Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Salary in a Private Limited company
A founder who is a director and employee can be paid director remuneration. The company deducts it as a business expense, TDS is deducted on it, and you pay tax on it as salary income. For a private company the approval is largely governed by your articles and a board resolution, so it is flexible — but the amount should be reasonable for the role and the company’s stage.
Remuneration in an LLP
An LLP has no ‘salary’ in the company sense. A working partner can be paid remuneration, which is taxed as business income in the partner’s hands, and the LLP can deduct it only within the Section 40(b) limits set out in the LLP deed. Confirm the current 40(b) limits.
What founders actually do — an example
Early on, many founders keep their salary low to conserve cash, then raise it after funding. Example: a founder draws ₹50,000 a month pre-seed, taxed as salary, deductible for the company; post-raise the board approves a market salary. Paying something is usually better than nothing, as it creates a clean record of income for loans and visas. Watch that the figure stays defensible if the company is loss-making. Our startup service can structure founder pay.