Home > GST Home > GST Help Center > Guide on New BusinessLast Updated: Jan 15th 2020

Starting a new Business in India? Step by Step Guide

Starting a new Business in India require a thorough strategy, planning, and execution. Often times, one may need to get more than one registration and/or licensing before starting a business. It's an effort to bring all aspects in starting a new business. Get to know through a Step by Step guide on Planning, Registrations, Licensing requirements, GST, Income Tax, ROC, MCA and other Compliance needs.

Starting a new Business in India? - Steps

To compare different business types and it's compliance levels, check Compare different Business Types in India


A. Select the 'Type of Business / Entity' you have or you are planning to have to see the relevant steps.


1. Business Planning


When you have an idea to start a Business, it's important to understand which industry sector your business belong to, such as Agriculture, Commerce, Construction, Education, Financial, Food, Health, Hotels, Technology etc. Also the type of business that is specific to an industry, eg. Food > Restaurant and a description of what, how you deliver you produce or render services to your customers.

This information is often needed for registering your business, communicating with your customers.

Business due-diligence is the process of checking every detail to make sure owner of the business understands the feasibility, typical challenges, risks, rewards when starting one.
Business Case is to be developed at the beginning of any business however short or long, but should consider describing a business modal, competition, risks, rewards, funding requirement, break-even period, resources needed to sustain initial phase of the business etc.

Unless it is a proprietor-based business, it is important to identify the partner, promoter, directors up front to kick start the business with confidence. Its certainly not an easy process for 1st time entrepreneurs but a much-needed effort.

Due consideration to be given when choosing a partner on the value one is bringing to the business success than the emotional connect. One need to think 2-3 year down the road in imagining working together.

Funding for the resources needed to establish, run, and sustain are essential to any business before starting one. Typically, this need to considered at the time of business case itself. Typical SME (Small, Medium Enterprise) Funding is secured thorough one's own resources or from Friends & Families, few may get Loans.

If the business needs a secured or unsecured loan, one need to prepare a Project Report with the financial projections for 3-5 years based on the amount of Loan. The same project report may (based on the amount) need to be duly signed by a tax professional before the submission to the Bank authorities.

For the last few years (from 2018), Government of India has started many initiatives to get small, medium loans at an attractive interest rates from all major banks. Several Schemes such as Mudra Loan provide financing up to Rs. 10 Lakhs.

Many corporate banks, giving loans with minimum documentation up to Rs. 50 Lakhs without much security, if you have an existing business etc.

Refer EZTax.in Money to get the resources you need to get a Personal loan.

For Firm, GST, and Company registrations, information related Personal PAN, Aadhaar, Addresses for all involved in Business as partners, directors is needed. If one of the directors of the company is a foreigner or NRI, the documentation need to be notarised locally in their resident countries. Check with Team EZTax.in in case of any specific questions in this area.

Identify Office Space or Shop space to run the business. There was a wrong perception that a non-residential office space is a must in starting a new business. There are certain types of businesses, and/or professions that can start at the comfort of your own home.

A Rental agreement is rented or a Sale Deed if owned, are required during the entity registration.

For Labour License, Firm Registration, and Private Limited Company registration, it is mandatory to have either Rental Agreement on the business name or Sale Deed to provide evidence that you are conducting said business at a particular location for the purpose of the business.
Get No Objection Certificate (NOC) to use premises for your Business if one of the director or partner own such premises. Sometimes, it is not required but in certain jurisdictions, officers may ask to upload or attach NOC.
Current or previous month Electricity Bill is mandatory for GST registration for the Office Space or Business Location. Collect and use when necessary.


2. Registration


Obtain Director Identification Number (DIN) for every director who is part of a private limited company registration.

Consult EZTax.in Customer Service for more information.

DSC (Digital Signature Certificate) are mandatory for all the Directors involved in private limited company registration, and is used to upload and sign the IT, ROC Returns at the end of the Year. Also used for Director KYC and other processes.
Choose a Business name for your Partnership Firm that is unique, representing your business or choice. This is the name to be used in all the tax invoices, bills and other documents to transact during your business.

Reserve the Business / Company Name Online for your Private Limited Company that is unique, representing your business or choice. Care to be taken in choosing Company Name, particularly for limited companies. Provide 3 business names of your choices in priority tyo EZTax.in Customer Service to incorporate a company.

This is the name to be used in all the tax invoices, bills, and other documents to transact during your business, unless you have a trade name that is different from your company name.

Complete the Partnership registration through a Service Provider such as EZTax.in

Typical documents required for such are Business Name, nature of the business, PAN, Aadhaar, Passport size photos, email ids, mobile numbers of the Partners, Business Address, Electricity Bill, Rental agreement or Sale Deed, NOC (in some cases), profit sharing ratio of the partners.

Sign the Company Documents when the initial preparation is over and your CS from EZTax.in requested your directors to sign. Check additional procedure for Foreign, NRI Directors

Once all the process is complete, and government fees are paid, your business get the Certificate of Incorporation. Typically, it would take 15 business days to get this received.

Get the Company Stamp and Director Stamp to use in case of issuing the Export / Import Tax Invoices, Bidding, other company related matters.

At times, it is mandatory to get Shop License through 'Register with the Office of Inspector, Shops and Establishment Act (State / Municipal)' in addition to Firm, Company registration

Get Food License Certificate for Restaurants, food outlets and other facilities that prepare food for consumption.

It's mandatory to get PSARA License for Security Agencies that provide security to apartment, office complexes to operate within a legal framework, are accountable to a regulatory mechanism defined by the Govt of India.

It is required to get RBI License for certain type of businesses that involve in Gold Loans, Chit Funds, Financing Businesses. Check with EZTax.in Team as this if often complicated due to various company violations in this space.

GST (Goods & Service Tax) registration is mandatory if business revenue is / expected to cross 40L (20L for Services) , and 20L is the limit for specific states North-Eastern states of India.

Even after more than an year of GST implementation, much confusion exist for SMEs whether to take GST registration or not. Check with Team EZTax.in for additional information or refer Guide on GST Basics

Generally, PF registration is mandatory for all businesses with 20 or more employees. Check with Team EZTax.in for additional information.
Register with Employees' Provident Fund Organization (National) if the business is planning to have more than 20 employees or more. Its not mandatory to register with EPFO. Refer Employee Provident Fund (EPF) Explained for more information on the EPF requirement, contributions, workings, benefits & interest that the business may need to explain to their employees and the withdrawal eligibility etc.
Register for Medical Insurance(MI) with any private Insurance company to provide such for the employees of the business. But its not mandatory to have such from get to. Refer EZTax.in > Money > Insurance for various resources to understand the health insurance and the choices you can make for your employees.


3. Post Registration


Open a Current Account from any of the nationalised or commercial banks to suit your business needs. You may need to check the minimum balance, digital banking features, branch location, and other aspects before considering a bank current account.

Today, its highly recommended to have every business listed on the internet through either directory services, having your own Web Site to showcase Products, and/or Services, Contact information, along with Unique Selling Proposition (USP).
While it depends on the type of Business, it could be an Office, Shop, or manufacturing facility to function your business. Office Setup including Space, Seating, Safety, Security, Employee Log Book, Visitor Sign-in Book, Internet, Computers, and basic marketing material.

SMEs do often need to have unique identity of their own beyond a name such as a logo representing your brand, short slogan, colour scheme to brand. Every Office or business premises must have a name board a the least.

Once you have your branding ready, design and print Visitor Cards to share with your clientele to visit again and/or to have them share with others.

One of the hardest part in any business is to get the rightly skilled resources to execute the business. For SMEs, while various channels do exist in getting the recruitment done, its important to have founder, owner to have a balanced view, suitability for the business setting.

Business Marketing for SMEs are primarily depending on the business vision, and scale that is expected. While Local business often focused on the local market, with the accessibility of the internet in the hands of most people, one need to plan both strategic, and targeted marketing approaches.

Strategic Channels: For B2B, bulk leads, business affiliations. A business may find a right balance through various routes, such as Partnerships, co-creation, content marketing, HR connect, Media Outreach.

Targeted Channels: For B2C, Brand, Organic. A business may find a further balance through SEO, Internet visual ads, Internet search ads, email campaigns, social media, social groups, and platforms. If focused on local business needs, one would also consider physical advertisements such as billboards etc.

There is nothing more joyful than start selling the products and services in any business. Tasting the 1st sale in any SME Business is an unforgettable moment. As SME, the resources are limited and often become constraints to launch many initiatives, it is important to have laser edge focus on what to be sold and how.

SMEs unless they have greater vision, often times forget the fact there is hidden brand in what they sell. We recommend to have one think upfront on the intellectual property and branding needs. Typically, most important activities in this area are 1. Trademarks 2. Copyrights 3. Patents

  1. Trademarks: are suitable for most of the businesses who would like to register to make them unique and own, so that the capital built over the time will fetch much in the longer run. Trademarks useful in identifying your business and carry history associated with that brand. You may register either 'Wordmark' (such as 'EZTax') or 'Symbol' (such as eztax logo)
  2. Copyrights: are similar to trademark but used to register a unique book, content that a business or a person own.
  3. Patents : are to register any unique method, design and or process. While this is a long process, as an SME, if you feel it's unique and will enable your USP and to restrict your competition not to copy or use, it's important to start the process immediately.

In general, whether Trademarks, Copyrights, and / or Patents, the processing time vary from 6 months to 2 years and a thorough follow-up is required to make sure a business can protect their intellectual property. During the course of approvals, competition may approach courts to block you to get the rights, which need to be discussed with your layer or attorney who is working on your cases to make sure that you paid attention and planned for it.




4. While Running your Business


As there are many components part of a typical salary, one need to pay attention in defining right salary structure that includes many possible allowances such as taxable (such as DA), exempt under specified limits ( such as HRA, entertainment allowance, transportation allowance etc.), and fully exempted allowance( such as Foreign allowance etc.).

If the total salary is less than the exemption limit (Rs. 2,50,000), many SMEs would consider a lump-sum monthly salary, as these employees do not generally go thru TDS and Tax Filing requirements.

As the Software became cheap and enhances the productivity of any organization and in particular to SMEs, it is important to understand what software an SME may need.

Typical Software include Point of Sale (POS) Software and Hardware, GST Accounting Software such as 'EZTax.in Books', Customer Relationship Management Software, Word processing software such as Microsoft Office 365, a Business eMail, a Chat Software that a business would integrate with their website and an Online blog software to express business views, updates on the Internet, further towards, Google, Bing Ads related content software etc.

Request a Point-of-Sale Machine from your Banking Vendor such as ICICI for payment processing & Billing. The Payments collected would be deposited in your current account generally with in T+2 working days and the bank would charge you between 0.5-2.5% as service charge in facilitating the machine and related processing.

These days, it is better to align with your bank than a commercial payment gateway solution, as the costs are high and not in favour of a business.

Unless a Business depends on just few customers, it is important to have necessary tools in capturing the information related to your customers to make informed decisions.

One could start with an excel spreadsheet but often in no time would require migrating to a commercially available cloud offerings.

EZTax.in Books software would facilitate some form of customer management through customer master and contact master in capturing the business-related information.

Similar to customer management, for certain type of business the product / service sourcing is coming from various vendors, suppliers, contractors, service providers and the processes such as Requisitions, Purchase Order requisitions, estimates, quality documents, and communication need to be captured.

EZTax.in Books software would facilitate some form of supplier management through supplier master, PO process, Google Drive integration to capture supplier invoicing, and contact master in capturing the business-related information.

For Traders, Shops, Distributors, it is very important to have proper inventory management and a reconciliation, adjustment processes in the Accounting Software. This will give a business owner the peace he/she rightly deserve.

Product Master in EZTax.in Books Software will do this easily, including but not limited to stock adjustments, valuation, daily pick list reporting etc.




5. Monthly Compliance


Inventory Audit is greatly beneficial if someone wants to get accurate information about the inventory. Inventory audit can be done at regular intervals depending on the size of business. Inventory Audit is beneficial for claiming Stock Valuation.

Daily, weekly or Monthly Statements gives you the instant insights about the sales, purchases, expenses, and other transactions done by the business.

Download and Save statements related to Payments, Sales, Purchase Transactions, eCommerce Transactions and save them in your Computer and or a network drive to refer them in future.

GST Filing is mandatory for every business registered under GST. Every person registered under regular scheme should file GSTR 3B and GSTR 1 and the persons registered under composition should file GSTR 4

With EZTax.in Books Online Accounting Software, every business can manage their business from invoicing to returns, and file GSTR 3B , GSTR 1 and GSTR 4 (for Composition Business) easily by uploading JSON file to GST Portal.

Salaries to Employees should be paid as per the company policy at prescribed time periods. Similarly, Contractor, Consultant Fees to be released based on the agreed schedules after due consideration to TDS deductions.

TDS should be deducted on prescribed payments and deducted TDS should be paid to the government within the due dates. Late Payment of TDS attracts interest and penalty. Paid TDS Challans should be saved for Filing Returns and Income tax purpose.




6. Quarterly Compliance


TDS return is a quarterly statement to be given to the Income Tax Department. It is mandatory for the persons who has deducted TDS to submit the TDS returns on time. Delay in filing of TDS returns attract penalty and interest. Generally, TDS should be deducted on payments of Salaries, interest, professional fee, contractors, commission etc.

Note: TDS deduction and filing is different from Income Tax Filing. Often get confused by the 1st time entrepreneurs. Refer more @ TDS Home Page and refer FAQs

With EZTax.in, businesses can file TDS return with ease through Online TDS Filings @ EZTax.in and in case you need guidance do not hesitate to call @ EZTax.in Support Phone



7. Annual Compliance


GST Audit refers to the examination of records, returns and other documents filed by registered person. It includes the verification of ITC availed, ITC utilized, Turnover declared and assessment of your compliance. There are 3 types of audit under GST.

  1. Turnover based Audit: If the taxpayer turnover exceeds Rs 2 crores, then GST Audit is required to be done
  2. Audit by Tax Authority: An audit will be conducted by Commissioner /Authorized GST officers
  3. Special Audit: Special Audit will be conducted by CA as per the instructions given by GST officer.

Every business needs to file Annual return under GST. Annual returns can be filed in form GSTR 9, 9A and 9C.

  • GSTR 9: Every Taxpayer registered under GST Regular scheme should file GSTR 9 annually
  • GSTR 9A: Every Taxpayer registered under GST Composition scheme should file GSTR 9A annually
  • GSTR 9C: GSTR 9C is a reconciliation statement of taxpayers between the Annual returns in GSTR 9 and Audited Financial statements of the taxpayer. Only required whose turnover exceeds certain limit.

The Income Tax law requires the taxpayer to get the audit of the accounts of his business/profession if the turnover exceeds the prescribed limits. The purpose of the tax audit is to ensure that the books of accounts and other records are properly maintained, and it reflects the true and fair view of the Income, expenses, profit/loss

Income Tax Filing (IT) is mandatory for the person whose gross income exceeds Rs. 2,50,000 in the preceding financial year. All Companies, Firms, LLP’s and Trusts are required to file Income Tax return irrespective of the turnover. The due date for filing Income Tax returns without audit is July 31st* and with audit is September 30th* every year.

With EZTax.in, every individual can file Income return Online or request Expert Assisted Tax Filing through EZTax.in Online ITR Filing or Speak to EZTax.in Support Team

Any person who has been allotted Director Identification Number (DIN) and whose DIN status is approved should file director KYC. If the director KYC is not done in due date, the DIN will get deactivated. The deactivated DIN will be activated only upon payment of Rs 5000 penalty.

INC-22A is a KYC form for companies. The objective of MCA is to detect the shell companies and update information of all active companies. Every company incorporated on or before 31st December 2017 should file INC 22A within due date. The company will be marked as ACTIVE-noncompliant if INC-22A is not filed in due date.

Every Company (Private limited / OPC / Public limited) should conduct board meetings at regular intervals. The board reviews the past performance of the company, establishes the policies for corporate management, and oversight, making decisions on major company issues.

Board Meetings agenda further may include adjustment of shares, capital, and other required changes.

Individuals are required to register in Ministry of Corporate Affairs (MCA) website (mca.gov.in) for accessing services of MCA (one time effort). Typical services from the SME perspective are to upload board meeting minutes, forms related to eKYC, INC, IT audit forms, and to process payments such as fees, penalties etc. There are 2 types of users in MCA.

  1. A registered user has access to the basic services of MCA.
  2. A business user has access to certain specific functionalities in addition to basic services.

Every company is required to file annual accounts and returns with Registrar of Companies within the prescribed time limits. AOC 4 should be filed within 30 days of AGM, and MGT 7 should be filed within 60 days of AGM. ROC Compliance is required once in a year.

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