In today’s video of Startup 101 series, we will discuss how you can start a company legally in India, how to register your business, taking care of the legal documentation, legal compliances and what procedures need to be followed.
00:00 Introduction
00:40 What is your business about?
01:05 Structure of the company
05:29 Types of registration
06:21 Documentation and Compliance
What is your business about?
Before you go about registering your company or a startup, you need to figure out what are the activities your business will involve. This is important because when you are registering your business with the government of India, you might not need all the documents but you will need documents which are important for your type of business. So figure out things like which sector your business is involved in and what are the activities it will undertake.
Structure of the company
Next, you need to figure out what is the structure of your company. This will help you determine which is the best way to register your company based on your current situation like the number of owners, place of operation and plans of raising external funding. Also, keep in mind, you can change the structure of your company as it grows in order to better suit your needs.
Proprietorship firm: If you are the only founder or owner of your company and your business is operations are limited to your own locality or state, then registering your business as a proprietorship firm might be the best choice for you. This involves the least amount of documentation and legal compliances.
Partnership firm: Now if you are starting a local business but you have more than one founders or owners, in this case, you can register your company as a partnership firm. In this type of registration, your business will have a PAN but will still have a lot less documentation as compared to the limited liability partnership (LLP) or a private limited company (Pvt. Ltd.).
Limited liability partnership (LLP): An LLP still has a lot less compliance and documentation requirements till the time your business has not crossed a certain threshold in terms of revenue. Also, if you think that your company won't need to raise any external funding, you can opt for an LLP.
Private limited company (Pvt. Ltd.): While registering your business as a Pvt. Ltd. company, you will have to file a lot of documents and follow a lot of compliance requests with the Registrar of Companies (RoC). These will include disclosure in terms of revenues, expenditure, tax benefits claimed and also your income tax return (ITR).
Types of registration - Employee State Insurance Corporation and Employees' Provident Fund Organisation
Employee State Insurance Corporation (ESIC): Any company that has more than 10 employees will have to register itself with the ESIC, which is an autonomous body under the Ministry of Labour and Employment. This helps the government to keep track of the people employed across different organisations.
Employees' Provident Fund Organisation (EPFO): Once your company employs more than 20 people, you will need to register it with the EPFO. This means that you will have to pay a certain contribution towards the EPF scheme, which is a kind of social security scheme to ensure that your employees get certain money with interest after retirement.
Documentation and compliance
Based on your revenue and type of business, you will also need a GST number for your company. You will have to file your GST returns every month and then every quarter, which will further add to your compliance and documentation burden as your startup grows over time. If you are exporting your software or services which might get you payments from international customers, then you will also need an export-import license from the government of India. This will help your business save a lot in terms of bank charges.
Music: Infraction - Corporate Business Music: • Corporate Business Mus...
Video Edited by Vansh Gujral.
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