How To Start A Business in India

It appears that starting a new business is a difficult task. Nonetheless, it has the potential to benefit both the corporation and the economy as a whole. Starting a business in India has several legalities and procedures that must be followed to ensure that your firm runs smoothly and profitably. A good corporate structure requires a robust business model and a solid legal foundation.

Over the last few years, the ease of doing business in India has increased dramatically. On the World Bank’s Ease of Doing Business Index, India ranks 63rd out of 190 nations.

Step 1: Form A Business Entity

First, you must decide on a business idea and conduct thorough market research. Find a format that will help your company succeed, expand, and avoid excessive taxes and personal responsibilities.

The different types of businesses that can be started in India are as follows:

• Sole Entrepreneurship: A proprietor is a type of business entity owned and managed by a single individual. Since the business has no legal identity separate from its owner, the proprietor is personally accountable for all commercial debts. 
• One-Person Company (OPC): This is a relatively new concept under the Companies Act of 2013. A one-person company has only one shareholder and director. According to the Act, only an Indian citizen living in India can function as a member and nominee of the OPC. OPC’s structure includes significant compliance and cost requirements and few tax benefits.
•  Private Limited Company (PLC): This format has a separate legal existence from its owners. In the case of a financial emergency, the owners and shareholders are only responsible for the value of their shares. To form a private limited corporation, you’ll need a minimum of two people and a maximum of 200. All such entities must be registered with the Registrar of Companies, according to the Companies Act, 2013. Annual compliance is required of these businesses, and failure to do so can result in serious legal consequences. This is probably the best option to raise money or have shareholders.
• Limited Liability Partnership (LLP): It is a legal structure that combines the advantages of limited liability and partnership flexibility. A partner is only accountable for the level of their capital contribution when it comes to liability protection. Furthermore, a partner cannot be held personally accountable for any other partner’s autonomous or illegal actions. Any independent or illegal acts, on the other hand, may cause the LLP to get entangled. The LLP Agreement governs how activities are administered in an LLP.
• Public Limited Company: This is a better option for more established firms. A public limited company has all of the benefits of a private limited business plus the ability for shareholders to transfer their shares freely. These kinds of businesses are heavily regulated.

Step 2: Obtain the Required Licences and Registrations

Depending on their operations, all businesses must register with various government agencies. The registration process varies depending on the type of company entity and structure you’ve chosen. 

The registrations and permissions required for your company are as follows:

• Digital Signature Certificate (DSC): You can get a DSC from one of MCA 21’s six recognised private firms. All directors must complete and submit an application form and provide proof of identification and address.
• Director Identification Number (DIN): You can apply for a DIN provisional by filling out the application form DIN-1 online. After that, a physical application form with proof of identity and address must be signed and forwarded to the Ministry of Corporate Affairs (MCA) for approval. A permanent DIN is granted after verification and approval.
• Name of company: Approval of a company name must be completed electronically. Check the MCA website for the availability of your desired company name. There is a limit of six names that can be submitted. Once accepted, the chosen name will appear on the website.
• Permanent Account Number (PAN): A PAN is obtained by filling out Form 49A. It can be completed online, but the documents must be sent in person for verification. A printed PAN card is issued after the PAN is received. The PAN is required to open bank accounts and file income tax and TDS returns. To apply for a tax deduction account number (TAN), fill out form 49B and submit it to any TIN Facilitation Centre.
• Certificate of Incorporation: To apply for a certificate of incorporation, you must electronically file paperwork such as e-form 1, e-form 18, and e-form 32 on the MCA’s website. 
• Goods and Services Tax (GST): As of July 2017, every business with annual revenue of more than INR 2 million (or INR 1 million in some states) must register for GST. GST registration is also required for enterprises that supply products and services within the state, regardless of their turnover.
• Import Export Code (IEC): Importers and exporters must use this 10-digit code to clear customs, shipments, and transfer money to foreign banks.

Step 3: Register Your Trademark

Your company’s brand value will increase as the company grows. As a result, it’s critical to safeguard your intellectual property (IP), which could include your company name, logo, tagline, and other crucial terms. If you register your trademark with the government, it protects you from misappropriation of the value you create in your business through branding and advertising.

The Trade Marks Act of 1999 registers trademarks that are applied for in India, improves trademark protection for goods and services and inhibits trademark fraud. It’s a good idea to file for your trademark as soon as possible once you start your branding efforts.

Step 4: Raise Funds

You can raise money for your startup in various ways, including angel investors, venture capitalists, business incubators, bank loans, government schemes, or crowdfunding. Preparing a detailed business plan that includes market analysis, financial predictions, organisational management, sales and marketing strategies, and other information can go a long way toward impressing possible investors.

Conclusion

Young people’s entrepreneurial ambitions are expanding with India’s growing middle class. Technology has offered up countless business options and simplified the process of founding and running a company. Detailed business planning will assist the entrepreneur in avoiding mistakes and increasing the likelihood of business success. If the entrepreneur does not have a business idea in mind, they can look for business ideas online.