According to a recent survey, over 48 million small scale companies are there in India, which is double the number of companies in the US. Micro, small and medium enterprises (MSME) contribute around 8% towards the country’s GDP, thus providing jobs to over 1.3 million every year. The ‘Make in India’ initiative from the Central Government has encouraged more start-ups to come up. It helped to increase the export of goods & services. Setting up a company with the right business structure will allow the entrepreneur more space to concentrate on his / her core marketing efforts.
A basic requirement to begin your own business is to have a blueprint of the products/services you can offer to the market. NRIs can invest in Indian businesses (per FEMA) which is an advantage for those seeking funds.
Registering your company
This involves getting a Digital Signature Certificate(DSC), acquiring a Director Identification Number(DIN), e-filing for registration, and incorporation.
The types of business structures you can register as include:
One Person Company (OPC)
OPC introduced in 2013, this helps a sole promoter/owner begin a company. Under the Startup India scheme, one can claim a tax holiday for the first 3 years, and there is no tax on dividend distribution. This structure provides greater benefits to depreciation. The filing needs only for the business return.
Limited Liability Partnership (LLP)
The liabilities of partners are only limited to their agreed contribution, and the company is a separate legal entity.
Private Limited Company (PLC)
The company considers as a separate legal entity from its founders, and its shareholders and directors consider to be employees of the company. This is ideal when the business has a high turnover. Above all, you get to enjoy a tax holiday for the first 3 years under the Startup India scheme. Filing of business & RoC returns is mandatory, and an audit is mandatory.
Public Limited Company
This is a voluntary association of members incorporated under the Company Law. It has a separate legal existence and restricted members’ liability to the shares they hold. The public limited company is best for businesses with high turnover. You also get to enjoy a tax holiday for the first 3 years under the Startup India scheme. Filing of business returns and an audit are mandatory.
Sole Proprietorship, Hindu Undivided Family (HUF) and Partnerships are the other business structures available – however, these do not get covered under the Company Law.
Please remember each business has its own set of compliances to adhere to. For instance, a sole proprietor just needs to file an income tax return, while a company has to file both an income tax return as well as an annual return with the Registrar of Companies. Attracting fresh investments is also simpler when there is a solid business plan back up by a clear business structure.
So if you need help registering your company, you have GKM to rely on for complete support from project report preparation, consulting, registration, maintenance of books, audit & assurance services.