Monday, October 15, 2007

Requirements for Starting a Business in India

What is the first thing to be done to start a business in India? What are the key issues that must be addressed before others? Here’s our top 10 compilation.

  1. Make a business plan. It will change many times, but you need to start somewhere.
  2. Follow that up with a detailed marketing plan for your product or service.
  3. Employ the services of a chartered accountant(s). They will help you get through the startup formalities.
  4. Decide the business structure you want your new business to have – a private or public limited company, a sole proprietorship or a partnership. Company formation is more complex and expensive, and you need to approach the Registrar of Companies in the chosen location for this purpose. On the other hand, a sole proprietorship is the simplest form of business (check our older blog post).
  5. Evaluate the funding options. The promoters have to bring in some money to start with (a lakh of rupees for a private limited company). Also look at loan options. Almost all banks in India have specific loan products for Small and Medium Enterprises.
  6. Open a bank account for the new business.
  7. Check out mandatory requirements stipulated by government agencies at different levels (central/ state/ municipal). Does your business need a license?
  8. Apply for the PAN & TAN numbers, Service Tax/Profession Tax/ VAT registration numbers.
  9. Identify business premises and fit it out with necessary furniture and equipment.
  10. Recruit key employees.

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Jessica D. said...

Nice. I'll keep this in mind because I plan on running my own business soon. I know it'll be tough, so I can use all the help and advice I can get. More recently I've been thinking about buying a business instead of starting one from scratch. Maybe a franchise? Home based? I’m not sure. Do you have any suggestions? Advice? Thanks.

Rachel said...

@Jessica - If you're planning to buy a business, there are still a lot of resources you can use. There are books and magazines on the topic, as well as plenty of articles online. I also suggest checking the market in your planned area by looking at the classifieds... just to give you an idea. There are sites, like BizTrader.com, that are online global marketplaces. You can use them to buy or sell a business, or find a lender or broker. I also suggest checking out local small business groups because they should also know what's available in your area.
Good luck!