“Business” – the backbone of the economy, albeit “risky”, is often a misunderstood word in a developing country like India. “Job vs Business” is often an ongoing debate in Indian households. But what happens when you actually want to become the ruler of your own kingdom? What happens when you’re thinking about launching your own startup? How or most importantly where do you begin? How do you navigate those “risks”? In this article, we will try to cover the entire process of how to start a business in India and excel in it. Even the big corporate giants started from somewhere. That is what is the most difficult and important part – the beginning.
Come up with a lucrative business idea:
The most important part of the whole process is knowing what you actually want to do. Decide on a specific business plan which brings us to our next point.
Choose a business entity:
The next step is incorporating the right business agency (sole proprietorship, one-person company, partnership, private limited company, limited liability partnership, and public limited company). Deciding on the right format will set you on the right path and help your business grow in many ways. It may even protect you against extremely high tax rates and personal liabilities. Different ways of establishing a business in India are as follows:
Started, managed, and owned by a single person, known as the “Proprietor”, this type of business has no legal identity, i.e., is not recognized or protected by the law. This means this type of business cannot sell an interest to raise the necessary capital.
One-person Company (OPC):
Introduced under the Companies act, 2013, a one-person company has only one sole director and shareholder. One ought to be a permanent citizen and resident of India to be a member and nominee of the OPC. Tax advantages are very and far between in OPC with strict compliance requirements.
Controlled by the Indian Partnerships Act, 1932, this type of business is set up by two or more people as partners and can have up to twenty partners. All the partners have to sign the partnership deed containing all the terms and conditions. The personal assets of the partners prove useful in recovering debts, hence this type of business is suitable for small to medium-sized firms.
Private Limited Company:
This format has a separate legal identity distinct from that of its owners. In case of a financial emergency, the owners and shareholders cannot be held accountable for the extent of their shares. A private limited company can be started by a minimum of two and a maximum of 200 people. The provisions related to such companies are held by the Companies Act, 2013 and it is mandatory for these companies to get registered with the Registrar of Companies. Legal repercussions may be severe for such business entities in case of failure to file annual compliance.
Limited Liability Partnership (LLP):
Managed under the provisions of the LLP Agreement, 2008, this type of legal entity offers flexibility in partnership and limited liability. A partner is held accountable only to the extent of their individual capital contribution and not to any independent illegal deeds of another partner. But any such independent illegal acts can get the LLP itself ceased.
Public Limited Company:
Highly regulated, this type of business format is worthy of a high-scale business. Shareholders can freely transfer their shares and this type of business can also enjoy the fruits of a private limited company. Public limited companies are extensively regulated by the Companies Act, 2013.
Preparing a Project Report:
Making a detailed report for the domestic and international markets for your product or service is an important aspect of starting any business model. Attach the name, age, qualifications, and experience certificates of the owner or partners concerned, thus facilitating the process of generating the necessary finance. Generate a revenue model containing details like cost and sale prices, taxes, delivery charges, other related expenses, and also expected revenues for the upcoming 2-3 years.
Now take care of the funding:
Self-funding or collecting funds from family and friends are the source of funds for most small businesses in India. The next step is estimating and calculating the finances required to launch your startup and to keep the business buoyed up until it starts delivering profits. Various sources of funding for micro, small, and medium entities are banks, cooperative credit societies, community development funds, crowdfunding, and angel investors.
Finalize a location:
It is mandatory to register any small business with the local municipal or village administration under Indian laws. Hence deciding on a particular location for your business is necessary for obtaining the permission of the concerned local body or gram panchayat.
Necessary registration, licenses, and legalization of the business:
This is a very stressful and daunting job. But nowadays, new companies are registered under the Ministry of Corporate Affairs (MCA) within one or two working days. New startups have to obtain necessary licenses from the state and central governments. You can obtain Permanent Account Number (PAN) Nd Taxpayers Identification Number (TIN) by approaching any PAN and TIN service centre authorized by National Securities Depository Limited (NSDL). PAN and TIN will be helpful at the time of paying taxes to the Government every year. As of July 2017, the Goods and Services Tax (GST) is mandatory for businesses with more than INR 2 million (1 million for some states) annual turnover. Businesses involving intra-state supply of goods and services have to register for GST too, irrespective of turnover.
Extensive market competitions make publicity of your business extremely important. Traditional ways like advertising in newspapers and local radios should now be assisted with modern digital ways like publicizing your business on Twitter, Facebook, LinkedIn, Instagram, Etc. The best way to establish an online presence is to start a unique website for your business. We know the potential of e-commerce nowadays, especially after the COVID-19 pandemic. Direct orders and multiple payment options make an e-commerce store idea for growing a business.
Conclusion – HOW TO START A BUSINESS IN INDIA
In conclusion, starting a business in India is not all sunshine and rainbows. It takes huge amounts of effort, capital, brains, and hard work to break into the scene. But the starting spirit always comes from a big dream and even bigger determination. India ranks 63rd among 190 countries on the World Bank’s “Ease of Doing Business” index. This indicates the said dream and determination of our youth and also our older generations. Nowadays we also have help from the Government like Startupindia, Mudra Bank, etc. India’s future in world business has never seemed brighter. So, let’s keep hustling for ourselves and our country and make India an even bigger business and economic power in the whole world.