India has become the hotspot for budding entrepreneurs and visionaries who are seeking to make an impact. Due to the growing economy and population, there has been a tremendous increase in the number of opportunities for those who want to start a business. Earlier, starting a new business was a difficult task due to many unfavorable odds. The Government has now introduced several helpful policies for startups in the country. It has also provided loan schemes like the MUDRA Loans, National Small Industries Corporation Subsidy etc.
[MUDRA is the acronym for Micro-Units Development & Refinance Agency Limited. It is an initiative by the Indian Government to support and encourage innovation in the small scale sector. To learn more, read our article on "How to get Pradhan Mantri Mudra Yojana (PMMY) Loan?"]
With so many options springing up for entrepreneurial ventures, starting a small business in India seems to be a great idea. Besides, you never know how big of a fortune a small business idea can yield you!
Following are the Steps to Start a Business in India
Set the foundation of your new business
Before even thinking of starting a business, you need to have the foundation ready in your mind. Ask yourself the essential questions regarding your business idea - What service or product am I exactly going to offer? What financial potential does this idea have? What kind of customers (niche) do I want to cater to? How am I going to bring this to the market?
Asking yourself these powerful, analytical questions will make your vision much clearer and will cut out a lot of guesswork. After getting the answers you will know whether your idea is reliable or not, if not you will get an answer to a successful idea.
Getting the answer based on the statistical data rather than asking different people for views on your business Idea will lead you to success because most of the time the data says something different than what most people expect or believe.
[An entrepreneur can rule his domain industry with a great idea. Nothing can stop him from being a successful entrepreneur. To learn about the latest trending business ideas read our article on "12 Low Investment Business Ideas In India With High Profit" ]
Business Research
Many small businesses make the mistake of not doing their “homework” before starting. You need to know the “nitty-gritty” of your business.
What kind of licensing do you require to start a business? What amount of investment do you need for it? Is there any other legal processing for the same? What kind of returns can you expect?
Have a thorough fact-check before you start.
Legal Formalities
Starting any kind of business will demand some legal formalities. Typically, this consists of registration, licensing and other legal processing, depending on the nature of your business. You can register your company as Sole Proprietorship, Partnership firm, One Person Company, Private Limited Company or Public Limited Company. As an owner, you have to comply with the following legal formalities to start a business:
Registering Your Business
You have to first register your business in order to begin the legal processing. Following are the requirements before registering your company.
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Acquirement of DIN (Director Identification Number)
The director of the company should get a DIN in order to begin the registration. You need to file a DIN-1 eForm on the official website of the Ministry of Corporate Affairs. You’ve to first register yourself on the website, fill the DIN-1 eForm and pay an application fee stipulated on the site.
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Get Digital Signature Certificate (DSC)
Any documents that are submitted electronically require a Digital Signature Certificate (DSC) to ensure their authenticity. These certificates can be acquired by agencies that are appointed by the CCA (Controller of Certification Agencies). Using a DSC is mandatory for electronically submitted documents as per the Information Act 2000. A few examples of agencies that offer DSC are SAFESCRYPT, MTNL, TCS etc.
[Digital Signature Certificates are used by the directors of the companies to ensure the privacy and security of the information exchanged electronically. Here is our in-depth guide on "What is a Digital Signature Certificate and How to get a DSC?"]
Apply for Company Registration
This is the last stage of getting your company registered. It involves the filling of the following forms:-
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RUN Form (Reserve Unique Name)
This involves the filing of an application form for determining the availability of company’s name. Along with this, we have to mention the company’s business object.
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Form INC 32 (Incorporation)
This form should be filed to notify the situation of the company’s new office. New companies will demand the filing of genuine office address.
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SPICe Form (SPICe, SPICe MoA, AoA)
SPICe Form 32
This form provides notice for the appointment of executives like New Directors, Secretaries, and Managers in a new company.
SPICe MoA INC 33
A Memorandum of Association (MoA) is a legal document prepared during the company registration process to define its relationship with shareholders. It also specifies the objectives for which the company has been formed.
SPICe AoA INC 34
Articles of Association (AoA) is a legal document prepared by a company to explicitly state the purpose of a company, the procedure to conduct its internal affairs. Most importantly the responsibility and authority of the directors, members, and other stakeholders.
Once you’ve submitted these forms, your company can be incorporated if your application is approved by the Ministry of Corporate Affairs (MCA). A confirmation e-mail pertaining to the same will be sent to you once it’s approved.
[Today, registering your company with the MCA is a simple procedure. With the right documents, you can register your company within a few days. To know which documents are required, read our article on "Documents Required for Private Limited Company Registration"]
GST Registration
You need to get the GST Registration in order to do business with an annual turnover crossing Rs 40 lakhs. This might change depending on the states. It can be done online and may be summed up in a few, easy steps.
1) Go to the Goods and Services Tax Portal of the Government.
2) Click on the “Register Now” button under “Taxpayers Normal”.
3) Fill in the required details including your State, District, Business Name, Business PAN etc.
4) Fill in an appropriate Email address and Mobile Number.
5) An OTP would be sent to the given email id and mobile number, enter it and click on Continue.
6) Now, you’ll receive a TRN or a Temporary Reference Number which you should note down.
7) Go once again to GST Portal and click on Register Now. Enter the TRN and the Captcha Code to proceed.
8) Another OTP would be sent to the provided email or mobile number, enter it and proceed.
9) The application will be present under the “draft” status, edit the draft and fill in the Part B section. You’ll be required to provide documentary proof in the form of Photographs, Proof of business place, Bank Account Details etc.
10) After filling the details, go to the verification page, agree to the declaration and submit the application. Your application can be submitted using E-Sign, DSC or EVC.
11) Once it’s done, a success message would be sent to the registered email and mobile number.
12) Your ARN Status can be checked at the GST Portal by entering the ARN.
[Goods and Services Tax (GST) is the latest addition to the Indian Tax system. GST has been beneficial to all business activities in India. To know more about GST registration process read our article on "GST Registration Process – Step by Step Guide"]
Licenses
Depending on your industry, certain other licenses might be required before setting up your business. Here are a few of them:-
Shop and Establishment Act License
The State Government shall issue this license (it varies from state to state). It is required to regulate business activities like work hours, wage payment, safety, employee safety, child labor etc.
Signage License
This license is required if you want to market your business through logos, banners, posters etc. The local Municipal corporations can offer you this license.
IRDAI Broker License
This is given by the Insurance Regulatory and Development Authority of India. Any insurance/broker based business would require these.
Liquor License
These are required for restaurant businesses or bars. This license is mandatory if you are to sell liquor. Not possessing it can lead to penalties or permanent shut down of the business.
FSSAI License
FSSAI stands for the Food Safety and Standards Authority License. It is necessary if you have any food/restaurant based business. It ensures that the restaurant’s food and eateries are in compliance with the accepted safety standards. These are just a few examples of licenses required across different industries. The number of licenses can vary across different industries.
[Today, entrepreneurs are willing to expand their business all over the world. Entrepreneurs can import and export goods and services with help of IEC code. To learn more about IEC code, read our article on"How to Apply for IEC Code Online – Step by Step Guide"]
Create A Mutually Agreeable Contract
The mistake most small companies make is the non-written declaration of the company’s rights or policies. In the initial stages, the founders of a start up company generally tend to orally declare a contract that is mutually agreed upon. The reason behind this might be discomfort or awkwardness behind formulating a written, legal contract on account of the company’s small size.
Non-written declarations like this often create problems in the company’s financial future, as differences and disagreements on the same often lead to rifts in the company. It is advisable to formulate a written contract with mutual agreement taken into consideration. Setting clearly defined policies and providing a legal basis for them is paramount to maintaining the company’s steady growth.
Make sure you discuss vital points like:-
- Company Share/Asset Declaration.
- The ownership structure.
- The legal specifics of the partnership (if it involves multiple partners).
Building Ties: Get People To Know About Your Business
You didn’t expect yourself to run a successful business without people knowing you, right? The thing that separates all successful businesses from the unsuccessful ones is their name and stronghold in the market.
Start by connecting with market influencers in your niche. Connect with the business owners, traders or vendors that might be of help to your business. Apps like LinkedIn have made it easier than ever to find the right kind of professional connections, use them to find relevant contacts in your market.
You can also make use of digital/social media marketing to make your products/services known to potential customers. The more you spread your name in the market, the more likely you are to see your business grow.
Success Story
The tale of Manavjeet Singh, the founder of Rubique FinTech is a noteworthy one. In spite of having his origins in a small town of Himachal, he has managed to set up a Finance Tech company that has helped process loans of over Rs 310 crore so far. He believes in the motto “Think Big, Dream Big”. His journey started 25 years ago from the town of Nahan in Himachal Pradesh to setting up a base in Mumbai. A friendly reminder that patience and passion are always rewarded!
Thousands of such inspiring stories are present throughout the country. After reading these tips and guidelines, don’t simply wait for the right moment to work on your vision, Start now!
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