How to start a business in India

If you want to become an entrepreneur, it is time to think about how to start a business in India on your own. Anyone with a business idea can start a business a business in India if they know the basic legal framework of establishing small firms or large enterprises, be it a sole proprietorship, a partnership deed, limited liability partnership, opc, pvt Ltd Company or a Public Ltd Company.

 steps in Establishing a Business Firm

• Selection of name of the firm

• Approval to the name

• Selection of ownership organization

• Deciding location of the firm

• Developing trade name and logo

• Creating the necessary infrastructure

• Applying for the grant of permanent account number (PAN) of income tax.

• Opening current account with the bank

The type of business is selected based on the nature of business, the number of members involved in establishing the firm, and also on the availability of the capital in establishing the firm.

sole proprietorship firm

• Sole Proprietorship means a business carried on by one person. The decision making and management of the business is in the hands of a single person.
• All the funds required for the business are contributed by the sole proprietor and therefore, all the profits belong to him. Likewise, all the losses are borne by the proprietor.
• It is the easiest form of business done in India since it isn’t governed by any specific laws. Under sole proprietorship’s, the compliances are minimal and easy to fulfil.

Registrations required for sole proprietorship firm

• registering as SME
• shop and establishment act license
• GST registration

Partnership Firm

• Partnership is defined as ‘an association of two or more than two persons who contribute jointly their financial and managerial resources and agree to carry on a business and share its profit and losses in agreed proportion’.

• The legalization governing the formation, execution and dissolution of partnership in India is called the Partnership Act, 1932.

• The Companies Act 2013 mandates that there has to be minimum two members to form a partnership. It further mandates the maximum limit of 100 members.

• The Partnership Act does not mandate for compulsory registration; however, it is highly recommended to get it registered when it is set up or at any time during its existence. Partnership firm without written deed is open to misunderstandings, mistrust and litigation among partners

steps to register a partnership firm

• Make Partnership Deed

• Register with Registrar of Firms (ROF)
  • Form 1
  • Affidavit
  • Proof of Place of Bs
  • Proof of residence- all partners

• Apply for PAN and TAN

• Open Current A/c in a Bank

• Apply for GSTIN/MSME registration

An application form along with fees is to be submitted to the Registrar of Firms of the State in which the firm is situated. The application has to be signed by all partners.

LLP- Limited Liability Partnership

• LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.

• The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.

• The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.

• Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.

• Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.

• Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

steps for registration of LLP firm

Join stock company

• Joint stock company is defined as the voluntary association of persons, recognised by law, to carry on a lawful business with a common name, a common seal, common capital divisible into transferable shares, limited liability and perpetual succession.

• The company may be Private limited company

Private Limited Company

A private limited company is a company privately held for small businesses. This type of business entity limits owner liability to their shareholdings, the number of shareholders to 200, and restricts shareholders from publicly trading shares.

PVT LTD CO- A Private Limited Company can be defined as a company that is a privately owned business entity. The Pvt Ltd company must not have more than 200 shareholders.There must be at least 2 Directors and the directors have to meet the conditions- having a DIN or a director identification number given by the Ministry of Corporate Affairs. A Pvt Ltd Company is governed by the Ministry of Corporate Affairs (MCA).   

Procedure for Setting Up a Private Limited Company in India

Step 1: Obtain Digital Signature Certificate (DSC)

Step 2: Obtain DIN

Step 3: Name Availability

Step 4: Form SPICE+

Step 5: MOA and AOA

Step 6: PAN and TAN Application

For Name availability under RUN Web service, there is no prior requirement to obtain DSC and DIN . It can be done with account login on MCA portal.

AO Code search for PAN

https://tin.tin.nsdl.com/pan2/servlet/AOSearch?alpha=A&display&Category

AO Code search for TAN

https://tin.tin.nsdl.com/tan/servlet/TanAOSearch?alpha=A&display=Y

List of main divisions of industrial activities https://www.mca.gov.in/MCA21/dca/help/instructionkit/NCA/Form_INC-7_help.pdf

Public Limited Company

A Public Limited Company under Company Act 2013 is a company that has limited liability and offers shares to the general public. Its stock can be acquired by anyone, either privately through (IPO) initial public offering or via trades on the stock market.

A public Ltd company is formed by shareholders Anyone over 18.Iit is run by the board of directors elected by the shareholders public limited company must hold an annual general meeting. shares are soled on stock exchange.

main difference between private and public limited company

One Person Company

• One Person Company (OPC) is a company incorporated by a single person under Companies Act, 2013. The Companies Act, 2013 provides that an individual can form a company with one single member and one director.

• Only a natural person who is an Indian citizen and resident in India (NRIs included in Finance Act 2021) shall be eligible to act as a member and nominee of an OPC.

Amendments to OPC in Finance Act 2021-22:

• Now non-residents can set up an OPC (earlier, only residents were allowed to do so);

• Residency rule for the person setting up an OPC has been relaxed. Accordingly, a person needs to be resident in India for 120 days as compared to the earlier rule of 182 days;

• An OPC can voluntarily convert itself into any kind of company at any time without meeting any of the criteria’s as to paid up share capital and average annual turnover.

• The requirement of compulsory conversion on exceeding the specified turnover or paid-up capital is done away with and now the OPC can grow without any restriction. The amendment effective from 01st April 2021.

steps for registration of OPC

Step 1: Apply for DSC

Step 2: Apply for DIN

Step 3: Name Approval Application

Step 4: Documents Required to be submitted to ROC

MOA and AOA

Consent of the nominee INC-3 along with PAN and Aadhar Proof of registered office

Declaration and Consent of the proposed Director of Form INC -9 and DIR – 2 respectively.

A declaration by the professional certifying that all compliances have been made.

Step 5: Filing of Forms With MCA

Step 6: Issue of the Certificate of Incorporation