles - requires intentional actions and deliberate policies. The WEPs are based on concrete business practices and have inspired companies around the world to tailor existing policies and programmes – or establish needed new ones – to realize women’s empowerment.

 Corporate Social Responsibility Dimensions

•Sport Promotion: These include CSR initiatives and investments in the sector by leading corporate houses, and non-profit foundations. These foundations are chiefly involved in providing opportunities to children from the under-privileged sections to take up sports, supporting promising sportspersons in accessing world class training facilities and developing sporting infrastructure.

 •Employment Generated: Jobs continue to be created, needing an educated workforce and many in sunrise sub-sectors. We need to recognize new opportunities and prepare the supply side.

•Educational Employee Training: Employee training and development is a broad term covering multiple kinds of employee learning. Training is a program that helps employees learn specific knowledge or skills to improve performance in their current roles.

•Employee Grievance: refers to the dissatisfaction of an employee with what he expects from the company and its management. A company has to provide an employee with a safe working        environment, realistic job preview, adequate compensation, respect etc.                       

•Benefits of Employee Welfare: They provide better physical and mental health to workers and thus promote a healthy work environment. Facilities like housing schemes, medical benefits, and education and recreation facilities for worker's families help in raising their standards of living. This makes workers to pay more attention towards work and thus increases their productivity. Employers get stable labor force by providing welfare facilities. Workers take active interest in their jobs and work with a feeling of involvement and participation.

•Increased Sales and Customer Loyalty: The customers also recognize those companies which are socially responsible. This results in increased sales and content customers.

•Complaint Received During the year: A customer complaint highlights problems with employees or internal processes and you can fix them before further problems arise and cause a bad customer experience. One of the advantages of CRM is that you can keep a record of customer feedback, both positive and negative.

•Complaint Resolved: The complaint is closed as Resolved because the provider has met the member's request for resolution to the complaint (as outlined on the Complaint Resolution Process complaint form).

•Complaint Pending: The complaint is currently in process. No final outcome has been determined.

•Investor Education and Protection Fund (IEPF): is for promotion of investors’ awareness and protection of the interests of investors. This website is an information providing platform to promote awareness, and it does not offer any investment advice or evaluation.

•Financial Risk Management             

Financial Risk Management is           the practice of economic value in a firm by using financial instruments to manage  exposure  to risk, particularly credit risk and market risk. Other types include Foreign exchange risk, Shape risk, Volatility risk, Sector risk, Liquidity risk, Inflation risk, etc. Similar to general risk management, financial risk management requires identifying its sources, measuring it, and plans to address them. Profit Risk is a risk management tool that focuses on understanding concentrations within the income statement and assessing the risk associated with those concentrations from a net income perspective.

•Legal Risk Management

Legal Risk Management refers to the process of evaluating alternative regulatory and non-regulatory responses to risk and selecting among them. Even with the legal realm, this process requires knowledge of the legal, economic and social factors, as well as knowledge of the business world in which legal teams operate. In an organizational setting, risk management refers to the process, by which an organization sets the risk tolerance, identifies potential risks and prioritizes the tolerance for risk based on the organization’s business objectives, and manages and mitigates risks throughout the organization.

•Risk Management

Risk Management and Internal Control help organizations understand the risks they are exposed to, put controls in place to counter threats, and effectively pursue their objectives. They are therefore an important aspect of an organization’s governance, management, and operations. Professional accountants can and should play a leading role in helping their organizations achieve an integrated, organization-wide approach to risk management and internal control—which ultimately helps create, enhance, and protect stakeholder value.

Business Environmental Responsibility

The companies are required to utilize the Planet i.e., Natural Capital in a well manner so that it cannot be wasted, excess utilized which is also required for the other states or countries and also requires to be preserve for the future generation.

Environmental management system that offers a framework that companies and organizations can follow in order to set up an effective environmental management program. Its certificate means that the company or organization is measuring and reducing its environmental impacts. Sustainability Report is used by companies to communicate their economic, environmental and social activities to depict transparency and compliance to rules and regulations.

•Audit of Environment: There are three main types of audits which are environmental compliance audits, environmental management audits to verify whether an organization meets its stated objectives, and, functional environmental audits such as for water and electricity.

•Pollution Control: Pollution prevention is a major global concern because of the harmful effects of pollution on a person’s health and on the environment. Environmental pollution comes in various forms, such as: air pollution, water pollution, soil pollution, etc.

•Project Location and Development: Project management is the discipline of initiating, planning, executing, controlling, and closing the work of a team to achieve specific goals and meet specific success criteria.

•Forest and Plantation of Tress: Industrial plantations are actively managed for the commercial production of forest products. Industrial plantations are usually large-scale. Individual blocks are usually even-aged and often consist of just one or two species. These species can be exotic or indigenous. The plants used for the plantation are often genetically altered for desired traits such as growth and resistance to pests and diseases in general and specific traits.

•Plants having Child Labour: The social scenario, however, changed radically with the advent of industrialization and urbanization under the impact of the newly generated centrifugal and centripetal forces; there was an unbroken stream of the rural poor migrating to urban center in search of livelihood. The child had to work as an individual person either under an employer or independently. His work environment endangered his physical health and mental growth and led to his exploitation. The protection and welfare of these children, therefore, become an issue of paramount social significance.

We, "PNJ Legal Consultants" are one of the well known organizations engaged in providing Consultancy Services keeping in mind the Client Service Mentality.

Our team members deliver excellent performance in providing these services and our clients can avail the services at affordable prices.

Our sophisticated team has complete knowledge of various exercises and technicalities that are used in our services. Our services includes Strategy Consulting, GST Consulting, Asset Management, Feasibility Study, International Arbitration, Due Dilligence, Franchisee Consulting, Financial Audits, Operational Audits, Tax Heaven Registrations, Shareholder Agreements, Start up Consulting, IP Consulting, Taxation Services, Accounting system design and Mergers Acquisitions.

Contact at parascs@gmail.com or refer website www.pnjlegal.com

ETHICAL ISSUES IN CORPORATE GOVERNANCE

Corporate fraud is defined as “one that occurs within an organization or by its owners or managers and involves deliberate dishonesty to deceive the public, investors or lending companies, usually resulting in a financial gain to the individuals or organization.” Most of the corporate frauds fall under the categories of asset misappropriation, money laundering, accounting frauds, frauds committed by senior management, bribery and corruption and regulatory non-compliance. It is practices such as these that are denting the image of our financial system. The organizations, therefore, must be attentive to these challenges and adopt pro-active anti-fraud measures rather than being reactive. Otherwise, organizations and entire societies have to bear the risk of fraud and its consequences, which will become more devastating.

Keys to solving ethical issue

1.        Sound Risk Management Framework

2.        Data Management and analysis

3.        Code of Conduct for Board of Directors

4.        Internal & External control system

5.        Forensic Accounting

6.        Independent auditor’s role

7.        Role of top management

8.        Whistle blowing policy

A. Sound Risk Management Framework

With the occurrence of such major financial crisis globally a lot of emphasis is laid on strengthening risk management practices for both financial and non-financial institutions. However, with respect to the financial institutions, it is evident that much attention is being paid to financial risk such as market risk, credit and liquidity, despite the focus being on managing operational risk. Accordingly, major reports have been published by many organizations, such as the Basel Committee, Institute of International Finance and others that highlight the need for effective risk management in financial institutions (OECD report, 2014).

B. Data Management and Analysis

An organization’s ability to generate revenue, manage the expenses and extenuate risks is determined by its ability to successfully share, store, retain and retrieve the escalating data. Effective data management practices can bring in large customer base, improve customer relationships which in turn help in generating revenue. According to American Institute of Certified Public Accountant (AICPA) report 2013, accountants play an important role in governing the organization’s data and ensure that it is in accordance with the CG practices of the organization. Since any financial institutions’ operation is based entirely on its customer base, governing the ever-increasing customer data becomes an important part of its CG practices.

C. Strict code of Conduct for Board Of Directors

Although people have always questioned the need for having corporate boards, it is empirically proven that their presence matters a lot at the time of organizational crisis. This can be verified as in the case of Enron, Worldcom and Parmalat scandals where the directors in particular were held liable for the fraud. Consequently, more attention is being paid to research on the role of corporate boards. Uzun, Szewczyk and Verma (2004) have demonstrated that the composition of the board and the structure of the supervisory committee were significantly related to occurrence of corporate frauds. In contrast, the study also found that the larger the number of independent outside directors, lesser was the possibility of occurrence of corporate frauds in U.S during the period 1978-200. Nevertheless, not many papers are available on the composition and effectiveness of corporate boards in the financial sector, which motivated this study to investigate the relationship between CG and fraud.

D. Internal and External Control Systems

Internal control system refers to the approved policies and procedures followed by the management in order to carry out smooth and proper functioning of business thereby avoiding various types of risks such as improper maintenance of accounts, unauthorized transactions and frauds which may affect the organization’s financial performance.

On the other hand external control system refers to the government regulations, market competition, media exposure, takeover activities, public release and assessment of financial statements. In spite of the fact that the company’s governance process also comprises of government regulations the role of external control systems in the financial sector is still a mystery.

E. Forensic Accounting

Forensic accounting is a special field related to accountancy profession where the accountants implement their accounting, auditing and investigative skills to detect frauds, bankruptcy and other litigations. The role of forensic accountants in investigating corporate frauds has long been identified by many countries and they now play a major role in probing corporate frauds. However the field is still in its nascent stage in India due to rapid increase in “white collar crimes” and the notion that the law enforcement agencies do not have sufficient time or expertise to expose the frauds committed. Therefore the researcher anticipates studying the role of forensic auditors and auditing process which may determine the quality of CG practices in the banking sector.

F. Independent auditor’s role

The purpose of designing a set of codes for CG is to enhance the efficiency of auditing process in order to retain the interests of all the stakeholders and investors. This is where the role of independent auditor comes into picture. The auditor has all the authority to capture the offender, eliminate bias from financial reports of the company and report objectively. Recently a lot of emphasis is placed on the role of auditor with respect to CG as auditors’ are solely responsible in detecting the scam. On the contrary, the auditor’s must not be forced into any kind of obligation which may bind his hands from discharging his duties veritably.

G. Role of top management

According to the Basel Committee report on banking supervision published in the year 2014 (Bank for International Settlements, 2014), it is the responsibility of the senior managers to carry out and manage all the activities of the banks in accordance with the business strategy, risk policies and other strategies as approved by the board. The top management’s personal conduct also contributes significantly in achieving “sound CG” along with the members of the board.

H. Whistle blowing policy

Whistle blowing policy in a company refers to the particular internal policy designed for its employees to report to the management about any suspicious behavior or frauds or any kind of infringement in company’s norms or code of conduct. The policy enables an employee to report to the senior managers or top management directly without informing his immediate manager(s). Because of this advantage, whistle blowing policy is considered to be a valuable tool in an organizations effective CG strategy.

The issues of corporate governance

1.        Asset Misappropriation

2.        Money laundering

3.        Accounting frauds

4.        Frauds committed by senior management

5.        Bribery and corruption

6.        Regulatory non-compliance

7.        Practice of Insider Trading and Selective leak of sensitive data

A. Asset Misappropriation

Asset misappropriation refers to the misuse of a company’s assets or resources for an individual’s personal use at the expense of the company. Sometimes it may even involve stealing of the company’s assets for personal interests and producing false records to mask the committed fault. Studies have shown that though asset misappropriation might not be visibly significant, disregarding the same may become “an incurable disease” and consequently affect the financial status due to unnecessary expenditure incurred.

B. Money laundering

Money laundering is gaining illegal money from criminal activities and projecting it to be a source from legal proceedings by concealing its actual source of inflow, ownership and use of funds.

C. Accounting frauds

Accounting frauds refer to deliberate falsification introduced in the financial statement to gain unlawful financial advantage by employees, management or any other individuals related to the organization. On the other hand, accounting irregularities arise due to inadvertent misrepresentation of facts or omission of certain entries in the financial statements. Both these mistakes lead to economic problems which ultimately find its root cause in fruitless CG mechanism and its inability to detect and prevent such faults. For instance the financial irregularities that happened with Enron, WorldCom and Satyam, all point towards a lack of proper CG at some point for the tragedy occurred.

D. Frauds committed by senior management

Also known as “white collar crime”, frauds committed by the members of the top management directly impacts the shareholders, employees and society as a whole. Frauds committed may not always be in terms of capital. It may also include the involvement of top managers in certain activities that are against the rules and regulations of the company or refrain themselves from taking necessary action after being aware of any illegal activity happening in the organization or certain disastrous decisions taken by the managers.

E. Bribery and corruption

Studies have demonstrated that poor CG practices can breed corruption. Corruption pertains to “the misuse of public office for private gains and has both demand and supply sides to it”. CG practices can be affected by bribery and corruption practices of the members involved at various levels including the board members, to managers, employees, shareholders and stakeholders. Good CG is expected to reduce the level of corruption by imposing strict constraints on the officials.

F. Regulatory non-compliance

For any organization it is mandatory to comply with the legal framework prescribed by the respective boards apart from the internal rules and regulations of the company. In India the Securities and Exchange Board of India imposes the rules and regulations and frames the guiding the guiding principles for companies to protect the interests of the investors. Apart from this, companies are also required to comply with the provisions of Companies Act 1956, Kumara Mangalam Birla report on CG, accounting standards issued by ICAI and additional listing agreements with the stock exchange they are listed with.

G. Practice of Insider trading and Selective leak of sensitive data

Insider trading indicates the practice of buying and selling company’s securities illegally without the knowledge of the public with the intention of making profit or preventing loss in the securities transactions of the company. In India it is considered as illegal trading by SEBI. In this case, the management of the company may take advantage of the confidential and price-sensitive data to make profit for themselves without informing the public investors.

We, "PNJ Legal Consultants" are one of the well known organizations engaged in providing Consultancy Services keeping in mind the Client Service Mentality.

Our team members deliver excellent performance in providing these services and our clients can avail the services at affordable prices.

Our sophisticated team has complete knowledge of various exercises and technicalities that are used in our services. Our services includes Strategy Consulting, GST Consulting, Asset Management, Feasibility Study, International Arbitration, Due Dilligence, Franchisee Consulting, Financial Audits, Operational Audits, Tax Heaven Registrations, Shareholder Agreements, Start up Consulting, IP Consulting, Taxation Services, Accounting system design and Mergers Acquisitions.

Contact at parascs@gmail.com or refer website www.pnjlegal.com

Composition Scheme Rules under GST

Composition Scheme Rules under GST provide for all the procedural compliance w.r.t. intimation for Composition Scheme, effective date for levy, conditions and restrictions on levy, validity of levy and rate of tax.

The current state indirect tax regime has provided a simpler compliance for small dealers known as the Composition Scheme. Under this scheme you,

• Pay taxes only at a certain percentage of turnover
• File periodic returns only (usually on a quarterly basis)
• Have an option of not having to maintain detailed records or follow tax invoicing rules
• Are not allowed to take Input Tax Credit (ITC)
• Are not allowed to collect tax on sales

A. Intimation and Effective date for Composition Levy

1.   For persons already registered under pre-GST regime

Any person being granted registration on a provisional basis (registered under VAT Act, Service Tax, Central Excise laws etc) and who opts for Composition Levy shall file an intimation in FORM GST CMP-01, duly signed, before or within 30 days of appointed date. If intimation is filed after the appointed day, the registered person:

a) Will not collect taxes

b) Issue bill of supply for supplies

FORM GST CMP- 03 must also be filed within 60 days of exercise of option:

a) Details of stock

b) Inward supply of goods received from unregistered persons held by him on the date preceding the day of exercise of option.

2. For persons who applied for fresh register under GST to opt scheme

For fresh registration under the scheme, intimation in FORM GST REG- 01 must be filed.

3. Registered under GST and person switches to Composition Scheme

Every registered person under GST and opts to pay taxes under Composition Scheme, must follow the following:

a) Intimation in FORM GST CMP- 02 for exercise option

b) Statement in FORM GST ITC- 3 for details of ITC relating to inputs lying in stock, inputs contained in semi-finished or finished goods within 60 days of commencement of the relevant financial year

b. Conditions for a Composite Tax Payer

Apart from the threshold limit, the following conditions are applicable for a composite tax payer:

• Cannot be engaged in supply of services, other than supply of food or drinks for human consumption
• Cannot be engaged in manufacture of specific notified goods
• Cannot supply goods not taxable under GST
• Cannot supply goods through an e-commerce operator
• No Interstate outward supplies – A composite tax payer should not engage in interstate outward supply of goods and / or services .
• Payment of composition tax – If the composite tax payer is in the trade of supplying goods and services, then composition levy will be applicable for both supply of goods and supply of services.
• Does not have to collect tax – The composite tax payer does not have to collect tax on all his outward supply of goods and / or services.
• Applicable for all business verticals under the same PAN – Composition levy will be applicable for all business verticals operating within state or interstate under the same pan.
• What does this mean?
• An individual with different business verticals, like:
• Mobiles & Accessories
• Stationery
• Franchisee

In the above scenario, the composition scheme will be applicable for all three business verticals. The dealer cannot opt for any one business vertical to fall under the composition scheme. For example, if the business vertical’s place of business is in Karnataka & Kerala for a single PAN, each of the business vertical in that particular state should have only ‘Intra-State(within state)’ supplies.

• Cannot claim Input Tax Credit – The composite tax payer is not eligible to claim input tax credit on all his inward supply of goods and / or services.
• What does this mean?
• If a dealer chooses to be a composite tax payer, he cannot claim input tax credit even if he makes taxable purchases from a regular taxable dealer. Ideally, the taxable amount would be added to the composite tax payer’s cost.
• Conclusion

Any person who opts for the scheme will be deemed to have been opted for all the places of business having the same registered PAN. Hence, you may not choose any one of all the place of business to be registered under scheme.

Composition Scheme Rules under GST have been targeted to be strict and crisp for the persons availing the Composition Scheme.

We, "PNJ Legal Consultants" are one of the well known organizations engaged in providing Consultancy Services keeping in mind the Client Service Mentality.

We have a team of highly qualified professionals and time to time training is provided by us as per the requirements. Our team members deliver excellent performance in providing these services and our clients can avail the services at affordable prices.

Our sophisticated team has complete knowledge of various exercises and technicalities that are used in our services. Our services includes Strategy Consulting, GST Consulting, Asset Management, Feasibility Study, International Arbitration, Due Dilligence, Franchisee Consulting, Financial Audits, Operational Audits, Tax Heaven Registrations, Shareholder Agreements, Start up Consulting, IP Consulting, Taxation Services, Accounting system design and Mergers Acquisitions.

Contact at parascs@gmail.com or refer website www.pnjlegal.com

7 Vaastu tips for a Successful Business

Vaastu Shastra or Vastu is an ancient Indian way of arranging layout of your office, home or business in a way that will yield a beneficial result for the owner. Vastu Shastra works by balancing the five basic elements of nature fire, water, space, air and Earth. Following these ancient principles of Vastu Shastra can indeed help your business succeed.

Here are 7 important Vastu tips for your business.

1.    Your office building can face north, north-east or north-west directions. Having a building facing these directions brings good luck and positive energy.

2.    Main entrance should always face north or east, never place anything obstructing the main entrance as it also obstructs good luck and fortune.

3.    Central part of the building should be empty, private business rooms must be in Northeast corners.

4.    Placing an aquarium with one black fish and nine goldfish in the north-east direction can boost your business.

5.    Desks and other objects in the office should be either squares or rectangles. Never choose irregularly shaped furniture as it may create confusion and obstruct fortune.

6.    Your accounts departments must be in north-east part of the office and all the financial transactions should be done facing either East or North.

7.    Office of the owner should be in North-West direction, do not place temple or any other idols in this position.

Achieve Financial Success with Vastu Shastra:  Vastu Shastra affects every aspect of your business, from attracting new customers to increasing sells and staff productivity, Vastu Shastra can truly bring amazing results.  Vastu Shastra is indeed a true science, based on ancient principals of architecture and construction- which still stands true today.

To achieve financial success in your business following these Vastu Shastra principals might be helpful.

·        North is ruled by Kuber- the Indian lord of wealth, thus any business facing this direction is destined to make financial benefits, It is also important to keep your office obstacle free, as placing an obstacle in the north will also hinder the flow of wealth from the north and make your business suffer.

·        Safes and vaults should never be placed direction facing south, as this would lead to unfortunate expenses in the business. You can create safes and vaults in the centre to avoid any unconventional expenses and loss.

·        Water is associated with wealth. Keeping a fountain will increase the flow of water and wealth associated with it.

·        Increase the amount of plants in your office, as they will increase the indoor air quality and also stop money from flowing out of your office.

·        Electronic wiring should always be kept in the southern area of the building.

If you are starting a new business don’t forget to follow these simple Vaastu for business tips as Applying these simple Vastu Shastra tips will keep your business out of debts, prevent money shortages and increase cash flow.It will also help your business grow quickly and attract more customers.  However breaking or ignoring these rules may lead your business to serious debt, financial crisis, loss or bad luck.

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We, "PNJ Legal Consultants" are one of the well known organizations engaged in providing Consultancy Services keeping in mind the Client Service Mentality.

We have a team of highly qualified professionals and time to time training is provided by us as per the requirements. Our team members deliver excellent performance in providing these services and our clients can avail the services at affordable prices.

Our sophisticated team has complete knowledge of various exercises and technicalities that are used in our services. Our services includes Strategy Consulting, GST Consulting, Asset Management, Feasibility Study, International Arbitration, Due Dilligence, Franchisee Consulting, Financial Audits, Operational Audits, Tax Heaven Registrations, Shareholder Agreements, Start up Consulting, IP Consulting, Taxation Services, Accounting system design and Mergers Acquisitions.

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3 simple methods for business valuation

Whether you're planning to sell your business or take a loan, or to attract new potential finances and investors, and up to date business valuation is a must have. Simply just knowing the value of your business can help you proper manage your business and evaluate your position.

Here are three simple ways to determine your business' true value.

1.      Focusing on Assets of a business:  This is by far the simplest valuation method, simply add up all your investments and subtract all the liabilities. You can also do your business valuation on basis of liquidation asset-based approach. In the liquidation asset-based approach you simply have to determine net cash received if all your assets were to be sold.

This is one of the best ways to evaluate the present gross value of a company or a business. Especially useful when you are trying to sell your business or get a business loan.

2.      Focusing on Market Values:  This approach focuses on determining the value of a business by comparing it with similar businesses in the market which were either evaluated or sold recently. This method works for most small and medium-size businesses as there are hundreds of other businesses to compare to. But if your business doesn't have comparable businesses in the market, then determining the true value of your business by this method can be difficult.

Also for an individual, using this method can be a cumbersome task. Focusing only on current market values may under-estimate your business value. Especially if you are just starting out or planning to expand in near future. This method is best used by professional evaluators.

3.      Focusing on Future Earning Values:  This approach is by far the most popular method for business valuation. This method revolves around the idea that true value of any business is determined by its capacity to generate wealth in near future. This method is very popular among investors and shareholders as they always value future returns on their investments.

Using companies past earnings and current growth rate, you can easily determine future revenues of a company. Normalise the assumption for unusual expense or revenue and add in the risk factor to get a complete learning value based business valuation.

The best choice: Apart from these methods, there are number of other methods to evaluate your business. But the best way to find the true value of your business is through a combination of all three. Combining two or more methods together will give you the best selling price. These business valuation methods will also plan, strategize and expand your business as well as attract more shareholders and investors.

Never do your business evaluation by yourself, it is like asking a mother to describe her child. Of course, you are going to over evaluate or under evaluate your business. That is why we recommend valuation for business must be done by a professional. We at pnjlegal.com offer a complete business valuation services.

We, "PNJ Legal Consultants" are one of the well known organizations engaged in providing Consultancy Services keeping in mind the Client Service Mentality.

We have a team of highly qualified professionals and time to time training is provided by us as per the requirements. Our team members deliver excellent performance in providing these services and our clients can avail the services at affordable prices.

Our sophisticated team has complete knowledge of various exercises and technicalities that are used in our services. Our services includes Strategy Consulting, GST Consulting, Asset Management, Feasibility Study, International Arbitration, Due Dilligence, Franchisee Consulting, Financial Audits, Operational Audits, Tax Heaven Registrations, Shareholder Agreements, Start up Consulting, IP Consulting, Taxation Services, Accounting system design and Mergers Acquisitions.

Contact at parascs@gmail.com or refer website www.pnjlegal.com