How to Start a Business in India

  • Setindiabiz Team
  • June 20, 2024
How to Start a Business in India

Gone are the days when starting a business was a hard nut to crack. In today’s digitally evolved era, starting and setting up a business in India has been simplified. Most of your business in the early phases such as deciding the line of business, business registration and various regulatory requirements can be fulfilled online with the help of an active internet connection and a smart device like tablet, laptop or even a smartphone. This written piece provides you with a simple guide on how to set up a business in India.

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 how to set up a business in India. In fact, it has made the whole process of ‘how to start a business in India’ and further managing it much easier. This blog explores various aspects of how to start a business in India:

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 the market analysis, projected financial statement, etc. However, a detailed business plan is preferred over the simple plan as it helps the aspiring entrepreneurs to avert mistakes thus, increasing the probability of succeeding in the business.
But, 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:
  1. Home based business ideas in India
  2. Business Idea Center
  3. Kickstarter
  4. 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 that would be helpful in choosing the right kind of business that you should opt for.

Business Entity Registration

Once the decision is made about the business to be started when an entrepreneur has to choose the form of business. The different forms of businesses available in India are as below:
  1. 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.
  2. 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.
  3. 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.
  4. Private limited company– Privately held company by a group of individuals and 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. 
  5. One Person Company– It is a type of pvt ltd company that is managed by one and only person, and he is the one who manages the company. 
  6. 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, 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 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 or seek business advice by our expert business advisors.
By fulfilling the documents requirements, you can get your business registered under the most suitable business structure as per your business operations.

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 would take place. Corporate entities like Private Limited CompanyLLP, 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 requires submission of the document prescribed by the Reserve Bank of India.
For detailed assistance on bank account opening kindly visit or seek business advice through our expert business advisors.

Tax Registration

Depending upon the nature of business and activities thus involved, various tax registrations might be required for the business:

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 the small business from VAT registration. The exemption limit varies from state to state. The same would be required to become a seller on Snapdeal or Flipkart or any other e-commerce portal as well.

Excise registration

Some businesses require Excise Registration along with VAT registration. These are as under:
  1. Manufactures of the goods on which excise duty is payable,
  2. Warehouse storing goods on which duty is not paid and
  3. Dealers issuing Cenvatable invoices
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 themselves to be registered with the service tax department.

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 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 registration there is a time frame within which the payment of taxes need to be submitted with the Government of India and 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 registration is required which is product specific or depends 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.
There are numerous other factors that you should consider before starting a business in India. For detailed assistance on registration & licenses kindly visit or seek business advice through our expert business advisors.

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 digitization, now most of the company compliance and taxation requirements can be accessed & fulfilled online. 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.

Dig deeper into how to start a business in India with the post!



Q1: Does a startup need to be registered in India?

Yes, it is necessary to register a startup in India. Firstly, it should be registered under an appropriate business structure to give it a legally valid identity separate from its director (s). If you are curious about how to start a business in India, do your research and can seek expert guidance from Setindiabiz professionals.

Q2: Can a private limited company float shares to the general public?

No, a Private limited company cannot allow floating shares as the shares of pvt ltd companies are restricted from transfer to the general public. Also, the shares of a pvt ltd company cannot be listed or traded on the stock exchanges. Learn about how to start a business in India with our experts’ consultation.

Q3: What is a Nidhi Company?

A Nidhi Company is registered in order to develop the habit of saving among the members via regular deposits, and provide mutual benefits to each other.

Q4: What are the prescribed number of members, directors and shareholders in an LLP?

For starting an LLP in India, the number of members prescribed should be at least 2 while the maximum cap is not defined. The members can’t become directors or shareholders.

Q5: Can more than one person become part of a One Person Company?

No! not more than one person can be associated as a member, director or shareholder in an OPC (One Person Company). However, the director of an OPC can appoint an individual as his nominee who will carry on the activities and can take necessary decisions on behalf of the person’s unavailability.

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