Registered Finally Part 2: How Naiive Can One Be

I feel like a fool! I feel like a fool on a lot of occasions on a lot of days but I feel particularly stupid for writing this. I sang praises for our CBR authorities and for whoever’s government it was that made it possible for people to register their businesses online – all too soon. Here is what happened.

One fine day, a couple of days after I wrote this, I went to the CBR office in Rawalpindi (it’s near McDonald’s if you want to egg them) to collect my NTN for Women’s Digital League. Get into the office, reach the right booth, give my name, ID card number etc to the gentleman at the desk, and grinning from ear to ear I waited for him to hand me my registration. But wait! Here is how the conversation went:

Him: You haven’t filled out the form.
Me: Of course I have.
H: It’s incomplete.
M: I received a confirmation email from you guys saying I could come and pick my NTN from this office.
H: Uhhh … no Bibi … you have to fill out ALL the fields.
M: (secret sigh) OK – so now what do I do?
H: Wait – let me give you a printed form – you fill it out and I’ll feed it into the system.
M: OK.
(He hands me the print and I start filling it).
M: OK I am done.
H: (looking at it) It says you live in Rawalpindi but your permanent address is in Peshawar.
M: Yes – that’s right.
H: You better put the same address in both fields.
M: But what if my husband who is a civil officer gets posted out of Pindi?
H: Then you can change the address … no problem.
M: (secret eyeroll … yeah right!) OK.
(I fill out the firm all over again)
M: OK – I am done.
H: So how do we verify you live at this address?
M: Huh?
H: Yeah, we need to verify you actually live at this place.
M: Umm … call on my landline?
H: Nope.
M: Have someone follow me?
H: Nope.
M: Send me a letter at this address?
H: Nope.
M: *Scratch my head
H: We will figure out something.
M: OK – so you will call me or email me when my application is approved?
H: Yes, that’s right.
M: How long do you think it would take?
H: A day or two.
M: OK – thanks.

Needless to say, after about 2 weeks I am still waiting to hear from them.




Registering Dilemma

Lately I have been trying to find a way (the best way) to register my VA company. I assure you ladies, regardless of what some may tell you, to make it into a real business, you have got to register it. The red-tape involved every step of the way and the lack of help and advice can frighten the best of us but it’s something that needs to be done. A lot of fancy, scary words were thrown at me. But the day was saved by a 24-yrs-old helping his bro run a virtual assistance firm (I HATE them for doing so well 😦 ) Both brothers have been A-MAZING in how generous they are with their time and their advice and their help. I wish we had more guys like the 2. Below, I have copied the conversation I had with the younger one (elder bro not answering my frantic messages on Skype being asleep with the headphones on!!) – I hope it helps the rest of you virtual assistants as much as it has helped me. The conversation answers questions about the options available as to what type of company you want to register as, the difference between the types, pros and cons, how registering with SECP and PASHA can get you some perks but may come with certain conditions that you gotta know from before. So, without further ado, read on my lovelies.

Types of Companies – differences between them – pros and cons

[7:14:51 AM] Bilal: if you are a PVT LTD you need to get registered with SECP and Software board then you get certain tax cuts, or incentives and you become INCORPORATED. your minimum tax bracket is something like 25% of revenues if you are a pvt. Ltd. But if you get registered as a Partnership, you fall in 20% tax bracket … and I think you don’t have to do any business with SECP and Software board.

Basically you have two options – in fact three options

1. Sole proprietor

2. Partnership

3. Private Ltd.

First two don’t require extensive paper work. You just have a stamped paper deed that says A is a sole proprietor of ABC company and stuff and you get an NTN tax number based on that…i.e. have to file monthly income tax on employees earning Rs. 300,000 per year or more, you can do it online from FBR‘s website. However, if you want to get registered as a PVT LTD, i.e., get Incorporated, you need to go to SECP‘s website and apply online, check for name availability first, then choose a name and apply for that. When SECP approves, you go onto the next step i.e. forms to be filled. When you complete that step you go to MCB (Muslim Commercial Bank) and pay some cash, I think about Rs. 1100, or Rs. 5000, not sure how much. You have to pay on the same day and move onto the next step, fill more forms and in the end you get SECP‘ed. With Software Board (I don’t know what it is called) you need some sort of certificate … that they certify you are an internet business because I think till 2016 Internet businesses are tax exempt …. but income taxes of employees have to be paid to FBR.

[7:26:59 AM] Bilal: We went to this tax lawyer who told us about things I told you. We wanted to know the benefits and cons, pros and losses of getting registered as an Inc. (pvt ltd) so basically he told us if you are a small company the definition of small company is monetized, i.e. less than 20 crore revenue per year and then you are fine when registered as a partnership.

So, I don’t have to pay taxes on my business – only on employee salary. This is so unfair. No wonder people pay such sucky salaries.

[7:29:04 AM] Bilal: You are Right. YOUR Business Profit, Income does not get taxed if you . Your Employee’s income gets taxed. Only if it is more than Rs. 25,000 per month i.e. if it is more than 3 lac (300,000) per year. In most contracts the onus of income tax is on the employee i.e. the employee should file for it online every month with FBR i.e. if you pay Mr. XYZ Rs. 40,000 per month you could tell him to pay his own taxes so his net income will be less than Rs. 40,000.

I am the sole owner of my business so I am going to register with SECP so I will only pay 20% instead of 25% tax and my profits are tax-free but I have to pay taxes (or get employees to pay it themselves) for employees earning more than Rs. 25k/month. But at the same time … my employees are mostly on ad hoc basis – we don’t have any contracts or anything … so do I have to keep track of them as well?

[7:39:43 AM] Bilal: Almost 100% correct….If you are registered as a ” sole proprietor”, you don’t need to get registered with SECP. SECP‘s domain is “Pvt. Ltd” so basically any employee that earns less than 25000 will have no paper work, except for internal paper work. Let me put it this way… ABC is a guy who works for money. His base income is Rs. 23,000. When the company introduced a bonus scheme, his February and March incomes were Rs. 35000 and Rs. 36000 so he had to file income tax with FBR for only two months. FBR is a monthly thing. You do it online every month. Now ABC is being terminated and he isn’t getting any bonuses, so he is not paying any tax and neither is the company.


Someone told me I should register with SECP coz that will mean I can register with software expo and PASHA and that would help in the long run.

[7:49:49 AM] Bilal: There are two options:

1. sole proprietor or partnership -> get NTN -> get taxed by FBR on your NTN

2. Pvt Ltd -> Get SECP

-> get software

-> get NTN

-> then pay taxes on your NTN to FBR

-> file to SECP each year, something like that, pay a fee per year

that’s the only difference!!!!!!!!!!!!!!!!!!!!!!!!

so then it seems CRAZY for ppl to register with SECP except if you are a HUGE business and the difference between 20-25% taxes is a gazillion $$$?

[7:53:41 AM] Bilal: yo something like that… Let me add to this. Why do people get registered with SECP? Well

1. for incentives such as PASHA

2. for any incentives related to anything else. For instance you want a loan, you’ll go to a bank tell about your company, the bank will check on you

3. if you become really big, you may want to go Public, i.e. get registered on the STOCK exchange to raise capital.

(How can PASHA help me?)

PASHA, as far as I know takes a chunk of your equity – say they’ll own 20% of your business value and they’ll incubate you. Getting registered with SECP helps if you want to make it big and there are a number of stakeholders involved. If Pasha wants to help you out, they’ll want to become a shareholder in your success which is why it makes sense to get incorporated. On the other hand if you are registered as a sole proprietor, you are the only owner, the only stakeholder

Incubation means: giving a place to start off with, even some workforce if you need it, some money. Incubators do take a share of your pie. They are not doing it for free

[8:10:49 AM] Me: Thank you, Bilal. You have been incredibly helpful. I am going to post this verbatim on my blog (of course will change names). This is great – not info you will find anywhere … and people like me NEED it. So, THANK YOU once again.

[8:11:32 AM] Bilal: Anytime, you are welcome…oh you can mention my name yo, I fame like lots.

 [8:11:39 AM] Me: lol – ok bye – haha – bbye
(I don’t think the poor kid knows I have like 5 readers, one of them being his bro). :D:D