How to start a business in India – Step by Step process

How to start a business in India? Starting Business requires a meticulous planning and capital investment. Apart from this one has to complete several other formalities & paperwork to start business.

The details on the procedures and paper works required to start a business in India is given below.

How to start a business in India – Checklist 

In India one can formulate following types of companies.

(1)   Sole Proprietorship

(2)   Partnership

(3)   Private Limited Company

(4)   Public Limited Company

(5)   Joint Venture Company

We will discuss general process to be followed for starting business.

Take a look at checklist with link and resources for starting a new business in India. You can filter out details which are not required or non relevant.

Step -1 Obtain PAN card from Income tax department

First step for starting business in India is to get Permanent Account Number (PAN) from income tax office. This is 10 digit laminated card issued by Income tax department.

Apply for PAN Card

Step -2 Register your Company

Second step is to register your company (Pvt. Ltd / Public Limited Company)

• Decide Unique Name for your Business Entity
• Apply for Director Identification Number

All the existing and intending Directors of the company have to obtain a Director Identification Number (DIN) within the prescribed time-frame as notified. The eForm DIN-1 can be filed to obtain DIN. The application is required to be counter signed by the promoter(s). Processing time 7 Days

Obtaining DIN

• Obtain Digital Signature Certificate

Digital signature certificate is required to submit the document in electronic format. Digital signature ensures authenticity and security of documents.

• Register New user at MCA website.
• Apply for Approval of the Name of Company

Apply for the name of the company to be registered by filing Form1A. This form requires a Digital Signature of one of the Promoters.

This form also require information like objective of company, capital required , location of company etc.

Step -3 Register for Service Tax 

Service tax is, as the name suggests, a tax on Services. It is a tax levied on the transaction of certain services specified by the Central Government.

If your business profile is related to providing services to customer you need to register to get service tax number. 

Step -4 Register for VAT/Sales Tax 

VAT (Value added tax) is imposed by state government on Goods. Taxation rate for VAT depends upon types of good and state government rules.

You need to get VAT/Sales tax number if you are starting business related to sales and purchase of goods. 

Also Read: – 20 Types of  Taxes in India

Step -5 Register for Excise Duty and Customs (Optional) 

Excise duty is indirect tax levied on those goods which are manufactured in India and are meant for home consumption. If your line of business is in manufacturing goods for consumption in India you must register for excise duty.

Customs Duty is Indirect Tax levied on Imports as well as Exports. If you are planning to start business of Import export you need to take care of custom duty. 

Step -6 Register for Shop and Establishment Act 

Shop and Establishment Act is to provide statutory obligation and rights to employees and employers in the unorganised sector of employment, i.e., shops and establishments. A state legislation; each state has framed its own rules for the Act.

You have to register for shop establishment and get relevant certificate for the same. 

Step -7 Opening Current Account in Bank

After getting approval for company one can proceed for opening current account in bank. Bank requires following documents for opening current account.

PAN Card, Address Proof, Certificate of incorporation, shop establishment certificate, VAT Number, Service Tax number etc.

Step -8 Apply for TAN 

As you will be employing people for job you are required to deduct tax at source or collect tax at source on behalf of Income Tax Department are required to apply for and obtain TAN. 

Step -9 Apply for EPF

EPF is Applicable for company employing 20 or more persons.

Step -10 Apply for ESI Scheme 

The Act is applicable to non-seasonal factories employing 10 or more persons.

The Scheme has been extended to shops, hotels, restaurants, cinemas, road-motor transport undertakings and newspaper establishments employing 20 or more persons. 

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