Starting a Business in India- Some points to be considered

by EzyBiz India Tax & Accounting Consulting Firm

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.