Tips For Starting a Business In India
To start a business in India it takes a long time. The bureaucratic red tape in India means that starting your own business in India would take anywhere between 80 – 90 days which is a long time when compared to countries like USA and China which take about 5 and 40 days respectively.
In fact, the average time taken to register a company in any most of the developed nation is 10-40 days.
This is one of the main frustrations of a new entrepreneur but he has to endure through this period and think of it as a test of patience before he starts his venture.
The first step obviously is to apply to the Registrar of Companies and like every other Government institution in our beloved country you have to make your way through a lot of bureaucratic red tape. Everyone agrees that a gestation period of 30-35 days would have been ideal and the delay beyond this is a little hard to wrap your mind around.
Choosing the right name is a very tricky process. You have to submit three choices for names and usually, the men who go through the applications reject the names on a very silly premise.
We suggest you choose three names which are uncommon and grapple with the officials if you hav e to, to get the name of your choice.
A CAs role in starting a business in India is an important one. If you have the right CA helping you with your venture their contacts alone can speed up things for you. Some CAs know the loopholes and the dark hallways of bureaucracy better than others and they will be able to help you with it.
Since you have decided to start your own business. Instead making all the mistakes and learning from them here are a few things that can help you run your dream venture successfully.
This is the simplest type of business that one can start and often all the entrepreneurs start out this way. If you are a graphic designer, artist or a writer this is best suited for you since you will be working predominantly from home. You can also get a few additional tax cuts by registering your firm under proprietorship.
You can start off this way but when you have to expand you need to get a few sanctions from your local municipality or better move to a commercial space as it is against the rules to run certain organizations in a residential area.
Private Limited Company
This is a much complicated option when compared to proprietorship but with it comes a lot of laws that can protect you in the long run. It is always better to get yourself an accountant who knows the rules when you start your private limited company. To register a Private Limited Company you need
Startup Capital – A minimum of 2 lakhs is required.
Registered Office – You need to register your office space with the Registrar of Companies.
Name the Company – You need to fill up a form with all the options for the name of your organization. Try to avoid generic names since most of them are already taken.
Directors – You need to nominate three directors including yourself. When your company becomes successful you can pay them salaries and increase the company expenses which can be used for tax breaks.
You can have an equal liability partnership or a variable liability partnership based on how much of the equity they hold of the company. The procedure is similar to the one that you saw above with a few minor changes. All in all it is always better to have a CA review the documents before you plunge yourself into a Partnership firm.
Starting a business in India is a tedious process. To help you with it we have created a list of things that you can follow that will reduce your woes.
Everyone talks about a business plan; this is because without a business plan you are hunting in the dark. So get started use tools and resources at your disposal to create one. This will act as a map for you to start your business and run it successfully.
Part time business training
Get yourself enrolled in part time business classes. There are lots of them conducted by reputed organizations like IIM’s in the weekends for budding entrepreneurs.
Location, Location, Location
Choose the right location for your business. It should be customer friendly and compliant to the zoning laws.
Get the required finances
The finance options that you can look at other than family and friends are government backed loans for entrepreneurs, venture capitals and research grants.
Legal structure of your business
In this the options that are available to you are sole proprietorship, partnership, Limited Liability Company, corporation, nonprofit or cooperative.
Register the name of the Organization
Register the name of your organization with Registrar of companies.
Get a Director Identification Number
Download the Provisional DIN form from the website www.mca.gov.in. Submit the required documentation and obtain the Director Identification Number also called as DIN.
Register for Taxes
Get yourself a PAN (Permanent Account Number) and a TAN (Tax Deduction and Collection Account Number). Without these the Central Board of Direct Tax (CBDT) banks will not accept any form of tax payment.
Business licenses and permits
Obtain all the business licenses pertaining to the state and centre depending on the area that you would like to cover with your business.