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How to register a small business in India? Here are 6 easy steps we have compiled for you along with a few resources.
Do you have a small business in India or the idea to set one up? Then this is for you.
India’s entrepreneurial landscape has witnessed a remarkable surge in the participation of women in recent years. It is exciting to see how the country’s thriving startup ecosystem, coupled with various government initiatives, has created a conducive environment for women entrepreneurs to transform their innovative ideas into successful ventures.
However, in my interactions with various small-scale women entrepreneurs, I gathered that one of the challenges they face is in understanding the process of registering their businesses.
Unfortunately, because a lot of women are not encouraged at their homes to be aware of financial and legal aspects of a venture, they find the information online overwhelming and difficult to comprehend. Even in cases where they outsource this activity, to ensure a seamless entry into the business world, it is crucial for women to understand the process of registering a business in India so that they can be on the top of their game and take complete control of running the business.
In this article, I have tried to put across the steps in a simple and clear manner, to make it easy to follow and execute.
The first step in registering a business in India is to establish its legal structure. Women entrepreneurs can choose from various options, such as
Each option has its own benefits and implications, so it is crucial to judiciously evaluate and select the most suitable option based on the nature and scale of the business. To make an informed decision, talk to trusted experts and take counselling, if required.
Amongst the options described above, an LLP and a Private Limited Company are the most suitable and preferred forms of registering a business in India. The popularity of LLP and Private Limited Company is purely due to various exemptions provided to these forms of business entities under the Indian corporate law.
In case of a LLP or a Company being formed, a person (these usually are the founders of the business) who is proposed to be appointed for the management of the LLP or the Company is required to obtain a DSC followed by obtaining the DIN.
Therefore, to proceed with the registration process, women entrepreneurs need to obtain a DSC and DIN.
A DSC serves as an electronic signature and ensures the security and authenticity of documents submitted online. The DIN is a unique identification number required for individuals intending to become directors (in case of a company) or partners (in case of an LLP). These can be obtained from government-approved agencies or through online portals.
Choosing a distinct and relevant name for your business is imperative. Entrepreneurs can check the availability of their desired name through the Ministry of Corporate Affairs (MCA) website. It is advisable to conduct a thorough search to ensure that the chosen name is not already registered by another entity. Once the name is approved, it can be reserved for a specified time period.
The registration process for different business structures varies.
For a sole proprietorship, registration is not mandatory. However, for partnerships, LLPs, and companies, registration with the MCA is essential.
The MCA in its endeavour to promote ease of doing business in India has introduced “Simplified Proforma for Incorporating a Company Electronically (SPICE)” utility which integrates all the important processes of registering an LLP and a Company. Entrepreneurs need to submit the necessary documents, including the company’s Memorandum of Association (MoA) and Articles of Association (AoA) or LLP’s Limited Liability Partnership Agreement (LLPA) as the case may be, along with the prescribed fees. The MCA’s online portal, commonly known as the “MCA 21,” simplifies the registration process and allows for easy submission of documents.
As mentioned earlier, the SPICE utility integrates various processes for ease of incorporating an LLP or a Company. This also extends to registrations under various authorities in India such as
To comply with taxation requirements, every business in India must obtain a Permanent Account Number (PAN). PAN is a unique ten-digit alphanumeric code issued by the Income Tax Department. Entrepreneurs can apply for PAN/TAN at the time of registration of the business through SPICE utility. Additionally, depending on the nature of the business, women entrepreneurs may need to register for GST or other applicable registrations.
After obtaining the necessary registrations, women entrepreneurs should open a bank account in the name of their business. A dedicated business account will ensure smooth financial operations and separate personal and business finances. Entrepreneurs must provide the required documents, such as PAN, business registration certificates, identity proof, and address proof, to open a bank account.
SPICE utility also provides for an option to choose a bank to open an account in the name of the LLP or the Company as the case may be.
With the introduction of the SPICE utility, registering a business in India is now a streamlined and simplified process, thanks to digitization and government initiatives aimed at promoting entrepreneurship and ease of doing business in India. Women entrepreneurs can leverage these opportunities and confidently embark on their entrepreneurial journey. By following the steps outlined above and seeking professional guidance when needed, aspiring women entrepreneurs can establish a strong foundation for their businesses and contribute to India’s economic progress and empowerment of women in business.
Disclaimer: This article has been written in consultation with an expert working in the area of small business registration. While I have tried to incorporate all the necessary information pertaining to the subject, your individual companies could have specific points to look into and consider. It is advisable to consult a trusted expert for detailed queries and clarifications.
Image source: a still from the film Darlings
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