Small Business Registration In India | Basic Guide

Small Business Registration Guidelines & Procedures To Start A Business In India For Beginners

The objective of crafting this article is to provide information about small business registration procedures in India to the entrepreneurs. Regardless you are starting a business in manufacturing, retailing or service providing, you must register your business. However, there are different Govt authority for specific types of licensing needs. Even dealing with the same product with a different business model may attract different licensing procedures. However, there are some basic requirements that are common to everyone.

Small business registration is the first step of initiating any type of business. However, the most important consideration is selecting the right form of organization. In India, you can for 8 types of business organization. Those are:

  1. Sole Proprietorship Company
  2. One Person Company
  3. Limited Liability Partnership
  4. Private Limited Company
  5. Public Limited Company
  6. Non-Banking Financial Corporation
  7. Joint Hindu Family Business
  8. And Co-operative Organization

Related: 8 Forms Of Business Organization In India | How To Choose | Basic Guide

Small Business RegistrationHowever, each and every entity have specific advantages and limitations both. Choose a proprietorship firm as a service providing startup. Choose partnership firm when you have partners and all want to continue their jobs in other companies. And want to just test their business ideas. You can go for Private Limited Company when you want to start a long term business. And your idea is already tested as trial and looking for the funding. Furthermore, when your small business registration budget is less than 10000 Go for LLP. However, with this entity you can enjoy all the company features with ROC. Finally, you can form OPC, when you are a single owner and want to enjoy the corporate features. In conclusion, this is the most crucial step in small business registration for new entrepreneurs.

Related: Startup India Action Plan 2016 – Key Highlights

Step-By-Step Process Of Small Business Registration

Obtain Digital Signature

This is the first step. You can use the digital signature in India for various online transactions. It includes Income Tax E-Filing, Company or LLP Incorporation, Filing Annual Return, E-Tenders, etc. There are three types of digital signatures. However, you will need to apply for  Class II. Read More…

Obtain director Identification Number (DIN)

This is a simple one day process. In addition, you can apply for DIN online. PAN number is mandatory for Indian citizen and Passport is mandatory for foreign national. You can get a provisional DIN number immediately.

Secure Your Company Name

In the form INC-29 you have an option of giving a single name for your company. However, you can check before if there is already an entity with the same name.

Craft Memorandum and Articles of Association

You will need to attach the Memorandum of Association (MoA) and Articles of Association (AoA) with the INC-29. However, it is a very important internal document. Thus you need to pay keen attention in crafting this document. Some of the important aspects are Main Object, Share Participation, Authorized Capital, Registered Office etc.

File INC-29 & Get the Incorporation Letter

This is a one-day procedure. However, you will need to attach several documents. Ensure that you have all the document ready. Any sort of error leads to a resubmission of this form. In addition, the filing of the single INC-29 form will grant you the incorporation certificate from the ROC.

Obtain Permanent Account Number

Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Unit Trust of India (UTI) Investors Services Ltd., as outsourced by the Income Tax Department (National)

Open A Current Account

Now you can open a current account in the bank. Furthermore, it is important to get the other licenses from the different authority. However, choose a nearby bank. And choose account type carefully. Read More…

Obtain MSME Udyog Aadhaar Registration

This is a simple process of getting SSI or MSME registration. Furthermore, you can apply it online now. This one page Udyog Aadhaar Memorandum is an initiative of MSME Ministry Govt. of India. In addition, the objective is to simplify the registration process for entrepreneurs and promoting ease of doing business. Read More…

Obtain TAN Number

First of all, this is important for Tax payment. However, you can obtain this from the Assessing Office of Income Tax Department of your state.

Obtain Service Tax Registration

Service tax is, as the name suggests, a tax on Services. In addition, Service Tax registration number is mandatory for any person or entity providing taxable services of over Rs.9 lakh. Furthermore, you can pay the tax either by manually depositing in the bank or by online payment. Read More…

Obtain Shops & Establishments Act License

Every shop and the establishment comes under the Act within 30 days of commencement of work, whether or not it has employees. In addition, this is mandatory for societies, charitable trusts, printing establishments and many more. Read More…

Obtain VAT Registration

Register for Value-Added Tax (VAT) at the Commercial Tax Office (State). The State Governments, through Taxation Departments, are carrying out the responsibility of levying and collecting VAT in the respective States.

Obtain Professional Tax Registration

This is mandatory for all types of business entity. However, the yearly tax rate is different. This registration is mandatory within 30 days of employing staff in a business. In addition, if you have employees in more than one state, you must the Registration in each state.

Register With Employee’s Provident Fund

This is applicable to establishments employing 20 or more persons and engaged in industry notified under Section 6 of Act. However, there are some different rates for the different specific industries.

Register With Employees’ State Insurance Corporation

ESIC stands for ‘Employees State Insurance Corporation’.  In addition, the scheme provides monetary and medical benefits to Employees. This benefit includes sickness, maternity, and employment injury and to make provisions for related matters. However, this is a statutory responsibility of the employers of factory or any establishment under Section 2-A. Read More…

Obtain IEC Code

IEC stands for “Importer Exporter Code ”. This is a 10 digit number. For any sort of foreign trading, you must obtain this license. However, you can apply to the nearest Regional Authority of Directorate General Foreign Trade.

Register With Custom Duty

The Central Board of Excise & Customs (CBEC) is the apex body for customs matters. Central Board of Excise and Customs (CBEC) is a part of the Department of Revenue under the Ministry of Finance, Government of India. However, check whether your business needs this or not.

NOC From Pollution Control Board

First of all, check whether you need an NOC from the PCB. Furthermore, there are three types of permission. They are Red, Orange and Green type. In addition, you must apply for ‘Consent to Establish’ first. Finally, you will get ‘Consent to Operate’.

Obtain FSSAI Registration

This is a mandatory license for food startups. Furthermore, it includes restaurant, food franchise outlet, bakery, canteen, food processing unit, cafeteria and even small kitchens. Food Safety and Standards Authority of India (FSSAI), Ministry of Family Health & Welfare, Government of India is responsible for this license. Read More…

Apply For AGMARK

The AGMARK is a specific type of certification in India. And it implies on the agricultural products. The term AGMARK was introduced by joining the words ‘Ag’ to mean agriculture and ‘mark’ for a certification mark. This term was introduced originally in the bill presented in the parliament of India for the Agricultural Produce (Grading and Marking) Act. Read More…

Obtain Intellectual Property Registration

You can protect your company or product brand name. In addition, you can protect any innovative product from duplicating it. In India, intellectual property rights including trademark and patent are controlled by Controller General of Patents Designs and Trademarks.

Keep in mind that these are standard procedures and are applicable in most cities in India. However, in some cities, there are some additional (or lack of) processes that you will have to find out. We will update this article on small business registration, as we get more information about the same.