A Step-by-Step Guide to Starting a Business in India
Starting a new business seems like a challenging proposal. However, it can greatly benefit the company and the economy as a whole. With so many businesses looking to set up businesses, there are a few things to consider when registering your business in India. With that in mind, we are pleased to present a few basic steps required to register any business in India:
1. Evaluate your idea
Once you have zeroed in on an idea, start analysing whether your business answers some basic questions like: What problem is your product or service going to address? Who will be the target audience? Will it be a side project or a full-fledged business? Who will be the competitors? What will be the means of running the business whether stores or online?
2. Identify your business structure
When you are clear of all the questions, your next step will be to assess the type of entity that best suits. In India, a startup can be registered as a Private Limited Company, Limited Liability Partnership, Partnership Firm, Sole Proprietorship and One Person Company.
3. Checking Company Name Availability
Before any company registration can take place, you should check that the proposed name is available. This can be done online, where applicants can check the availability of the names of the companies they want on the MCA 21 website. Once approved, the selected company name appears on the website.
4. Obtaining an administrator ID number (DIN)
Director's Identity Identification Number (DIN) is a unique identification number provided to any existing or potential directors of listed companies. Temporary DIN can be obtained by completing the online DIN-1 application form.
Thereafter, the printed and signed version of the form must be forwarded to the service along with the identity and address of their approval. Permanent DIN is issued after document confirmation and subsequent approval of the application.
5. Obtaining a Digital Signature Certificate
A digital signature certificate is an electronic key that certifies and identifies the owner of this certificate. One of the accredited agencies registered with the department may issue this certificate. The application form, identity document, and proof of permanent address must be submitted by the company's directors when applying for a Digital Signature Certificate.
6. Obtaining a Consolidation Certificate
The inclusion certificate is issued by the Department of Business Affairs and is used as proof of the company's constitution. To apply, the following forms must be digitized on the official website of the Department of Corporate Affairs - e-form 32, form 1 and e-form 18.
In accordance with Form 1, the Registrar of Companies must be provided with a single copy of each: Memorandum and Articles of Association (MoA and AoA), directors' approval, and a stamped copy of the power of attorney.
The installation certificate will be automatically sent to the email ID as provided in the submitted information and forms during the installation of the company.
7. Creating a Company Seal for Official Documents
It is necessary to mark the company on the paper sharing certificates and other official documents. The total cost of obtaining an official mark depends on the number of words that need to be recorded, the number of symbols used, and the timing of the marking. It is noteworthy here that the need to keep a company logo is not mandatory in the private sector.
8. Stamping of all Companies
An application for stamping of company records must always be accompanied by unregistered copies of the Memorandum and Articles of Association next to the same payment receipt. Stamp duty must be paid online for such documents to the Registrar of Companies.
Following this request, the Superintendent will return copies - one of which is stamped, signed, and duly signed. Finally, the company promoters must sign the MoA and AoA, with all the required details filled out by hand.
9. Getting a Permanent Account Number (PAN)
Completion of Form 49A is required for PAN use. Once a unique PAN has been received, a visual version of the PAN card will be sent to your registered address by official post. The PAN application can also be made online, but the required documents will still need to be physically sent for final confirmation.
10. Obtaining Tax Account Number (TAN)
According to the Government of India, a Tax Account Account or Tax Account Number (TAN) is a special number issued by the tax department for all businesses that require or deduct a tax from a source.
To obtain this number, form 49B must be completed and submitted to the TIN Facilitation Center. Once the application is approved, it is forwarded to the Department of Revenue and TAN is issued. TAN application can be made offline or through the NSDL website.
11. Obtaining a certificate from the State / Municipal Inspector under the Shopping and Establishment Act
A statement that includes the names of the employer / manager, the name of the designated company and the permanent postal address and business category must be provided to the State Shop and Establishment Inspector and the payment of applicable fees. This is an important step in registering trading licenses as all companies must be registered within one month (30 days) of opening their business.
12. Apply for GST registration
GST registration is compulsory for any business that seeks to deliver goods and services to all provinces while maintaining an annual turnover of more than INR 40 lakhs / 20 Lakhs. This should be a priority before any other registration process for a new company. For more information on GST registration and application documentation, you can visit the following link.
GST registration is mandatory if you are a reseller or plan to become a reseller on Amazon.in (except: if it only applies to GST unpaid categories).
13. Obtaining the Employment Tax Certificate from the State Tax Office
Every employer (other than a government official) is subject to taxation and must obtain a registration certificate from the relevant authorities. The company is required to file Form 1 with the State Taxation Office to apply for the Employment Tax Certificate, if required.
14. Complete the Registration of the National Employee Fund Fund
Every employer is required to provide employee details to the Employee Provident Fund Organization (EPFO). This must be done in the prescribed manner so that the Establishment Code Number (ECN) is issued to the company. This process is under the sole discretion of the employer, and no separate requests need to be made by employees. Note that this will only be required if the provisions of the Employees' Provident Fund and the Miscellaneous Providence Act, 1952 apply to the company.
15. Create online presence
In this digital era, it is absolutely necessary for your business to create an online presence. Having an interactive website and social media pages help in showcasing your services and products while attracting potential customers.
16. Raise funding
To source funds for your startup, some of the options available are crowdfunding, bootstrapping or self-funding, Angel investment, and venture capital, business incubators, bank loans, government schemes, etc. Getting a business plan with market analysis, organization management, financial projections, marketing and sales strategies help in impressing potential investors.