How to Start a Low Investment Business in India

Starting a business anywhere in the world does not solely call for an investment of capital. What forms the greater part of the total ‘investment’ is the deployment of the heart (willingness), body (determination) and the soul (commitment) to build and run a company.  And surprisingly, in India, possession of the latter qualities and lacking the former has often been the case. However, of course, before deciding what should be the principal focus between the two, and starting a business with the perspectives, one must undertake a law compliance drive, performing all the required steps following rules/regulations, and consequently ensure a seamless company registration in India.

Small Business Big Impact

Small enterprises are subtly the pillar of one of the fastest-growing economies in the world i.e. India. Per the reports published by the Ministry of Micro, Small & Medium Enterprises, India has way over 63 million registered small businesses, with an employment capacity of whopping 107 million individuals. Also, small enterprises constitute over 28% to the GDP reported in the Annual Report 2018-19 by the Ministry of Micro, Small & Medium Enterprises. Hence, naming low investment businesses the locomotive of India’s growth would not an overstatement to make. Matter of the fact is, there are endless opportunities offered to the small and medium businesses in India and all the entrepreneurs are needed to do is shove themselves into the open environment and commence the journey filled with glories. And the first step in the actualisation of the same is company registration in India.

Defining Moments and Tips before going ahead with Company Registration in India

According to the Ministry of Micro, Small and Medium Enterprises, units in the service sector with an overall investment below ₹2,00,00,000 in machinery and allied instruments are categorized as small businesses. On the other hand, under the manufacturing sector, units with investment capacity below ₹5,00,00,000 defined as small businesses. Thereby, you stand sorted out with the classifications.

Moving forward, during the finalization of a small investment business idea to execute, enterprisers must do a thorough research on the following spheres of starting a low investment business in India, or anywhere in the world.

1. All the opportunities the target market has the prospect of providing.
2. Capital required for carrying out a sustained existence, before the success knocks.
3. It is advised to only embark on the journey after spending enough time in apprehending the ins and outs of the business.
4. Set an objective for your business, and make it ambitious enough to be conveyed to your employees to bring out an analogous dedication for the job just as yourself. This element is also functional at attracting customers looking for an enterprise that cares to cater.
5. Resources required, including unprocessed material, machinery, other allied infrastructure, so on and so forth. Resources shall also include employees without whom the enterprise would not actually set in motion.
6. The most important step in the low investment company registration in India is the step of acquired all the applicable business licenses.
7. Preceding in priority another step, i.e. of knowing all about tax filings, its rules and regulations, and the obligations needed to be regularly followed.
8. Doing the homework before putting the foot down finally includes monetary projections. Now, this step can be carried out by taking the example of competitor companies, or the entire sector. A thorough research-based projection may give you the most accurate results for planning accordingly.

The Dilemma of Sole Proprietorship/Partnership/LLP during the company registration in India

Making conclusions from live examples, the majority of small businesses in India began as a sole proprietorship company simply to evade compliance issues, time and greater expenses. Partnership firms on the other hand are also setting the trend since such business entities not only divide the expenses, but also liability. LLPs (Limited Liability Partnerships) make the consideration easier; however, to obtain limited liability protection one must comply with guidelines laid down in the Limited Partnership Act, 2008. For an idea, small investment businesses in India with a turnover above ₹10,00,000 can begin an LLP and reap the advantages e.g. liability protection,  unhampered access to bank aids, etc. Another fun fact that makes LLPs an ideal choice for small enterprises is that such entities do not need audits given the turnover for annual gross sales is below ₹40,00,000  with a capital share below ₹25,00,000.

Company Registration in India: The Checklist

Udyog Aadhaar Registration

Udyog Aadhaar is an online portal for company registration in India with a small investment, made function directly under the supervision of the Ministry of Small and Medium Enterprises. The portal was built to facilitate the company registration process in India. Not only registration but the portal can also be utilised to avail benefits under various schemes promoted by the Government for small businesses. Therefore, entrepreneurs can fill the form and apply for the online msme registration for their business. Upon successful completion, the portal shall also generate a Udyog Aadhaar Number for your business.

Trademark Registration

This step is designed to cater to small enterprises with the protection of identity. Significance and advantages of a trademark can be easily surfed about on the internet. However, the most worthy feature of Trademark registration is that it enables small businesses to compete against bigger brands. Social media, for instance, can be actually made operational with trademark registration, for providing a level playing field.

The IE Code

Registration of Import Export Code (IE Code) comes next in the hierarchy, especially when an enterprise is indulged in the importation or exportation of commodities outside the Indian jurisdiction. Therefore, Import Export Code registration is nonobligatory.

ESIC Registration

Another entry in the nonobligatory list is the Employees’ State Insurance Corporation Registration. ESIC is deemed applicable to enterprises that employ more than 20 employees.

Tax Registration

Upon the completion of company registration, the small enterprises would have to carry out different tax registrations next, that too at various levels of business after the commencement of its operation. The various registrations would be of the following:

TAN – Registration of Tax Deduction and Collection Account Number (TAN) is applicable for those small and large enterprises that levy TDS. Hence upon achieving a point where the small enterprise is subject to the law directing tax deduction at source, registering for TAN would also be applicable.

PAN – Permanent Account Number which in popular terms known as “PAN card”, is a mandatory registration that a small enterprise must undertake before moving any further post the business registration. The sole reason being the utility of PAN in the performance of any monetary task, legally. Sole proprietorships can make use of the owner’s PAN; however, for entities other than the sole proprietorship a different PAN is generated.

Service Tax and VAT Registration – Service tax registration, per the applicable guidelines by the Central Board of Indirect Taxes & Customs shall be required for businesses that make over ₹9,00,000 per financial year through services. Enterprises can also accumulate taxes from customers and pay-in the service taxes upon crossing the threshold of ₹10,00,000 of revenue earned from the taxable services.

The VAT, on the other hand, is applicable for enterprises engaged in selling and distribution of goods. The VAT is controlled and supervised by the State government. Therefore, quite naturally, the applicability, terms, and regulations, as well as processes in the registration may vary upon any change in the jurisdiction. Nevertheless, the majority of the States call for VAT registration for businesses that make trade of ₹5,00,000 worth of commodities per annum.

Conclusion

Company registration in India might be tricky at times; however, if the guidelines are stringently adhered to, the rest of the journey for your business would be a piece of cake. Alternatively, there are a large number of agencies filled with hard-working individuals having expertise in government laws and compliance concerning startups and businesses already functioning. These agencies are relentlessly providing the ease one might have asked for, in a situation when all of their focus shall be revolving around successful business launch instead of government guidelines and compliance.

A company may need other License as per the nature of the business in operation. Get Consultation on How to Start a Low Investment Business in India through Enterslice.