India is largely considered one of the planet’s fastest-growing economies with the 3rd largest in purchasing power parity and the 6th in terms of nominal GDP. Being the world’s most populous democracy, it is not surprising why locals and foreign nationals alike would want to start their own business in India. With its 1.2 billion population and a more relaxed business atmosphere, setting up a company in India seems a wise move. However, you should follow the steps necessary to get your company up to speed in the right direction.
Here are the steps that you’ll need to start a company in India.
Determine what type of company you want to set up
There are 5 different types of businesses that can be set up in India. These can include Sole Proprietorships, Partnerships, Limited Liability Partnerships, Private Limited Companies, and Public Limited Companies.
An SP is run and managed by a single individual, usually the owner. In many cases single proprietorships don’t require registration. If the business is going to be run by a number of people, it is called a Partnership. The difference from a Limited Liability Partnership is that the liability for failed decisions made by others is not shared equally among the partners.
Private companies require a minimum of 2 and a maximum of 50 individuals for its Board and can essentially start operating once the certificate of incorporation has been obtained. Public companies require a minimum of 7 for the Board with no limitations on the maximum. They require the business commencement certificate to start operating.
If you are a foreigner wanting to invest or establish business in India, you can choose from a Representative or Liaison Office, Branch Office, Project Office, Joint Venture Company, or even Wholly-owned Subsidiary Company. Of course, these are in addition to the types of business we have already presented above.
Obtain your Digital Signature Certificate
All companies in India are required to have secure and authentic electronic documents. As such obtaining your Digital Signature Certificate is a necessary step in starting a company in India. This can be obtained from agencies authorized by the Ministry of Corporate Affairs and will typically take about 2 to 5 days to complete.
Have your company incorporated
Having your company incorporated is a necessary step in starting a company in India. For this you will need to secure a Director Identification Number and file your desired company name with the MCA’s Registrar of Companies. This is to make sure the name of your business is available for use. You will also be asked to submit other pertinent documents and pay the required fees to obtain your company’s Certificate of Incorporation.
Get your PAN and TAN
Two of the most important identification numbers you need to secure for tax purposes are the Permanent Account Number and the Tax Account Number. You can apply for your company’s PAN with the Income Tax Department or through online PAN application services. Getting a PAN Card is relatively easy. You can secure the TAN by filling up Form 49B and submitting the form at any TIN Facilitation Center.
Register your company with Labor Offices
Make sure to register your company with appropriate labor offices such as the Employees’ State Insurance Corporation, Employees’ Provident Fund Organization, and Office of Inspector, Shops, and Establishment Act, among others. They will help guide you in managing your employees.
Setting up a company in India can look daunting at first. The good thing is that the MCA has very clear guidelines and protocols to be followed by anyone who wants to do business in the country. Also, adhere to these steps we shared and you should be alright.