HOW TO OPEN SMALL BUSINESS IN INDIA

Small business Startup in India needs appropriate planning at the initial level, main financial decisions & a lot of legal formalities.

What is a small business Startup in India?

The most influential and highly prioritized business segment during traditional times and even in today’s world is having a small business Start-up. The essence of a small business is in terms of its customer reach and the segment the business deals in. Small business Start-up is privately owned corporation, partnerships or sole proprietorship firms that is operating with limited employee strength, have a local presence and earn a less amount of revenue as compared to large corporations.

ONLINE REGISTRATION IN INDIA

A digital platform has been developed as an online service marketplace that serves as the online directory for professional expertise for requirements & budget for the online company registration in India and for start-up registration.

OPTION OF BUSINESS STRUCTURES IN INDIA

BASIS	SOLE PROPRIETORSHIP	PARTNERSHIP	LLP	PRIVATE COMPANY	ONE PERSON COMPANY
NO. OF MEMBERS	ONE	TWO PARTNERS	TWO DESIGNATED PARTNERS	TWO MEMBERS	ONE MEMBER
LIABILITY	UNLIMITED	UNLIMITED	LIMITED	LIMITED	LIMITED
NO. OF DIRECTORS	NIL	NIL	NIL	TWO	ONE
DIN AND DSC	NOT REQUIRED	NOT REQUIRED	REQUIRED	REQUIRED	REQUIRED
PAN CARD	YES	YES	YES	YES	YES
MINIMUM CAPITAL	NIL	NIL	NIL	NIL	NIL
MAXIMUM MEMBERS	ONE	ONE HUNDRED	NO LIMIT	TWO HUNDRED	ONE
NOMINEE	NOT REQUIRED	NOT REQUIRED	NOT REQUIRED	NOT REQUIRED	REQUIRED

The main features of small business Startup in India are:

1. LIMITED SOURCE OF FUNDS – Due to small-scale operation and lack of credit rating, small businesses are provided with limited financial back-up and limited sources of funds and that is why there is always a budget constraint on small businesses. In the case of borrowing from financial institutions, there would be an increased burden on their profits, thereby holding them back from market borrowing.
2. LABOUR INTENSIVE BUSINESS – As discussed in the above point, due to lack of capital, small businesses are not in a position to purchase big automated machines, and due to this, they are more into labor-intensive business activity. Though labor-intensive activity involves a small amount of funds, in the long run, their benefits are quite less.
3. UNORGANISED BUSINESS SECTOR – Small business entities constitute a major portion of the unorganized sector. Therefore, maximum workforce participation is witnessed and it is, therefore, the most competitive segment out of all the forms.

The procedure of small business Start-up in India

1. RESEARCH: Extensive market research is required before entering into any small business in India. They need to have a detailed report about the business in which they are entering along with knowing their potential customers, competitors. It will, thereby, create a strong foundation base that will bring your business in a more advantageous position.

2. BUSINESS PLAN: Planning is the essence of any business entity. An ideal business plan shall constitute both short-term milestones and the long-term vision of the business. In the short-term perspective, small businesses tend to adjust and keep their foot tight in the market while in the long run, they look to grow and earn steady profits.
3. FUNDING: As discussed before, the source of funds is limited, but in this 21st-century era, the government is coming up with various programs and schemes for creating multiple sources of funds, and thus a good business idea will get funding very easily and smoothly. The funding process is a tedious, stressful, and time-consuming task, but at the same time, it is the most important one.
4. PLACE OF OPERATION: The person starting the small business is totally independent in selecting the place of operation for its business. But it is generally seen that the business is set up where the customer of their product is in abundance. Also, the need of material and legal and tax requirements of the place of business is also necessarily accounted for.
5. TYPE OF BUSINESS FORM: There are different forms of a business-like sole proprietorship, Partnership firm, One Person Company or Private limited company, etc. and every business form has its respective merits and demerits. And also, they have different modes of registration and their fees. The applicant must carefully consider the characteristics and requirements for each form and choose the best one with due care.
6. NAME OF THE BUSINESS: Another important aspect of registration is selecting the name of the company. It is proposed that the name should give a hint about the business undertaken, but at the same time, the name should not be similar or identical to the name of any other entity already in existence. The name should be simple & give due importance in selecting the company's name.
7. STARTING WITH REGISTRATION: Once the above steps are done, the applicant should proceed with the company registration, to give a legal right and protect its brand name.
8. REGISTRATION OF PAN/TAN: Every business is required to have a PAN/TAN issued under the name of such business, to undertake any financial transaction. Such documents are also required in ITR filing and maintenance of records and accounts.
9. LICENSING: The business after getting incorporated is required to take up the licenses required in their business segment. Different businesses require different licenses such as the Food business needs the license from FSSAI to start their operation; the APEDA license, import-export license are some of the business licenses which a business needs to obtain for working in the respective sector.
10. BANK ACCOUNT: After all the above steps, the final step is to open a bank account in the name of the business using the PAN and registration documents of the business. The business will be required to receive and make payments from such bank accounts only.

Last updated 2 years ago