How to Start a Business in India
Overview: Gone are the days when starting a business was a hard nut to crack. In today’s digitally evolved era, setting up a business in India is easier if you are well-versed in the prerequisites. Most of your business requirements in their early phases, such as deciding the line of business, business registration, and various regulatory requirements, can be fulfilled online using an active internet connection and any smart device (a tablet, laptop, or even a smartphone). Learn more about how to set up a business in India with this blog!
In today’s India, the young generation is inquisitive and interested in doing work in their own way. The number of youngsters with an independent mindset across India has risen, leading to the creation of more entrepreneurs rather than job seekers. In addition to this, technology has significantly contributed to the creation of numerous business opportunities, along with easing the process of setting up a business in India.
In fact, it has made the whole process of ‘how to start a business in India’ and its further management much easier. This blog explores various aspects of how to start a business in India:
How to start a business in India?
1. Deciding the line of business
The first and foremost step prior to starting a business in India is the idea and vision of the line of business. The entrepreneur ought to have a vision, whether in the form of a simple or detailed business plan backed by market analysis, projected financial statements, etc. However, a detailed business plan is preferred over a simple plan as it helps aspiring entrepreneurs to avoid mistakes, thus increasing the probability of succeeding in the business.
If you are on the other side and do not possess any particular business idea, then you can put your mind on some research work by taking help of technology through the internet. It will show you numerous business ideas to choose from the relevant ones as per your area of interest, targeted location and estimated capital you want to invest in it, along with giving you a brief idea on how to set up a business in India.
The following are good online resources for finding business ideas:
- Home-based business ideas in India
- Business Idea Centre
- Kickstarter
- Big List of Business Ideas
You can use many other search terms in your smart device browser in order to gain insight into different business structures for starting a business in India, which would be helpful in choosing the right kind of business that you should opt for.
2. Business Entity Registration
Once the decision is made about the business to be started, an entrepreneur has to choose the form of business, the different forms of businesses available in India are as follows:
- Proprietorship– The owner and the firm are not separate legal entities. A single person is responsible for controlling the entire functioning of these companies and has unlimited liability.
- Partnership– Formed by two or more individuals who share profits, assets, and other financial obligations. Those individuals are referred to as ‘Partners’ of the company.
- Limited liability partnership– As the name implies, the liability of partners is limited to the amount of capital invested by them. It can be formed by two or more individuals.
- Private limited company– A privately held company by a group of individuals that provides limited liability and a separate legal identity. It is one of the most preferred choices of entrepreneurs for starting a business in India due to its attractive features.
- One Person Company– It is a type of private limited company that is managed by one and only person, and he is the one who manages the company.
- Public Limited Company– A public limited company is a company in which the liability of every shareholder is limited to the extent of capital invested.
Choosing a form of business depends on a number of factors, for example, the nature of the business, the number of members involved, initial capital, etc.
For instance, if there is only one person, then we can choose either a Proprietorship or a One Person Company, as the other forms of business registration require at least two or more persons. However, for a micro or small level entity, it would be prudent to choose a Limited Liability Partnership (LLP) or proprietorship to set up your business in India.
Furthermore, some necessary and mandatory documents, such as PAN and address proof of the entrepreneurs involved, would be required at the time of registration. For detailed assistance in choosing the right kind of business entity, kindly visit setindiabiz.com or seek business advice from our expert business advisors. By fulfilling the document requirements, you can get your business registered under the most suitable business structure as per your business operations.
Company Registration Cost
- Director DIN
- Company Name Approval
- Filing Incorporation Forms
- Company PAN & TAN
- Digital Signature
- Drafting MoA & AoA
- Certificate of Incorporation
- 100% Online Process
3. Bank Account Opening
After the incorporation of the business entity, the next significant step is to open a bank account in the name of the business through which all the business transactions will take place. Corporate entities like Private Limited Company, LLP, One Person Company, and Limited Companies are allowed to open a bank account in India ,which requires the submission of a Certificate of Incorporation and PAN Card of the entity.
However, in the case of a proprietorship entity opening a current account in the name of the business, it requires the submission of the document prescribed by the Reserve Bank of India. For detailed assistance on bank account opening, kindly visit setindiabiz.com or seek business advice through our expert business advisors.
4. Tax Registration
Depending upon the nature of business and activities involved, various tax registrations might be required for the business:
5. VAT Registration
If the business activity involves sales of goods or products, then VAT Registration or TIN Number is required. It is state-specific registration, and every state has an exemption limit for small businesses from VAT registration. The exemption limit varies from state to state. The same would be required to become a seller on Snapdeal, Flipkart, or any other e-commerce portal as well.
6. Excise Registration
Some businesses require Excise Registration along with VAT registration. These are as follows:
- Manufacturers of the goods on which excise duty is payable,
- Warehouse storing goods on which duty is not paid and
- Dealers issuing Cenvatable invoices
7. Service Tax Registration
All the service providers who are rendering services to the customers and have an annual billing of more than Rs . 9 lakhs need to be registered with the service tax department.
8. TAN Registration
TAN Registration is mandatory for tax deduction at source (TDS). Every business at the time of making payment needs to adhere to the rules of TDS and has to deduct tax if any is required by the rules therein, and the deducted amount is to be submitted to the Income tax department on behalf of the person whose tax is deducted.
For all the above tax registrations, there is a time frame within which the payment of taxes needs to be submitted to the Government of India, and a return providing all the details of taxes involved in a particular transaction is to be filed.
In addition to the above tax registration with relevant authorities, there are some more licenses and registrations required, which are product-specific or depend on the type of service rendered. A business needs to be registered with the ESI department if its employees are ten or more in number. PF registration at the same time is a voluntary registration till the number of employees reaches 20 or more.
Numerous other factors should be considered before starting a business in India. For detailed assistance on registration & licenses, kindly visit setindiabiz.com or seek business advice through our expert business advisors.
Conclusion
Starting a business in India involves several steps for setting up a legally valid company. However, most of those steps can be fulfilled online. With digitisation, now most of the company’s compliance and taxation requirements can be accessed & fulfilled online as described above. It is one of the key characteristics of the digital world that is transforming the whole way of setting up a business in India, and also how to get it registered lawfully in India.
FAQ’s
Does a startup need to be registered in India?
Can a private limited company float shares to the general public?
What is a Nidhi Company?
What are the prescribed number of members, directors and shareholders in an LLP?
Can more than one person become part of a One Person Company?
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