An Ultimate Guide on How to Start a Business in India
Today, if a person is looking forward how to start a business in India, there is no scarcity of business opportunities available for him in developing countries such as India, which is also the world’s largest democracy.
Without having a major experience, a college degree, or even own investment initially, one can successfully start a business journey. All a person needs a drive, a proper plan, and an objective.
To prove this, we can take the example of today’s business icon Mark Zuckerberg.
During his college years, when Mr. Zuckerberg started Facebook, at that time, he never expected that one day his business’ market capitalization will be more than $500 billion and have more than 2 billion monthly active users.
Similarly, hundreds of successful enterprises out there like Zomato, Flipkart, etc., that started on a very small scale and today needs no introduction.
If you’re an entrepreneur and thinking of starting a business in India, then through this blog, we’re going to guide you on how to do it successfully.
Decide On How to Start A Business Idea And Evaluate It
As India is opening multiple doors and promoting new business in Indian ventures, especially Medium and small enterprises (MSMEs), in several new sectors, including defense and aerospace, you’ll have to choose and find the online business idea that best fits your skills.
Under the ‘Make In India’ campaign, You can also benefit from available business opportunities in hospitality and tourism, manufacturing industries, and agriculture.
And to ease this business idea decision-making process further, the government has put a large number of lucrative business ideas on the MSME and Make In India websites’ website.
To make a better decision regarding the business idea, it’s important that you analyze if your business strategy with specific ideas answers some fundamental questions like:
Does it have an international scope in the future?
How much competition is present in the market?
Who will be your targeted audience?
What problems are your product or service address?
What will be the means of running the business, whether in stores, online?
Identify Your Business Structure
After finalizing an idea for your business, the next thing you need to do is to assess the type of entity that best suits your interests.
You can register your startup as a Private Limited Company, Limited Liability Partnership, Sole proprietorship, Partnership, and One Person Company in India.
- Private Limited Company – If you don’t have an investment and plan to raise funding from investors and venture capitalists, get bank loans, and have shareholders so that you can start a business, you should register your company as a private limited company. In a private limited company, Shareholders and owners are only liable to their shares in the occurrence of a financial crisis, which means there is no risk of losing their assets. To register as a Private limited company, you need at least two people and a maximum of 200 by your side in your company.
- Limited Liability Partnership (LLP): With the benefit of flexible partnerships and fewer compliance requirements, the Limited Liability Partnership is the best choice if you don’t require equity funding for your business. Just like in the case of Private Limited Company, with LLP, there is no risk of losing personal assets as Shareholders and owners are only liable to their shares in the occurrence of a financial crisis. To register as LLP, you require a minimum of two partners and one more thing; in LLP, you can have an unlimited number of partners.
- One Person Company: If you want to be the sole shareholder of your company, you can opt for OPC. OPC also offers you limited liability so that your assets remain safe in the case of a financial crisis. However, an OPC structure has a relatively high number of compliances to handle and limited tax advantages.
- Partnership Firm: If you are looking to start a business with one or more partners, you can register your company as a partnership firm. A partnership firm allows you to have a maximum of 20 partners; all of them will have to sign a partnership deed containing the company’s terms and conditions. However, no partner can transfer his interest in the firm to anybody without other partners’ consent. Unlike the above entities, there is no limited liability because the partnership firm’s debts can be recovered from the partners’ assets.
- Sole Proprietorship: In a sole proprietorship, you’ll be the only owner of your business and personally liable for business debts. In Sole proprietorship, you won’t have an option to raise funds by selling business interests.
Make It Official
Once you decide on the structure, your next step is to register the business in India. Based on the type of entity, the registration process of your business may vary.
To register the most common type of entity – Private Limited Company, you need to follow the below-written steps.
- Apply for Digital Signature Certificate
- Apply for Director Identification Number
- Check the company name availability
- Apply for TAN (Tax deduction Account Number) and PAN (Permanent Account Number)
- Get the Incorporation Certificate from the registrar of companies (ROC)
- Open a current bank account
Get Government Registrations and Other Licenses
After completing the registration process, you might need to get some mandatory govt licenses based on your business location, sector, entity type, number of employees, etc.
The following are a few examples of registrations and licenses.
- Shop And Establishment Act: To open shops, restaurants, theaters, places of interest, etc., a person first needs to get a license. Through this act, the Govt regulates the employee’s working conditions, health and safety measures, working hours, payment of wages, etc.
- GST Registration: If you’re thinking of starting a business that’s gonna have a turnover of more than Rs 40 lakhs and Rs 20 lakhs for states under the “Special Category,” then GST registration is a must for your company. Furthermore, if your business with whatever turnover does an intrastate supply of goods, GST registration is mandatory.
- Import Export Code (IEC): IEC contains a 10-digit code that a person needs while Importing and Exporting to clear customs and shipment and to transfer money to foreign banks. Anyone can get IEC easily with the minimum number of documents required.
Maintaining accounts and compliance.
It is one of the important aspects when you’re looking to find a solution on how to start a business in India. To get sustainable growth in any business, you make sure that there are a proper accounting and compliance system in place. Timely management of your financial records and books will help you assess the cash flow, presenting the financial health to your stakeholders, Budget planning, making key decisions, and more.
Create Your Presence On Online Platforms
In this digital era, where most people prefer to buy online or first research online before making a purchase, your business must have an online presence.
By having an interactive website and social media pages, you can promote your brand and services to attract potential customers.
Make A Team Of Workers
The success of any business depends on its doers. Therefore, your business needs to have properly skilled staff.
Many startups succumbed to failure every year because of an inadequate number of workers and irregular analysis of workers’ performances, ultimately costing them a lot.
While hiring workers, you must make sure to define the designation, roles, and responsibilities for every job clear adequately after a thorough analysis.
Here, you need to keep in mind that if any business hires ten or more people and is involved in any of the industry notified by the government, then that business needs to be registered under the Employees Provident Funds and Miscellaneous Provisions Act, 1952.
Make Sure Your Brand Remains Safe
For any business, irrespective of how big it is, the brand always remains one of the most important assets as customers perceive and identify your business in the market through your brand.
Therefore, securing intellectual property rights that contain the trademark, copyright, patent, industrial designs, software, inventions, etc., is crucial for your business.
Due to less awareness concerning the scope and need for intellectual property (IP) protection, many people don’t understand the importance of IP management in the early stages of their business, which ultimately cost them in the long run.
They need to understand that it’s important to secure both the business ideas and the brand for attracting investors and potential customers.
Raise Investments For Your Business in India
Today, there are many ways out there through which you can raise fundings for your business, such as crowdfunding, angel investment, bootstrapping, venture capital, bank loans, business incubators, etc.
Suppose you have a complete business strategy with market analysis, organization management, financial projections, and sale strategies. In that case, you can impress and push potential investors to invest in your business venture.
In this blog, we’ve mentioned almost all the fundamental points a person needs to know while starting a business, and one thing you always should remember is “Patience is the key to success”.
And now we wish you all the best for your new business journey in India.