Back in the 90s, seldom would anyone in India venture into the business world. Lack of technology, higher risks, lack of funds and inadequate support from authorities would generally be some of the reasons why someone would not want to start a business. Fast forward to 2018 and you will find that all these things have changed. Almost everyone today wants to break away from the 9 to 6 mundane routine and dreams of starting their own business.
If you’re reading this, you’re probably one of the millions of aspiring entrepreneurs who wants to understand how to build a business in India. Check out our comprehensive guide that will get you one step closer to your dream of starting a business in India.
1. Idea and Planning:
- Passion: Before you can take your first steps into the business world, you need to understand what you’re passionate about. If you can convert your interests into a functional business, then you’re going to enjoy running it.
- Value to Customer: The more value you offer, the greater are the chances of a customer purchasing from you and hopefully converting into a recurring and loyal customer
- Research: Research plays an integral role in your journey to start your business. You need to thoroughly research the market and your competitors to understand how your business is different. The information that you gather from your research will help you evaluate and lay down a solid business plan.
- Make a business plan: No successful business has ever begun without a good business plan. If you’re planning to start your business in the next one week, make sure you prepare a business plan for the next one year. Your business plan should be able to answer the following questions,
- What problem are you addressing?
- What makes your business unique?
- Who is your audience?
- How is your business going to generate revenue?
- How will you market your business?
- What resources will you need to get started?
Your business plan should be so detailed that anyone who looks at it should be convinced that you have a business worth investing in.
2. Build your business website: Once you’ve identified the business that you would like to establish, the very next step would be to build your website. A website is the first and extremely important step in creating a successful online presence for your business.. Many believe that a website is only needed for an e-commerce website but honestly, that’s just a misconception. Today, majority shoppers look out for a website or an online review before entrusting their money to the business. Your website will be an excellent source of information to your potential customers and can help convert them.
To get your website, you will first need to register a domain name like www.yourcompanyname.com. While .com, .net, in and .co are some very popular domain extensions, you can choose from a plethora of other domain extensions as well. You then need to host your website on a web server. There are many hosting solutions available for different kinds of website. If you need assistance in understanding which hosting plan works best for your website, you can chat with us now.
3. Register your business: The next crucial step is to register your business with the government. There are many types of company registrations but we will only talk about the four most popular ones.
- Sole Proprietorship: This is the oldest and the easiest way to register your business with the government. In this form of registration, you are the sole owner of the company and personally liable for everything that’s happening with your business. Small businesses such as a local grocery or a single person art studio are examples of sole proprietorship. Since government regulations are at the minimum, this type of registration can be done in just 1 to 2 days. You need to get the registration done by a local authority. If you stay in the city, then you need to head to your municipality or if you stay in the village, you need to head to your gram panchayat. In some cities, the registration can be done online as well. Remember, you can only apply for a proprietorship if your company is small scale and doesn’t employee more than 5 to 10 people.
- One Person Company (OPC): If you want to keep the company’s profit and loss separate from your personal profit and loss then you will need to register your company under One Person Company. Here you are not liable for your company’s loss. In this registration, you will need to be the director as well as the shareholder of the company. So if you were to register your computer shop called ‘Vision Next’ it will be registered as Vision Next PVT. LTD. (OPC). It generally takes 8 to 10 days for the registration, depending on your location.
- Private Limited Company (PVT. LTD.): The main difference between Private Limited and OPC is that you need to have a minimum of 2 shareholders and 2 directors to form a PVT. LTD. You can have a maximum of 200 shareholders. Any more than 200 shareholders will need you to register your company as a Public Limited Company. Private Limited is similar to OPC where there’s limited liability. Hence, if there’s a loss in the company, then the shareholders won’t have to pay for the loss personally. Most reputable businesses are registered as a Private Limited Company. As there are higher government regulations, customers, clients and money lenders like banks and venture capitalists have greater trust in Private Limited Companies. This form of registration generally takes anywhere between 5 to 10 days to complete.
- Limited Liability Partnership (LLP): This type of registration is useful when you’re a professional like doctor, engineer or chartered accountant. It is also helpful for those who want to form a company for a limited time and are going to dissolve it soon. For example, you are into events and started a company to manage an event where you’ve employed artists, technical expertise and event managers. But once the event is completed, you don’t need that company and so you dissolve that company. This type of company will be registered under LLP. It generally takes approximately 14 – 20 days to complete an LLP registration.
4. Tax Registration: Once your company is registered, the next step is to do the Tax registration. There are a bunch of registrations that you will need to do to get everything in place. Let’s quickly take a look at some of the important ones:
- GST Registration: If your company’s turnover is more than 20 lakhs in a year, you will need to register for GST (Goods and Services Tax). This limit is however set to 10 lakhs for some states in North India which are listed under the special category. It is also mandatory to get GST registration if you have an e-commerce business or a business which deals with import and export of goods even if it is within the states in India.
- Import Export Code Registration (IEC): If your business deals with the import and export of goods, you will need to register the Import Export Code (IEC).
- Professional Tax Registration: If you reside in certain states like Maharashtra, Karnataka, etc, then you will also need to complete the Professional Tax Registration.
- Employee State Insurance Registration (ESI): This registration comes into play if you have more than 10 employees in your company.
- Provident Fund Registration (PF): Besides the ESI, if you have more than 20 employees in your company then you will also have to get the Provident Fund Registration done.
- Micro, Small & Medium Enterprises Registration (MSME): Also known as the Udyog Aadhar, this registration is not mandatory. However, there are many benefits like tax subsidies, exemption schemes, etc. Hence, it is advisable that you get the MSME registration done.
5. Yearly Mandatory Compliances: There are a few things which a business needs to do every year. These activities are essential to smoothly run your business and avoid any penalties from the authorities. We’ve made a quick list for your reference.
- Income Tax Returns: The first and most important task is to file your Income Tax returns at the end of each year. It is essential that you don’t delay this procedure as it will lead to hefty penalties from the government.
- Accounting: The next thing you need to really focus on is the accounting. You need to maintain a balance sheet where all the details about your company’s profit and loss, money received and money spent are added. You can either hire an accountant to help you or else if you are a small company then you can use some online tools like QuickBooks do it by yourself.
- GST Returns: If you’re registered under GST, you will need to file GST either monthly or quarterly.
- Secretarial Audit: If your company is registered as an OPC, LLP or PVT. LTD. then you will also need to complete a secretarial audit.
- Statutory Audit: If your company is an OPC or LLP with a yearly turnover of 40 lakhs or more, you will also need to complete the Statutory Audit.
The above procedures may overwhelm you a bit but there are so many solutions and consultants online that can help you manage all these registrations and compliances at a nominal fee
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