Choice of Business Entity
The security guard service business model inherently involves a few risks like employing numerous employees covered under ESI & PF, obtaining licenses and registrations for operation and exposure to liability due to the sensitive nature of the service being provided. Therefore, it is best for the promoters of a Security Guard Service Business to opt for a Private Limited Company or a Limited Liability Partnership while incorporating a business entity. Both Private Limited Company and Limited Liability Partnership offer the promoters limited liability protection, transferability of the business and continuos existence benefits.
The services provided by a security guard service are taxable under the Service Tax Act and hence, security guard services that cross an annual turnover of over Rs.9 lakhs must obtain service tax registration. The security guard service provider must add an additional 12.36% of service tax to the end client while billing for security services provided after crossing an annual turnover of Rs.10 lakhs. Based on the choice of entity, the Service Tax payment must either be deposited with the government on quarterly basis or monthly basis.
Security Agency License
After the introduction of the Private Security Agencies Act, 2005, security service providers are required to obtain a license under the act from the Controlling Authority. The controlling authority in most states is the Police Department or the authority rests with the Home Department of that state. New security agencies must obtain the security agency license prior to commencing business and agencies that were in operation before the introduction of the Private Security Agencies Act, 2005 were allowed to function for a period of one year without the license from the time of introduction of the Act.
The Security Agency License is provided under three categories namely: License to operate Security Agency in 1 District, License to operate Security Agency in 2-5 District and License to operate Security Agency throughout the State. Once, the application is submitted to the Controlling Authority, the application is process and if found fit, a license to operate a security agency is provided for a period of 5 years. The license is renewable at the end of its expiry. [Source : https://www.indiafilings.com/learn/starting-a-security-guard-service-business/ ]
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Article Added on Friday, August 30, 2019
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