How To Start A New Business Venture In India?
India is at present the fastest growing country in the world. If you check the GDP of the India, it is growing at a positive pace and after the Modi’s government effective planning for influencing the growth of the business sector, the GDP is hovering around 7.2% which is the highest in the world. India has surpassed China in GDP growth due to the recent boom in the business and manufacturing sector. With all the new startups and the SMEs in India, it can be anticipated, that India is going to be the most powerful nation in time soon.
The economic condition of India in 2017 has been upgraded a lot and not only the large scale businesses have opportunities and economies but also the government is providing various subsidies to inspire small scale businesses. But one of the major differences which are pushing the business sector upward on the scale of GDP is the new startups. If you read the newspapers every day and especially the business page, you must have found hundreds of new entrepreneurs who are flourishing their business countrywide and even abroad. There are young students who are trying to do something different while studying.
The market in India is huge because of its population so any good idea if implemented in the right way can grow into a business, though it will require days of hard work and your dedication.
The government is trying to empower the middle class with new sources of income and providing various opportunities to grow their business ideas and move up the ladder of the status of living.
But if having a business idea doesn’t mean that you can start the business overnight and grow it into a popular one. There are various steps which follow to a successful business and the first one being the right business idea for you.
The right business idea is the embryo of any successful business and it should have been conceived with the right thought process. This is a generation where we all are much passionate about what we do and not follow the same old route that our ancestors have done. And making passion your career by building a business on it can be always more fruitful in terms of personal as well as professional satisfaction. We are dealing in a global market now and we are not restricted by any barriers. We can sell out service and products to any part of the world and that why you can nurture your rarest of the business ideas at present time.
You might have many ideas or at least 2-3 when you are thinking of becoming an entrepreneur. The first thing you need to do is to do a thorough research on that field like for example, if you are thinking about starting a local newspaper business, you must explore the market first, see who can be your customers, your competitors, products they are selling etc. The first step of any business has to be a thorough research of the market and that industry.
After you have conceived or decided the business idea, think about the form of company you want to have. That takes us to the next point – types of business.
Type of Business
If you are going to start the business on your own and alone then obviously it will be a sole proprietorship business. This is the simplest form which requires a little bit of legal procedure.
If you have planned the business with your friends or partners, then you can start the business as a Partnership firm or LLC. This type of business requires legal registration and other formalities before commencement. The profits and the losses will be shared either equally or according to the business deed of the firm among all the partners.
Normally, the new entrepreneurs who want to start new business choose one of the above two types. But if there are more shareholders of the business then the business might be formed as Private Limited Company with no more than 50 shareholders and shares cannot be publically traded.
If the business grows into a large one, then you can enlist it on the stock exchange and make it a public company.
A business plan is the most vital thing that any entrepreneur will require before starting any business. An effective business plan should possess the following aspects:
- Cost factors: You need to analyze and make an estimate of all the costs that will be incurred in the setting up of the business. Those costs will be accounted as preliminary cost and then you will have to make estimates for working capital and the expenses that will incur every month or according to your business cycle.
- Revenue Factors: Estimate the probable amount of business you can do in the coming three years or so. Check with your competitors and do industry analysis to understand the turnover of this business for first few years.
- Profit Estimates: Combine the revenues and cost factors to anticipate the amount of profit for the first 3-5 years.
- Arrangement for raw materials, supplies: Check the market prices for your raw materials and compare the prices provided by various suppliers. For running a steady business, you need to have a steady flow of raw materials.
- Business setup/office space/factory/machinery: If you are going to start a manufacturing unit, you have to find a proper space for your factory. Compare the prices of the factory units, machinery and purchase them only after you are satisfied.
- Marketing strategies: The main purpose of any business is to sell their product or service and for that, you need marketing strategies which must attraction customers. Formulate strategies which aren’t age old so that clients get influenced to buy your service or products.
The registration process for any business firm has been changed for the better by this new government. Things you need to do to get your business registered are as follows:
- Acquire Digital Signature Certificate: You can obtain a DSC within 2-5 days after applying to any authorized MCA agencies.
- Obtain DIN: Director Identification Number is a must for any business and you can apply and obtain it from Ministry of Corporate Affair online site.
- Select a Name: After obtaining DSC and DIN, you need to select a name for your company, if you have already fixed one, check whether it is available for your use or it is already in use. You have to intimate the Registrar office about the name and check from their website that is via MCA agencies websites.
- Select an Office address: You need to register a particular office as your head office for the business.
- Objectives of the business: You have to make a list of objectives of your business which you need to submit to the Registrar of office. They will scrutinize the objectives and then if they find everything at the place, will approve it.
- Preparation of MOA and AOA: Memorandum of Association and Articles of Association has to be drafted and produced before the Registrar office for approval. MOA will contain details about your business, its parts, subsidiaries if any, the amount of capital and its division, type of business, the name of the directors of the business. AOA will contain the regulations of the business, the procedure they are going to follow to run the business and the rules they should adhere to.
Fees for registration of business
To get the certificate of incorporation of the business you need to pay a fee to the Registrar office. There is a slab for fees according to the amount of share capital of the business:
Amount of Capital (INR)
|Up to 100000||5000|
|100000 – 500000||4000 per 100000 of capital (authorized)|
|100000 – 5000000||3000 per 100000 of capital (authorized)|
|100000 – 10000000||1000 per 100000 of capital (authorized)|
|Above 10000000||750 per 100000 of capital (authorized)|
After paying the required amount of fees, you need to submit the following document in both physical as well as digital form before the Registrar of Companies for applying for the Certificate of Incorporation, the documents are:
- e-form 1 which will state that the requirements for the process of incorporation have been met.
- e-form 18 which will intimate the ROC about the registered office of your business.
- e-form 32 which will intimate about the appointment of the directors who have been proposed to join. This form has to be filed electronically.
- MOA and AOA have to be submitted which need to be duly signed and stamped.
- The power of Attorney which needs to be signed has to be submitted.
- Letter of approval of the name of the company by ROC.
- Consent of the board members.
Income Tax Filing Procedure
Firstly, you need to acquire a PAN card and if you have one you need to register the same for your business. Form 49A has to be used for applying for PAN card.
Secondly, you need to obtain a TAN which is the Tax account number for collection and deduction of tax. Form 49B has to be used for TAN.
You need to adhere to the new GST rule which has been implemented by the government and it is into effect from June 1, 2017.
Employing the Right Person
A business can only run successfully when it has the right employees who are dedicated to their work and faithful to the company. You need to hire the right candidates for growing your business.