Are you planning to start a new business? Everyone wants to do business but it is not that easy to Set up a business in India. First of all, you need to decide which type of entity to form, then You need to take various registrations, you need to comply with various laws and regulations, you need to take decision on sources and utilization of funds. Here is guide on “How to set up new business in India?”
Type of Entity
For starting a business, first of all you need to choose “Type of Entity” for your business. There are various kinds of entities like Proprietorship Firm, Partnership Firm, Limited Liability Partnership, Private Limited Company, One Person Company, Public Limited Company, Trust and etc. Considering your business idea, type of industry, future plan and other things, you need to choose one from these forms. Every form of entity has own advantages and disadvantages.
Sources of Fund
Money is said to be lifeline of business. For running every business, you need funds. Basically, every business requires two type of funds namely fixed capital and working capital. Fixed capital is the amount which you require for purchasing assets, giving deposits and incorporation expenses. Working capital is the amount which is required for running day to day business activities of organization. There are various sources of funds like own fund, loan from kins and relatives, Bank Loan like CC / OD / Term Loan, Seed Funding, Angel Investment, Deposit from Public etc.
Registration required
India Stands at 63rd Position in the world for Ease of doing business ranking. There are various Registrations and Licenses which you need to take before starting business. The different kind of registrations are GST Registration, Permanent Account number, Tax Deduction Account Number, Professional Tax Registration, Provident Fund Registration, Employee State Insurance Registration, Factories Act Registration, Food Safety License (in case of food industry), Shop and Establishment Act License, ISO Certification, Import Export Code, Trademark Registration, MSME License and many other licenses as applicable to particular industry.
Compliance
After getting registration, various laws are to be complied and different returns are to be filed with government. For example, GST Returns filing is to be done every month or Quarter, TDS return filing is to be filed every quarter, Income tax return is to be filed every year, Advance Income tax is to be paid within due date of payment, Provident Fund and Employee State Insurance returns are to be filed every month, various compliances are required to be done under Companies Act and Limited Liability Partnership Act etc. Furthermore, many of these licenses are to be renewed yearly or at regular interval of some definite time period.
Setting up Internal controls
Internal controls are the processes designed to provide assurance that operations are running smoothly without disruptions, financial statement give reliable report and all applicable laws are complied with. Examples of internal controls are defining Standard operating procedures, segregation of duties, setting up reporting channel and reviewing policies. Internal controls are implemented manually as well as with the help of technology.
Book Keeping and Accounting
Accounting is said to be backbone of every business. Accounting and Book Keeping service is the process of recording financial transactions, summarizing, analyzing, and reporting these transactions to business owners. The various reports prepared are Trading and Profit & loss Statement, Balance Sheet, Cash flow statement, Age-wise debtors’ analysis, Cost report, Break even point sales report, Ratio analysis, Segment reports etc. These reports give insights of financial position of Business.
Internal Audit
Internal audit is an independent, objective assurance and consulting activity to evaluate and improve the effectiveness of risk management, control, and governance processes. Internal audit covers checking of effectiveness of internal controls, checking accounting process of organization, checking all legal compliances, performing physical verification, checking inventory management and reviewing transaction pocessing system.
Investment Decision
Everyone knows that the best way to make money is to let your money work for you. A business man needs to pay great attention to whether to re-invest profit in business or to invest in some other things. The other investment options are Fixed Deposits, Shares and Securities, Mutual Funds, Properties, Liquid Funds etc. One need to select balanced portfolio for investment.
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