India is riding the start-up wave. The government of India recently announced that start-ups in the country have grown to 72,993 in 2022 from a mere 471 in 2016.
If you’re someone who has a business idea but doesn’t know the process to start a company in India, you’ve come to the right place. This blog will tell you everything you need to know about how to start a new business in India.
How to start a business in India
Starting a business may seem like a herculean task but do not fret! Here are the steps you should follow to know how to start a new business in India.
- Decide your choice of business
The first step in how to start a new business in India is to decide on the kind of business you want to start. Ask yourself questions like,
- What is my business idea?
- What is the unique selling proposition (USP) of my business idea?
- Is there a demand for my business idea?
- What is my competition in the market?
You might have a clear vision of what your business should work like, but asking yourself these questions will help you foresee obstacles and prepare for them.
This also entails having a business plan in place. A projected statement of accounts, annual profits, and market analysis are all part of a strong business plan. As you start preparing these, you will get a good idea of what you can improve about your business proposition.
This is still a nascent stage in the grand scheme of things, so making any changes at this stage won’t have any far-reaching repercussions. Further down the line, modifying your business plan, which essentially works as a foundation for your work, could mean layoffs, extra funding, or even monetary loss.
- Work out your funding
An important part of the process of starting a company in India is deciding your capital and source of funds. Especially during the gestation period. This is a crucial period when your business would be set up before showcasing results. Any miscalculation at this stage could bring the whole show to a standstill.
A tip we can give you is to calculate your TAM or total addressable market. It is the amount of revenue your business could generate if it gains 100% market share. The benefits of calculating your TAM are twofold.
Firstly, it helps you understand the effort and funding required for your business to succeed, guiding you toward specific verticals you should concentrate on.
Secondly, when you pitch your business to investors, your TAM would hold you in good stead as it provides a deep dive into the financial health as well as the potential of your business. Investors appreciate quick and reliable information for their decision-making.
- Register your business
The next step in how to start a new business in India is to register your business. This involves choosing the type of business entity you want your business to be. If you plan on keeping your business small, then a sole proprietorship or a limited liability partnership (LLP) would be suitable. But if you visualize it being a larger operation, registering it as a private limited company (Pvt Ltd) would be ideal.
Earlier, this would have been a gruelling, time-consuming process. But with the new government policy, this has become much easier. You can visit the website of the Ministry of Corporate Affairs to get the details regarding documentation and procedure.
- Tax Registration
You must get your business tax registered next. Depending on the type of business operation, different taxes can be levied. Here we have some common categories that you must know about.
- TAN Registration
This is a 10-digit alpha-numeric number issued by the Tax department. It is a legal requirement for any entity with annual revenue of Rs 20 Lakhs. The amount may vary in different states.
- ESI Registration
This is under the employee state insurance scheme introduced by the government. In case your business has employees, it must be registered for this as well. It aims to provide social and health security to workers employed in the private sector.
- GST Registration
This is the goods and services tax. Under the Goods and Services Act, 2017, any business entity with annual revenue of 40 Lakhs and above must be registered for GST. This may vary from state to state as well.
Registering your business is an essential point when understanding how to start a business in India. Failure to do so could invite legal action.
- Get started!
The last step is how to start a new business in India is what every entrepreneur eagerly awaits. It’s when you get your hands dirty and start building your business.
If your business calls for a physical shop, this step would involve renting or buying real estate, setting up the infrastructure required, and hiring the necessary personnel.
On the other hand, if you plan to start a business online, then building a website, acquiring a domain name, etc would be important to get the business running.
But, we do advise that even if you don’t have an online business, it should have an internet presence nonetheless. This helps the business get attention and credibility. This, consequently, gets you more customers. So, make sure that your business details like contacts, location, goods, and services offered are all available online.
Not knowing how to start a new business in India might have made your dream seem too difficult to achieve. But by following these steps, running your own business someday is made a lot easier. And you don’t have to do it alone.
We at Tata Capital will walk this journey with you. Right from planting the seed of your idea to seeing it soar into a booming business. We do this by offering business loans at attractive interest rates. Visit our website to apply for a loan today!