Steps to Starting a Business in India

September 23, 2020

Establishing a new business seems like a challenging proposition. Yet, it can reap great benefits for both the company and the economy at large. With many entities looking to set up enterprises, there are a few things to consider when you’re going for registering your business in India. With that in mind, we’re happy to present a few fundamental steps that are necessary for registering any business in India:

1. Checking the Company Name Availability

Before any company registration can take place, you must check whether the proposed name is available. This can be done online, where applicants may check the availability of their desired company names on the MCA 21 website. Once approved, the selected company name appears on the website.

2. Acquiring a Director Identification Number (DIN)

A Director Identification Number (DIN) is a special identification number that is provided to any existing or potential directors of companies that are incorporated. A provisional DIN can be obtained by filling a DIN-1 application form online.

Then, a printed and signed version of the form must be forwarded to the ministry along with identity and address proof for their approval. A permanent DIN is issued after the verification of the documents and the subsequent approval of the request.

3. Acquiring a Digital Signature Certificate

A digital signature certificate is an issued electronic key that validates and identifies the holder of this certificate. One of the approved agencies registered with the ministry can issue this certificate. An application form, identity proof, and permanent address proof must be submitted by the company directors when applying for a Digital Signature Certificate.

4. Obtaining an Incorporation Certificate

An incorporation certificate is provided by the Ministry of Corporate Affairs and is used as proof for the constitution of the company. To apply, the following forms must be digitally filed on the official Ministry of Company Affairs website – e-form 32, e-form 1 and e-form 18.

Along with Form 1, the Registrar of Companies must be provided with one copy of each: The Memorandum and Articles of Association (MoA and AoA), the consent of directors, and a stamped copy establishing the power of attorney.

The certificate of incorporation will be automatically sent to the e-mail ID as provided in the information submitted with the forms while incorporating the company.

5. Creating a Company Seal for official documentation

A company seal is required to be placed on papers for sharing certificates and other official documents. The total cost of acquiring an official seal is dependent on the number of words that need to be engraved on it, the number of seals issued, and the time period for the delivery of the seals. It is to be noted here that the requirement to maintain a company seal is not mandatory for private companies.

6. Stamping of all Company Documents

The application to have the company’s incorporation documents stamped must always have the unsigned copies of the Memorandum and Articles of Association attached alongside the payment receipt for the same. Stamp duty should be paid online for such documents to the Registrar of Companies.

Following this application, the Superintendent will return the copies – one of which is stamped, signed and embossed in an official capacity. Finally, the company promoters must sign the MoA and AoA, with all required information being filled in their own handwriting.

7. Acquiring a Permanent Account Number (PAN)

Filing of Form 49A is required for the application of PAN. Once a unique PAN is acquired, a physical version of the PAN card will be delivered to your registered address by official post. The PAN application may also be done online, but the required documents will still need to be physically sent for final verification.

8. Acquiring a Tax Account Number (TAN)

As per the Government of India, a Tax Deduction Account Number or Tax Collection Account Number (TAN) is a special number issued by the Income-tax department to all entities who are required to either deduct or collect tax at the source.

To obtain this number, the form 49B must be filled out and submitted at a TIN Facilitation Center. Once the application has been verified, it is forwarded to the Income Tax Department and the TAN is issued. The application for a TAN can be done either offline or through the NSDL website.

9. Obtaining a certificate from the State/Municipal Inspector under the Shops and Establishment Act

A statement that includes the employer/manager’s names, company’s designated name and permanent postal address and business category must be provided to the State Shop and Establishment Inspector along with the payment of applicable fees. This is a vital step in trade license registration as all companies must be registered within one month (30 days) of the opening of their business.

10. Applying for GST Registration

GST registration is mandatory for any entity seeking to undertake the supply of goods and services across states while maintaining an annual aggregate turnover of more than INR 40 lakhs/20 Lakhs. This should be prioritized before any other process for new company registration. For further information on GST Registration and documents required for the application, you may visit the following link.

GST registration is mandatory if you are a seller or are planning to be a seller on Amazon.in (exception: if deals only with GST-exempt categories).

11. Obtaining a Profession Tax Certificate from the State Profession Tax Office

Every employer (who is not a government officer) is liable to taxation and must obtain a certificate of registration from the relevant authority. A company is required to file Form 1 to the State Profession Tax Office to apply for the Profession Tax Certificate, if applicable.

12. Completing a National Employees’ Provident Fund Registration

Every employer is required to provide their worker information to the local Employee Provident Fund Organization (EPFO). This must be done in the prescribed manner so that an Establishment Code Number (ECN) can be allotted to the company. This process is within the sole purview of the employer, and no separate applications need to be made by the employees. Note that this will only be required if the provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 are applicable on the company.

Mr. Nipun Khanna is the founder of this firm- Startup Solicitors LLP

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