How to begin your own business

22-08-2017 Tue 10:33 | Finance

Central Government main aim is ‘make in India’ a manufacturing hub. Many start-ups are coming up these days. Flipkart, the prominent eCommerce site was once a start-up. Lots of people dream of starting a small business and rising high on their own, as well as create employment to few others. Despite enthusiasm to begin a business, many are not aware of the rules and regulations that are to be followed, for doing this. Let us see what is to be done essentially, before beginning a company

Types of companies
There are five types of opportunities before starting a business in India: Taxes, responsibilities as manager, services, investments and funds. Any of these can be chosen to start a business.

Sole proprietorship
This is an easy way to begin a company. You will have to register it with the concerned government department, whether it is services or trade. Under sole proprietorship, management cannot be transferred from one person to another. But assets can be sold.

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Partnership
Two or more people can begin a company. A maximum of 20 people can work as partners of a company. The initial capital invested by each and every partner, at what ratio should the profits or losses be distributed, amount as wages, etc. details are mentioned in the partnership deal. The Income Tax (IT) department will offer a special pan number to such partnership companies. It is not compulsory on the part of partnership companies to register themselves with Registrar of Firms (ROF). However, only if they register their company with ROF, the partnership deal will be considered as legal. Foreigners are not allowed to start partnership companies.

Limited Liability Partnership
Limited Liability Partnership (LLP) was made effective through Parliamentary Act. In this method, the managers of the company have some responsibility towards the partners. It offers security to the partners. This responsibility depends on the share of capital that the partners are investing in the company. Even if one of the partners is corrupt or indulging in illegalities or unrecognised activities, the remaining partners will be protected. The company will have a unique pan card.

Private Limited Company
The company has to register with the ROF. Article of Association (AOA) or company guidelines or draft of memorandum of associations will have to be signed by all the company founders. From two to 200 people can start a company with a minimum of Rs. 1,00,000 as share capital. A minimum of two to a maximum of seven directors have to be appointed, with the agreement of all the shareholders. At least one of them should be an Indian citizen. When compared to LLP, the accounts of a private limited company has to be run in accordance with IT department, company laws. Closure of the company is difficult task. Shareholders might change, without causing any hurdles to the running of the company. Division will be as per the management and functions. It is possible for the shareholders to conveniently leave anytime they want.

Public limited company
This is similar to the private ltd. co. But there is no limit in matter of shareholders, whose number should be a minimum of seven. It depends on the managers whether to register with the stock exchange or continue as an unlisted company. A public ltd. co. should be very transparent and inform its every move to the public. It should strictly adhere to the government and Securities and Exchange Board of India (SEBI) regulations. Independent directors should be appointed to the board. Comprehensive information of account books and details of the wages of the directors and Chief Executive Officers (CEOs), has to be handed over to the concerned department.

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Company Registration Process
After deciding about the kind of company to start, the process of legally registering it should begin. Appoint a Chartered Account (CA) at first. A CA knows about the legal proceedings regarding companies. Then selected directors should obtain Digital Signature Certificate. Also they have to apply for the Directors Identity Number (DIN). In case of foreigners or Non-Resident Indians (NRIs), a self-attested notarised copy of their passports and an address proof (driving license or utility bills) have to be given. They have to also register for service tax, VAT, Sales tax, Excise duty and customs duty. They will have to also apply for Tax (Deduction and Collection) Account Number (TAN). All kinds of permissions and licenses should be obtained. After all this another application has to filed at Employee Service Insurance (ESI) for pension and gratuity of employees. If it is a retail business, a license has to be obtained under Shops and Establishments Act.

Necessary documents
Copy of Director's pan card, his voter ID, copy of Aadhar card, two passport size photos, six months bank account statement, electricity or water bill of the registered office, rent agreement in case of rented building, a cancelled cheque, have to be submitted