Startup – made with ease

“Take up one idea. Make that one idea your life – think of it, dream of it, live on that idea. Let the brain, muscles, nerves, every part of your body, be full of that idea, and just leave every other idea alone. This is the way to success” – Swami Vivekananda

As a person, everyone would like to be an entrepreneur, but only those who are ready to take up the immediate business challenges will end up being an entrepreneur. As I mentioned earlier, we will have lot of business challenges with respect to setting up of business entity like fund raising, business planning, business continuity planning, mobilization of resources and disaster recovery plan so on and so forth….

We have summarized the key business registration requirements in India in this article.

  1. Constitution of Business (Type of Business Entity):
  2. A) Sole Proprietorship (Also known as – sole trader, individual entrepreneurship or proprietorship), B) Partnership Firm, C) Limited Liability Partnership (LLP), D) One Person Company (OPC), E) Private Limited Company and the last but not the least F) Public Limited Company.

Each types of business entities are having its own merits and demerits. We have to cautiously choose the right one depending upon our business requirement, module, status, visibility, market reach.

  1. Business Registration / setup:

As soon you finalize your business constitution, you have to go for registration of your business based on the constitution of the business. As a Sole Proprietorship, nothing much to be done. For Partnership Firm, you have to register your partnership deed, apply for PAN and TAN and have to open the bank account. For LLP, OPC, Private Limited and Limited company, you have to apply for name availability, followed by incorporation certificate, PAN, TAN, bank account and commencement certificate.

  1. Other registrations:

Presently, we are going to discuss about common business registration requirements in India.

A. GST Registration:

As of now, with an aggregate turnover of INR. 40.00 Lakhs would be exempted from the GST. For the north eastern states, the exemption would now be INR. 20.00 Lakhs.

Advantages of GST Registration:

  • Extend Input Tax Credit (ITC) to your customers/Clients.
  • Avail Input Tax Credit (ITC) on your inward supplies.
  • Make inter-state sales without many restrictions.
  • Be compliant.
  • Greater visibility in toughest competitive market.

As other side of GST registration, you will have to be filing GSTR and adhere to GST compliance requirements.

Please visit the following URL for more information:

https://www.gst.gov.in

B. Professional Tax Registration:

  1. Professional Tax Employer Registration – Certificate of Enrollment (EC):

Every business entity in Karnataka shall obtain the Certificate of Enrollment (EC) from the Profession Tax Officer within Thirty days from the date of commencement of the business. This registration is mandatory for business whether they employ any people in employment or not.

Every registered business with Enrollment Certificate shall pay tax every year before 30th of April at the specified rates. The amount of tax payable by the employer and the date by which the amount to be paid shall be mentioned in every certificate of enrollment. If an employer has fails to obtain the registration or enrollment within the time specified, the assessing authority shall impose a penalty for delay in obtaining the Registration.

  1. Professional Tax Employee Registration — Certificate of Registration (RC):

Every employer is liable to Professional Tax on behalf of their employees must obtain a Certificate of Registration (RC) within thirty days of his becoming liable to pay tax (starting employment of people).

Professional Tax Employee Registration is a must for all the employers who employ people

with salary or wages of INR.15,000.00 or more. Certificate of Enrollment (EC) is must for obtaining the Certificate of Registration (RC).

Please visit the following URL for more information:

https://pt.kar.nic.in/(S(kw1e2ou3qwbfk0fzo4h4wepu))/Main.aspx

C. Karnataka Shops and Commercial Establishment Act Registration:

Karnataka Shops and Establishment Act registration is mandatory for all shops and commercial establishments in Karnataka, expect those are exempted. New shops or commercial establishments in Bangalore or Karnataka are required to apply for Karnataka Shops and Establishment Act Registration within 30 days of commencing operations. The Shops and Establishment Act Registration must be submitted in the prescribed format to the Labour Inspector of the area concerned.

Registration fees
Number of Employees Fees (INR)
No Employees 300.00
1 to 9 Employees 600.00
10 to 19 Employees 4,000.00
20 to 49 Employees 10,000.00
50 to 99 Employees 20,000.00
100 to 250 Employees 40,000.00
251 to 500 Employees 50,000.00
501 to 1000 Employees 70,000.00
Above 1000 Employees 75,000.00

Exemptions from Registration:

  1. Offices of or under the Central or State Governments or Local Authorities, except commercial undertakings.
  2. Any railway service, water transport service, postal, telegraph or telephone service, any system of public conservancy or sanitation or any industry, business or undertaking which supplies power, light or water to the public.
  3. Railway dining cars.
  4. Establishments for the treatment or care of the sick, infirm, or the mentally unfit.
  5. Establishments of the Food Corporate of India.
  6. Offices of legal practitioners and medical practitioners in which not more than three persons are employed.
  7. Offices of a banking company.
  8. Any person employed in any business from point 1 – 7 above.
  9. Persons occupying positions of management in any establishment.
  10. Persons whose work is inherently intermittent such as drivers, care-takers, watch and ward staff, or canvassers.
  11. Persons directly engaged in preparatory or complementary work, such as, clearing and forwarding clerks responsible for the dispatch of goods.

Please visit the following URL for more information:

http://164.100.133.176/ekarmika/static/home.aspx

  1. Provident Fund Registration (PF):

Employees Provident Fund is a scheme under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. It is regulated by Employees’ Provident Fund Organization.

EPF registration is mandatory for all establishments:

  • which is a factory engaged in any industry having 20 or more employees, and
  • to any other establishment employing 20 or more employees or class of such establishments which the Central Government may, by notification specify in this behalf.

Both employee and employer have to contribute 12% each of basic salary plus dearness allowance.

Please visit the following URL for more information:

https://epfindia.gov.in/site_en/index.php

https://shramsuvidha.gov.in/home

  1. E) Employee State Insurance (ESI) Registration:

The ESI scheme is applicable to all factories and other establishments as defined in the Act with 10 or more persons employed in such establishment and the beneficiaries’ monthly wage does not exceed INR. 21,000.00 are covered under the scheme.

 

          ESI contribution
Particulars %
Employee                 0.75
Employer                 3.25
Total                    4.00

Please visit the following URL for more information:

 https://www.esic.nic.in

https://shramsuvidha.gov.in/home

As of now, we have discussed about, registration of GST, PT, Shop and Establishment, PF and ESI. We may have to go for registration of Trade license, EXIM, NSIC, FSSAI, so on and so forth, based on the nature of business, industry, turnover.

Statutory Compliance requirements: 

Based on the constitution of business, turnover, nature of business and industry, we have to adhere to following compliance requirements:

  1. Companies Act of 1956 and its subsequent amendments.
  2. Income Tax Act of 1956 and its subsequent amendments.
  3. The Limited Liability Partnership Act, 2008.
  4. Goods and Service Tax (GST).
  5. Provident Fund (PF).
  6. Professional Tax (PT).
  7. Employee State Insurance (ESI).
  8. The Karnataka Shops and Commercial Establishments Acts, 1961.
  9. The FEMA Act, 1999.

Techno functional / Socio economic Registrations / set up

  1. Google my business registration:

To have an online presence and to feature on Google map, Google my business registration is necessary. Please visit the following URL:

https://www.google.com/intl/en_in/business/

  1. Social media account set up:

The social media accounts on LinkedIn, Facebook, Twitter, YouTube, Pinterest, Instagram, registration will help to reach the customer / client in most sensible way.

  1. Pitch Deck:

Pitch Deck is a brief presentation about your business, which can be used to attract prospective clients / customers. In common parlance, we can call it as “business profile”. Attractive pitch deck may attract more and more investors, clients / customers.

  1. URL / Website creation:

URL / Website is like online presence as compared to physical address of the business. The great URL / Website is need of the hour as most of the business requirements will fulfill through internet of things.

  1. Online listing:

Online listing is similar to an advertisement, which exists on internet.

  1. Corporate stationeries:

Business seal, common seal, letter head, identity cards are part of corporate stationeries.

  1. Startup India Registration:

Startup India registration will be applicable to LLPs, OPCs, private limited companies and registered firms.

DPIIT-Recognised Startups are eligible for the following benefits:

  1. Intellectual Property Rights benefits.
  2. Relaxation in public procurements norms.
  3. Self-Certification under Labour & Environment laws.
  4. Fund of Funds for Startups.
  5. Faster exit for Startups.
  6. DPIIT-Recognised Startups may apply to IMB for the income tax exemption for first 3 years u/s 80 IAC of Income Tax Act.

Please visit the following URL:

https://www.startupindia.gov.in/

  1. MSME Registration:

Benefits of MSME Registration:

1.Chances of getting government tenders will be more as some are only open to the MSME Industries.

2.Reimbursement of expenses with respect to ISO certification.

3.Higher preference for government licenses and certification.

4.The bank loans will cheaper by 1%.

5.Cost of setting up will be reduced as the rebates, subsidy and concessions will be available.

Please visit the following URL:

https://udyogaadhaar.gov.in/UA/UAM_Registration.aspx 

To conclude, there is no fixed formula as such to be a successful entrepreneur, as long as we are following the best practices ethically and adhering to the rule of the land, rest will follow sooner than later. All the best.

Thank you for your time.

Chinmaya G Hegde

Founder and Partner

Ganashri Advisers India LLP

April 30, 2020

Bangalore

Disclaimer

“This document is issued in the general interest of knowledge transfer purpose and it cannot be construed in any other manner whatsoever.”