I work full-time at an IT company and want to start a private limited company. Will there be any problem if I join a new organization in future and they got to know about it in the background verification?
1. I want it registered in my name and don't want to involve any family member
2. I am okay to discloe this with new employer
What should be the best? If any HR people can answer this?
1. I want it registered in my name and don't want to involve any family member
2. I am okay to discloe this with new employer
What should be the best? If any HR people can answer this?
Can You Start a Private Limited Company While Working Full-Time?
Yes, you can start a Private Limited Company while working full-time, but there are critical factors to consider, especially regarding employment contracts, legal compliance, and background verification.
📌 Key Considerations Before Registering a Private Limited Company
1️⃣ Check Your Current Employment Contract
🔹 Review your employment agreement to see if there are any clauses related to:
✅ Non-Compete Clause – Restricts working for or running a competing business
✅ Non-Solicitation Clause – Prevents hiring employees or clients from your employer
✅ Conflict of Interest Clause – Prohibits engagement in other businesses without approval
🔹 If such clauses exist, seek written approval from HR or legally navigate them.
2️⃣ Legal Aspects of Running a Private Limited Company While Employed
✅ Legally, there is no restriction on being a director or shareholder in a Private Limited Company.
✅ However, under Section 16(1)(b) of the Companies Act, 2013, you cannot be a whole-time director while holding a full-time job.
✅ You can register the company under your name, but if you don’t actively manage daily operations, appointing a co-founder or director can help.
3️⃣ Background Verification & Future Job Prospects
✅ If you fully disclose this to a new employer, there should be no problem.
✅ HR verification checks generally focus on past employment, education, and criminal records.
✅ If the company is publicly registered, it may show up in MCA (Ministry of Corporate Affairs) records, which recruiters may check.
✅ Hiding this information could damage credibility, but disclosing it with a clear explanation shows professionalism.
📌 What’s the Best Approach? (HR Perspective)
🔹 Option 1: Register the Company Under Your Name (With Proper Disclosures)
Suitable if your employment contract does not restrict external business ventures
Be transparent with your employer and future organizations
🔹 Option 2: Appoint a Co-Founder or Silent Director
If your employer has strict policies, you can register the company but appoint a director for operations
You will remain a shareholder and have control over decision-making
🔹 Option 3: Get Prior Approval from HR (Only if required as per your contract)
If policies require approval, get written consent from your employer before incorporating
📌 Final HR Advice
✔ Registering a company in your name is legally allowed, but ensure there’s no conflict of interest
✔ Disclose it upfront to avoid background verification issues in future job opportunities
✔ If needed, take a legal consultation to avoid employment contract violations
From India, Faridabad
4Yes, you can start a Private Limited Company while working full-time, but there are critical factors to consider, especially regarding employment contracts, legal compliance, and background verification.
📌 Key Considerations Before Registering a Private Limited Company
1️⃣ Check Your Current Employment Contract
🔹 Review your employment agreement to see if there are any clauses related to:
✅ Non-Compete Clause – Restricts working for or running a competing business
✅ Non-Solicitation Clause – Prevents hiring employees or clients from your employer
✅ Conflict of Interest Clause – Prohibits engagement in other businesses without approval
🔹 If such clauses exist, seek written approval from HR or legally navigate them.
2️⃣ Legal Aspects of Running a Private Limited Company While Employed
✅ Legally, there is no restriction on being a director or shareholder in a Private Limited Company.
✅ However, under Section 16(1)(b) of the Companies Act, 2013, you cannot be a whole-time director while holding a full-time job.
✅ You can register the company under your name, but if you don’t actively manage daily operations, appointing a co-founder or director can help.
3️⃣ Background Verification & Future Job Prospects
✅ If you fully disclose this to a new employer, there should be no problem.
✅ HR verification checks generally focus on past employment, education, and criminal records.
✅ If the company is publicly registered, it may show up in MCA (Ministry of Corporate Affairs) records, which recruiters may check.
✅ Hiding this information could damage credibility, but disclosing it with a clear explanation shows professionalism.
📌 What’s the Best Approach? (HR Perspective)
🔹 Option 1: Register the Company Under Your Name (With Proper Disclosures)
Suitable if your employment contract does not restrict external business ventures
Be transparent with your employer and future organizations
🔹 Option 2: Appoint a Co-Founder or Silent Director
If your employer has strict policies, you can register the company but appoint a director for operations
You will remain a shareholder and have control over decision-making
🔹 Option 3: Get Prior Approval from HR (Only if required as per your contract)
If policies require approval, get written consent from your employer before incorporating
📌 Final HR Advice
✔ Registering a company in your name is legally allowed, but ensure there’s no conflict of interest
✔ Disclose it upfront to avoid background verification issues in future job opportunities
✔ If needed, take a legal consultation to avoid employment contract violations
From India, Faridabad
Dear Sachin,
Employers always aspire to expand their businesses. Since they cannot handle all the activities on their own, they delegate part of the work to the employees. As the businesses grow, the process of delegation develops multiple layers and hierarchies in the organisation are developed. Whatever the position of the employee in the hierarchy may be, the employer expects them to serve loyally and faithfully by devoting their energy to promoting the interest of the organisation, always thinking about enhancing customer satisfaction, suggesting innovative ideas to improve systems and processes, etc. But to do all this requires a single-minded focus. If the employee starts working concurrently for one's organisation, his or her attention will be diverted. Do you think any employer will accept this? Certainly not!
As a via media, you can start a company assigning its ownership to your spouse or any other blood relative. You should not have any shareholding. Theoretically, this may look like a good option, however, it is also fraught with challenges. This is because, approaching the customers, convincing them to give you a business, and further fulfilling their expectations about the quality of the product or services is no easy task. It could suck a far greater energy than you think! Furthermore, do not think that a satisfied customer will pay you on time. You need to do a lot of follow-up to get a payment from the customers.
Thanks,
Dinesh Divekar
From India, Bangalore
Employers always aspire to expand their businesses. Since they cannot handle all the activities on their own, they delegate part of the work to the employees. As the businesses grow, the process of delegation develops multiple layers and hierarchies in the organisation are developed. Whatever the position of the employee in the hierarchy may be, the employer expects them to serve loyally and faithfully by devoting their energy to promoting the interest of the organisation, always thinking about enhancing customer satisfaction, suggesting innovative ideas to improve systems and processes, etc. But to do all this requires a single-minded focus. If the employee starts working concurrently for one's organisation, his or her attention will be diverted. Do you think any employer will accept this? Certainly not!
As a via media, you can start a company assigning its ownership to your spouse or any other blood relative. You should not have any shareholding. Theoretically, this may look like a good option, however, it is also fraught with challenges. This is because, approaching the customers, convincing them to give you a business, and further fulfilling their expectations about the quality of the product or services is no easy task. It could suck a far greater energy than you think! Furthermore, do not think that a satisfied customer will pay you on time. You need to do a lot of follow-up to get a payment from the customers.
Thanks,
Dinesh Divekar
From India, Bangalore
You work in IT and presumably that is your area of expertise.
If you try and start your own company which deals with IT in any way, shape or form, you will automatically have a conflict of interest, and NO employer is going to allow you to continue working for them under those circumstances. As previous legal cases have shown, it is extremely difficult to prove you have not stolen company information, intellectual property, and customers from a current or previous employer.
Even if you could find something that is totally different to AI, e.g, making and selling pottery, as my colleague Dinesh above has stated, it is is extremely difficult to set up a new business, find customers, service those customers and build the business while employed full time elsewhere. That quickly leads to burn out, and you then become ineffective in your day job, management puts you on performance management plan, and eventually you are terminated.
All these risks should be comprehensively covered in your SWOT analysis in your business plan, But my guess is that you have done little or no planning, let alone write a full business plan.
Remember the golden rule - FAILURE TO PLAN IS PLANNING TO FAIL.
From Australia, Melbourne
If you try and start your own company which deals with IT in any way, shape or form, you will automatically have a conflict of interest, and NO employer is going to allow you to continue working for them under those circumstances. As previous legal cases have shown, it is extremely difficult to prove you have not stolen company information, intellectual property, and customers from a current or previous employer.
Even if you could find something that is totally different to AI, e.g, making and selling pottery, as my colleague Dinesh above has stated, it is is extremely difficult to set up a new business, find customers, service those customers and build the business while employed full time elsewhere. That quickly leads to burn out, and you then become ineffective in your day job, management puts you on performance management plan, and eventually you are terminated.
All these risks should be comprehensively covered in your SWOT analysis in your business plan, But my guess is that you have done little or no planning, let alone write a full business plan.
Remember the golden rule - FAILURE TO PLAN IS PLANNING TO FAIL.
From Australia, Melbourne
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