How to Start a Small Business in India
Whether it’s in India or anywhere if you are wondering how to start a small business, the basic necessity is proper planning; finance comes next only. You should be well aware of all the matters in regard of what business you are starting, the scope of the business and finally how to start a small business.
Competitors are there in every field and having an edge over them is necessary to become successful. It should be possible for you to avail your product or services at lower rates or your product should have something extra which the customers would welcome. Marketing your product too is vital and the mode used for that should be compatible to nature of your products or services. You should study from the mentors, internet forums or similar businesses about the various aspects of the business before getting on to how to start a small business.
The thing which should always be there in our heads is that it is many times impossible to beat every competitor you have by reducing the price. You can’t always afford that. So try to increase the quality of your product or services and it should be a pleasing experience for the customers to hire your services or buying your products. If you triumph in making the customers satisfied, the same or a little bit higher prices than that of your competitors would not be a hindering factor. Customers now days give priority to the quality of services rather than focusing on price only. So, if you can’t beat your competitors in price beat them in quality.
If your planning phase of business is over then the next subject of worry is how to start a small business. You can’t just start a business as you like and you should be careful about abiding to the legal facets. This is the basic to be known in case of how to start a small business. The procedures for how to start a small business varies a bit accordingly to the states but generally in all cases the nature of how to start a small business almost remains the same.
Obtaining a Director Identification Number
The process of starting a small business marks its beginning with obtaining a director identification number. First of all you should obtain a provisional DIN and for this an application form need to be filled. The form can be found easily from the portal of corporate affairs ministry. There is usually no delay in the issue of provisional DIN. You should print and sign the application form; after that it should be sent to ministry for approval via courier with your identity proof holding your address. You should also avail any of the residence proofs like passport, license, ration card, voters card etc. The authority concerned will verify the documents; then upon approval a permanent director identification number is issued. Normally it takes around 4 weeks for the approval. By getting a permanent DIN, your half of the concern regarding how to start a small business is over.
Obtaining a Digital Signature Certificate
The next step is obtaining a digital signature certificate or DIC online from any private agency which is authorized by ministry for corporate affairs. The certificate is valid only if the private agency on which you rely is genuine. The directors of the company submit the application form with the proof of identity and address.
Company Name Reservation
The name of the company is reserved online with ROC, i.e. Registrar of companies. The approval of company’s name must be done via electronic means. The applicant can easily check for the company name availability on the concerned website. You can submit maximum 6 names for your company. The staff of ROC checks whether the suggested names have similarities with names of other companies within India. The name request is cleared by junior officer first and then passed for approval to the concerned senior officer. After the approval, your selected name will appear on the site. Generally two days are taken for the names to get approved.
Stamp Your Company Documents
The quest of how to start a small business is not that much complicated anyway. You should stamp your company documents on any authorized bank or state secretary. Your request to stamp the documents must be accompanied along with the unsigned copies of Memorandum, payment receipt and article of submission. The copies are returned by the superintended and one among the copies is signed, stamped, embossed and shows payment of stamp duty. After the stamping of article of association and memorandum, it should be dated and signed by company promoters. And this includes the name of the company and the activity and purpose description. Also the name, address, occupation etc of the father must be specified. This information should be handwritten by the applicant and witnessed dully.
Certificate of Incorporation
How to start a small business is not that much easy and there are certain more legal hurdles to be passed. You should get certificate regarding incorporation from companies’ registrars. After getting this certificate cleared, automatically the certificate is sent to the company’s registered office.
Obtaining PAN and TAN
Next, you should obtain a PAN or permanent account number and TAN or tax account number. This is necessary if you are serious about how to start a small business. Without PAN and TAN, you will not be able to pay the tax which is mandatory for any business.
Register The Office at State or Municipal Level
Then you should register the office at state or municipal level. For this a statement which contains names of employers, managers and establishments are sent to concerned local shop inspector along with the fees applicable. Now only a few more steps are left on how to start a small business.
Register for Value Added Tax (VAT)
VAT or value added tax came into effect from April 1 of year 2011. The application is signed by the authorized representatives and they must be present at the Sales tax office at the time when application is verified. The applicant has to go to the office and visit registration counter. The clerk there will verify that whether the entire document required is there with the applicant and then a token is given to the applicant. After waiting for a short time the applicant is called to the sales-tax officer. Then the information is entered into system manually by officer there. A TIN or tax registration number is generated by the system thereafter and the company now is registered completely for paying taxes. But nowadays the entire process is manipulated via online means.
Another deal is the profession tax which is applicable to every employer unless he is a government officer. From prescribed authority the applicant should obtain the registration certificate. Based on the business nature, there should be certain documents like address proof, details regarding the number of company registration, company deed, head office details etc along with the application.
Register with Employees’ Provident fund Organization
Next step in how to start a small business is registering with the Employees’ Provident fund Organization. This applies for such an establishment where 20 or even more than 20 members are employed. After the applicant completes an application he is provided with a security number. This type of registration centers on underreporting, non-reporting or delinquent reporting of the size of workforce. This workforce is only an optional if there are less 20 members. The employees don’t require any special registration. All the qualified employees should become the members of fund. The employer allots individual account numbers in the manner prescribed. It takes up to three days for the allotment of code number but there are also cases where it took around 15 days for the process to get over. Sad fact is that for this there is not any online facility available till now in almost every place.
Register with Regional Office for Employees
The final procedure of how to start a small business is registering for the medical insurance from the concerned authority, i.e. regional office for employees’ State Insurance Corporation to get an ESI card. By this process of registration each and every employer and the paid employees are insured and the individual records become set up. According to the concerned insurance corporation, the must need to be presented by employer for the registration. The individual insurance of employee is another process which sets only upon the registration of employers. It is the employer who is responsible to submit the needed declaration form whereas employees should avail correct information only to employers. In a lot of places the temporary ESI cards are provided on spot by local offices there. The validity of temporary cards is up to 13 weeks and to obtain a permanent card it may take 5 weeks usually.
If you know how to start a small business and have enough capital to invest, there obviously is no one on your way to take the initiative and set up a small business. But some things need to be considered with respect and the most important part is the legal aspect even though many other aspects are there when you start a business. Your business should adhere to all the legal requirements so that things move with ease without any hassles ever.