Legal ADDA

How to Start Business in India

We Provide Complete Guidance for how to Start Business India and Business Compliance to be maintained.

Simple and Easy Business Formation Process also for Foreigner / Foreign Subsidiary in India.

Step wise explanation for Business Startup and Compliance.

Are You Looking for Starting Business in India?

How to Start Business in India

There are multiple ways for starting a business in India. Mainly, are proprietorship and partnership firm business formation is popular as both options are cost-effective for formation. However, Company formation is popular for medium to large scale business idea. In addition, the Company form of business entity gives the advantage of government “STARTUP INDIA” and “MAKE IN INDIA” Scheme benefits.

Foreign Investor or Foreign Company who is willing to start a business in India can create Fully Owned Foreign Subsidiary Company, where foreign company/ foreigner will hold 100% Ownership of company. However, One Indian Resident Director required for the formation of a Fully Owned Foreign Subsidiary Company.

Let’s Understand the Stages for the Business formation and compliance management.

Types Business Entity Formation in India

Individual Proprietorship

Indian Resident Can Start Proprietorship business with personal PAN. It is Simple and have lowest formation cost.

Partnership Firm

Two or more Person can start joint owned business with formation of partnership firm. foreign individual engagement not allowed.

Limited Liability Partnership

Two or More person can start joint business with LLP. it is same as partnership firm but this formation is more recognized.

One Person Company (OPC)

One Member Can Form OPC with One Director.
Maximum Capital Restricted to Rs. 50 Lakhs.
NO Foreign Member allowed.

Private Limited Company

Minimum Two Shareholder and Two Directors Required. Foreign Director and Shareholder can participate in company.

Public Limited Company

Minimum Seven Shareholders and Three Directors required. Foreign Directors and member allowed in company.

Producer Company

Suitable for producer activity like agricultural activity. FDI Restricted in producer company. only Primary producer activity allowed.

Section 8 (NGO)

Non Profit Organization can start their activity by forming Section 8 Company, which is for non profit nature of activity.

Foreign Subsidiary

Foreign Company can start their business in India by forming subsidiary fully owned by foreigner Company or NRI.

Steps for Business Startup in India

Step 1
Formation of Entity
Incorporation of Company in India

According to requirement of business one can choose which type of entity you want to form. there are multiple options.
1. Proprietorship
2. Partnership or LLP
3. Company
4. Foreigned Owned Company. etc

Step 2
Registration & License
Obtain Applicable Registration and License

Secondly, Entity required to obtain all the registration and licenses which is applicable for activity of business.

License and Registration List for Startup Business

PAN Card: Income Tax Permanent Account Number is Compulsory for starting Business In India. However Individual Proprietor Not Need to Apply Separate Business PAN. for all other types of Business Establishment PAN separately available from Income Tax Department.

Professional Tax Registration/ Shop Act License: Before Starting Business activity, Establishment Need to Get Registration Certificate from Local Municipal Corporation. Such Registration are as per Local Municipal Area Guidelines. Types of Registration are Professional Tax Registration, Shop and Establishment License, Gumasta Dhara License etc.

Goods and Services Tax Registration (GST): Supplier of Goods or Services are Required to Get Registration under GST Act. Minimum Turnover without GST is upto Rs. 40 Lacs. However for Interstate Sales and For Export Sales GSTIN (GST Number) is Compulsory. Goods and Services Tax is Combine Tax Structure of Service Tax and Sales VAT Tax.

Tax Account Number (TAN): Person or Establishment Responsible for Tax Deduction at source are required to get TAN. Its Mandatory for the entity who is required to get tax audit of their Books of Account.

Provident Fund Registration (PF): If employees are morehan 20.

ESIC Registration: If Employee Morethan 10.

Special Registration According to Business Activity:
Labour License: in case Manpower industries.
DoT (TRAI) License: in case call center and BPO, KPO activity
Foods License (FSSAI): Hotel, Restaurant Units
Drug License: Medical Store
Import Export Code (IEC) : Exporter

Step 3
Bank Account
Opening of Business Entity Bank Account

After All License and Registration, Business bank account need to be open with bank for payment and receipt of proceeds of activity.

Step 4
Maintaining Records & Compliance Filings

All the accounting records of business sales, purchase, expense should be maintained time to time. All the Application return must be filed within due time.