Setting up a new company/business involves various exercises including planning business model, arranging initial funding, designing and many more. Once these aspects are taken care of, another most important step required to bring a company’s name into existence legally in the market is by registering it. This is one such aspect that budding entrepreneurs who excel significanly in their fields face hurdles in. So now, we’re trying to make their job a bit easier by providing a little insight on the procedure of registering a company in India. Read on…
Apply for Director Identification Number (DIN)
Apply for a Director Identification Number (DIN) online through Ministry of Corporate Affairs (MCA) website (http://www.mca.gov.in/MCA21/Din.html). You will be assigned a provisional DIN immediately. Then you must print the application form and send the signed form to Ministry of Corporate Affairs for approval along with the proof of identity and address through post/courier.
Get a Digital Signature Certificate (DSC)
Obtain a Digital Signature Certificate (DSC) from one of the private agencies that is authorized by the Ministry of Corporate Affairs. The application has to be submitted by the company director along with his proof of identity and address proof.
Get your Company Name Approved
Apply for the approval of the desired company name with the Registrar of Companies. Before applying for approval, make sure that the desired name is available. This can be done on the Ministry of Corporate Affairs website. You may suggest a maximum of 6 names among which one name which has no/least similarities with any company registered with Ministry of Corporate Affairs is approved for you.
Get the Company Documents Stamped
Once your company name is approved, you need to get the company documents stamped by the State Treasure or an authorized bank. For this, unsigned copies of Memorandum of Association (document that governs the relationship between the company and the outside and contains how much capital you want to raise and related aspects), Articles of Association (document which defines the functioning of the company, responsibilities of the directors, kind of business etc.,) and payment receipts have to be submitted with the stamping request.
Obtain the Certificate of Incorporation
The next step is to get the Certificate of Incorporation from the Registrar of Companies, Ministry of Corporate Affairs by applying online at MCA website by filling the prescribed forms along with required documents and signed & stamped copies of Memorandum of Association and Articles of Association.
Once you get the Certificate of Incorporation, your company is free to start its operations.
Apply for a Permanent Account Number (PAN)
Once you have the Certificate of Incorporation, apply for a PAN online on NSDL website (https://tin.tin.nsdl.com/pan/newpan.html) or through PAN Centers authorized by Income Tax Department. (if you do not have one already)
Apply for Tax Deduction Account Number (TAN)
Apply for a TAN online on NSDL website (https://www.tin-nsdl.com/tan/form49b.php) or through TIN Facilitation Centers authorized by Income Tax Department.
Register for all or which of the following applicable for your business
Office of Inspector, Shops, and Establishment Act or local City Corporation
Register your company and obtain a license to operate from the local City Corporation or the Office of Inspector, Shops, and Establishment Act whichever is applicable. The process varies from state to state and city to city.
Value Added Tax (VAT)
Check whether your business comes under VAT and if it does, then register for VAT with your state’s Commercial Taxes department.
Every company employing people should register for Professional tax with the Professional Tax department of the state.
Employees’ Provident Fund Organization (EPFO)
Any company employing 20 or more people must register with the EPFO and obtain the EPFO registration certificate.
Employees’ State Insurance Corporation (ESIC)
A company employing 20 people having salary below Rs. 10,000 per month has to register with the ESIC for medical insurance purposes provided with the assistance of the government.
Now that you are aware of the process for registering a company, here are some important rules regarding the funding requirements and also some sources to get the required funds for you to run the show.
Minimum Paid-up Capital
The minimum paid-up capital at the time of registering/incorporating a Private Limited Company is Rs. 1,00,000. But for a Limited Liability Partnership (LLP) company there is no minimum paid-up capital required.
Sources of Funds
The most sought after source of fund for a new business is bank loans. If you’ve the right business plan with a clear revenue model and income forecasts, you might easily get a bank loan. Other sources include issuing equity shares, your personal savings, borrowings from friends and relatives, financial grants from the government, advance payments from the customers, Venture Capitalists – who invest in new and promising start-ups etc. And for equipments, lease financing is very helpful as you do not need to invest a huge amount at once on the equipments and machinery.
Though setting up a new business is a very enthusiastic and rewarding exercise, it has many risks associated with it too. College pass-outs and budding entrepreneurs need to be informed, well-researched and should have thorough knowledge of the nature of business they want to get into, its competition and the market conditions before taking the plunge. Seek professional help, attend entrepreneurial workshops, have a successful entrepreneur as your mentor and learn the intricacies and nuances of doing a business before getting into one.
And finally, we wish you the very best with your business and hope to see your business flourish. Don’t forget to share your success story with us..!!