Starting a Business in India- Some points to be considered

 

Looking to start your own Business? Great!

Following 7 points may be quite helpful in your future endeavor.

a)      Choosing a right type of entity for setting up business in India

There are many options available for company registration in India like proprietorship, partnership, private limited company, public limited company and limited liability partnership. Each entity has its own pros and cons and one must choose the right type of entity depending upon its nature of business and future plans and vision of the company.

Private limited company registration provides an advantage to investors to invest in the company by taking equity shares. Also, tax rate of private limited company are less as compared to LLPs and partnership firm. However, annual compliance cost of private limited company is quite high as compared to other forms of entity.

Another advantage of private limited company registration is that foreign parent company can subscribe to shares of Indian company and Indian company will become wholly owned subsidiary of parent company. Thus, it allows foreign companies to invest in India.

Compliance cost of LLPs and proprietorship firms are less as compared to private limited company. However, company has separate legal entity from its owners or founders.

In modern day and age, Private limited company registration is most popular and preferable form of entity registration in India.

b)     Business model of the company

This is the most crucial aspect of business set up in India. Proper research and planning shall be made to come out with a solid and robust business model of the company. Efforts should be made to look for latest trend and future predictions in the market. More and more use of technology shall be made in the business. There should be proper plan of monetization and revenue creation as well as backup plan in case things do not come out the way you desire it to be.

c)      Scalability

 

Business should be scalable in future otherwise sooner or later, it would be closed. Proper expansion plan should be in place even before launch of new business.

 

d)     Providing some solutions to existing problems

It has been seen that technology driven businesses which provides some solutions to existing problems becomes a hit very easily and have potential to become very big companies in short span of time. Therefore, endeavor shall be made to venture into new business which provides some solutions to problems or which provides improvement in existing functioning

 

e)      Talented Manpower

Companies grow because of its manpower. All endeavors shall be made to recruit and retain talented man power in the company.

 

f)       Various schemes of Government

Nowadays, Government has announced lot of schemes of funding both debt funding and private equity funding for deserving startups. Further, registration under startup scheme makes a startup eligible for various tax exemptions, reliefs from compliances and host of other benefits. Every startup shall avail those beneficial schemes introduced by the government of India.

 

 

g)      Keep the initial cost at minimum

 

Last but not the least, at the initial level; try to keep the cost of operations in the company at the minimum. Accordingly, it is advisable that initially, entire focus should be on cost cutting and avoiding expenses which can be incurred later. For example, there is no immediate requirement after company incorporation, to apply for trademark or ISO certification and other similar expenses. Once the company starts growing, one can incur such expenses.

 

All the aforesaid points are very important and should be kept into consideration while making a decision for business startup and day to day running of its business.

Company Formation in India During Covid 19

The economic impact of Covid-19 pandemic has been felt across the globe in terms of disruption of businesses, job loss, reduced production, reduced sales, and increase in credit terms and so on and so forth.

Further, the nature of doing work has also changed in terms of work from home has become the new norms, more and more virtual meetings happening quite frequently, cloud based systems and software have come into operation. However, despite the pandemic, entrepreneur spirit has not dampened across the globe. Although business sales and revenue has decreased but more and more new businesses were also set up.

India has also seen a surprising trend in terms of increase in entrepreneur spirits amongst the Indian youth across the country during these difficult times. More and more companies have been registered in India during time of pandemic. 

Different types of company formation in India has been witnessed during pandemic like

•  Private Limited Company Registration;
•  Public Limited Company Registration.
• Limited Liability Partnership Registration.
  

Company formation in India has increased by 25% during first five months of FY 2021-22. Also, there has been an increase in Limited Liability Partnership registration by approx. 45% during same period.

When COVID has started in India during March 2020, inspite of initial disruptions, total number of company formation in India during period April 2020 to August 2020 was 51,784 as reported by the Ministry of Corporate Affairs (MCA). It may be noted that this was peak period of COVID-19 in India and even the pandemic was unable to hamper or stop the spirit of company formation in India.

 

Further, during entire FY 2020-21, total 1.55 lac Indian company formation took place in India. 

If we look at monthly increase, in April 2021, total 12,554 companies incorporated in India which is 3.9 times of companies incorporated during April 2020 i.e 3209 companies.

Similarly, in May 2021 total 10,915 companies incorporated which is 2.3 times of number of companies incorporated during May 2020 i.e 4835 companies.

Also, in case of Limited Liability Partnerships, between April 2021 to August 2021, total 18,390 LLPs were registered which is approx. 44.5 percent increase from last year. During last year, total 12,724 LLPs were registered in India.

It may be noted that there has been a percentage increase in Private limited company registration in India in the field of finance and construction industry. During April 2020 to August 2020, total 90 finance companies and 726 construction based companies were registered where as in FY 2021, Total 354 finance companies and 1545 construction based companies were registered which is approx.. 293 percent and 112 percent increase respectively.

Thus, all the aforesaid trends in increase in company formation in India are indicative of the facts that by and large, the effect of pandemic has been overcome by Indian entrepreneurs. Further, FY 2021 has proven to be fastest growing year in terms of new company formation in India despite COVID-19 pandemic.

Also, this trend has raised high hopes for FY 2022 and expectation is that more and more new company registration will take place in India in coming years.

One can just hope and pray that no new variants of pandemic are effective in near future and this trend of growth in new businesses continues which will really help in contributing to national economy in long run.

How to register a Private limited Company Online in Delhi?

Many options are available for businessmen for businesses setup in India like Proprietorship, Partnership, LLPs, Private Limited Company, and Public Limited Company.

Out of the above, Private Limited Company Registration is the most popular and widely used mode of entity registration.

 What are the advantages of Private Limited Company Registration?

1.     It is a separate legal entity, unlike a proprietorship or partnership business.

2.     The liability of shareholders are limited, whereas, in the case of proprietorship and partnership, the liabilities of owners/partners are unlimited.

3.     Suitable for startup registration.

4.     It has a brand and reputation.

5.     It can easily accept funding from angel investors, venture
capitalists, and private equity investors.

6.     Since it is subject to audits, it has more authenticity in the
eyes of outside users like banks and financial institutions.

7.     Very easy to add or remove directors and shareholders in a legal manner.

 Procedure for Company Registration in Delhi

1.     There should be a minimum of 2 shareholders and two directors, out of which at least one director shall be an Indian citizen and Indian Resident.

2.     There should be local address proof for showing the registered
address of the company.

3.     There is no limit on minimum capital required for private
limited company registration.

4.     First of all, the Digital signature certificate of all the
directors needs to be prepared.

5.     The company's name needs to be approved by ROC by providing 2-3 proposed names of the company.

6.     Once the name is approved, charter documents need to be
prepared, i.e., Memorandum of Association and Article of
Association.

7.     Director Identification number needs to be applied.

8.    Other registrations need to be applied like PAN, TAN, ESI, PF.

9.    Name of the proposed banker with whom the company's accounted to be opened needs to be provided.

10. Finally, the company will be registered, and a Certificate of
Incorporation will be issued containing the CIN, PAN, TAN of
the company.

It will complete the procedure of Company registration in Delhi.

 Documents required for Company Registration:

The applicant must provide or submit the following documents for company registration in Delhi: 

1.     PAN Card copies of all the directors of the company.

2.     Identity proof of the directors such as Voter ID/ AADHAAR Card etc.

3.     Address proof of the directors.

4.     Passport size photographs of all the directors.

5.     Rent agreement (if any) of the place of business.

6.     Electricity bill/water bill/ telephone bill of the place of business.

7.     No Objection Certificate (NOC) from the landlord (in case of rented property).

8.     Memorandum of Association (MOA).

9.     Articles of Association (AOA). 10.Identity proof of subscribers.

10.   Address proof of subscribers.

11.  Declaration made by all the directors and first subscribers.

12.  Affidavit by directors and first subscribers.

 

Other Things to be kept in mind after company registration

Once a company is registered, the following other compliance needs to be done by every company: 

1.     GST registration need to be taken for providing services or selling goods.

2.     Within 30 days of company incorporation, a board meeting needs to be held, and the first auditors of the company need to be appointed.

3.     Within 180 days of company incorporation, a business commencement certificate needs to be applied with ROC/MCA.

4.     Periodical compliances need to be filed monthly GST returns, Filing quarterly TDS returns, preparing BS, PL, conducting statutory audits, conducting tax audits, filing income tax returns, and secretarial compliance before ROC Filing of ROC returns.

It may be noted that all the compliance above need to be done by every company irrespective of their turnover or sales. Therefore, if any company has fewer sales or no sales, even then, they have to do all the compliance above before the due date. Failure to do so will result in heavy penalties and interest. Wholly Owned Subsidiary Company

Therefore, compliance cost in the case of a private limited company is more. However, since it has many advantages, as mentioned above, along with brand and reputation, more and more businessmen, especially, young generation, chose the private limited company as their preferred mode of business entity.