Guide To Starting A Business in India

Guide to Starting a Business In India
By Companiesinn.com LLP V 2.1

Introduction Indian Economy
The Indian economy is the fourth largest economy of the world on the basis of Purchasing Power
Parity (PPP). It is one of the most attractive destinations for business and investment opportuni-
ties due to huge manpower base, diversified natural resources and strong macro-economic fun-
damentals. Also, the process of economic reforms initiated since 1991 has been providing an in-
vestor-friendly environment through a liberalised policy framework spanning the whole econ-
omy.
Foreign Direct Investment Policy &

Law (FDI)
The law governing Foreign Investment in India
is Foreign Exchange Management Act, 1999
I ndian Economy is grow-
ing over 8% for the last
10 years and it is expected to
maintain this growth rate for
(FEMA) managed by Reserve Bank of India next 20 years
(RBI) (India Central Bank). RBI notifies regula-
tions under FEMA based on the government of
India guidelines and policies.
As per the present policy, majority of sectors

are available for 100% foreign Investment with FDI - Negative List
full repatriation benefits. It means investment
and profit can be taken back out of India. Retail Trading (except single brand
product retailing)
If the sector is opened for foreign investment, Atomic Energy
no government approval etc requires if investor
Lottery Business including Govern-
comply with all rules and regulations.
ment / private lottery, online lotter-
ies, etc.
Gambling and Betting including casi-
nos, etc
Business of chit fund
I n India all most all sec-

tors are open for foreign
investment

Nidhi company
Agricultural or plantation activities,
or
Real estate business, or construction
of farm houses, or
Trading in Transferable Develop-
ment Rights(TDRs)
Investment Vehicles (structures) available in India.
The structures available for business in India are Company, Limited Liability Partnership (LLP),
Partnership and sole proprietorship. However, foreign investment is only allowed in Company
and LLP. A foreign company can also open branch in India
Company
Company form of organization is most common incorporated business structure in India. The
present law governing company formation and administration is Companies Act, 1956. The main
features of a company in India are;
Limited Liability Organization
Basically two types of companies available, Private Limited and Limited
Minimum number of promoters for a private company is two and public company
seven
Number of directors for a private company is two and public company three. It is
mandatory that all directors shall be individuals.
The power of management is with Board of Directors subject to articles of the com-
pany.
Foreign Investment is allowed in this structure under automatic rout (without govern-
ment approval) except some sectors.
Limited Liability Partnership (LLP)

LLP is a body corporate with all features of a company. This is a new business organization with
all the features of US LLC and UK LLP. This is an ideal organization for business as compared to
a company. The law governing LLP in India is Limited Liability Partnership Act, 2008. The main
features and benefits of LLP are
Limited Liability Organization
A LLP can be formed by two people or corporate for doing business.
Minimum two Designated Partners required for forming a LLP
If all partners are corporates, their nominees can be designated partner
Easy to manage subject to LLP agreement
Firm taxation applicable
Less compliance
Branch Office or Liaison Office
Companies registered outside India (Foreign Company) can establish their operations in India
without registering a subsidiary company. The scope of operation of such offices is limited and is
preferred for representative office, sourcing, technical support, market support in India. Compa-
nies from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China need previous approval
of Reserve Bank of India for opening a branch.
Steps for Starting Business in India - Company

A company can be incorporated by two person by subscribing memorandum of association and
articles of associations. After incorporation, a company can apply for tax numbers and open bank
account to do business.
If promoters or investors of a foreign company are foreign nationals or corporates incorporated

outside India, apart from incorporation, the company need comply with foreign investment in
India regulations. Below are the steps involve in incorporation
Pre-requisites for company formation

Minimum two directors (only individuals)
Minimum two promoters
All directors need to take DIN( Directors Identification Number) using copy of passport and
address proof (it is a number generated created by company registrar website after filing
these documents)
Apply and get Digital signature from Indian certifying authorities ( it is for online authentica-
tion of documents filed)
Registered Office Address in India
Process of Incorporation
Apply DIN numbers and file name for the company
Prepare and execute Memorandum and Articles
File these documents and get incorporated
Limited Liability Partnership

LLP is the most tax friendly business structure available foreign nationals. Since, it is taxed like
a partnership firm, profit after tax in the hand of partners are tax free. The saving is around
13%.
Like company, LLP can be formed by two individuals or body corporate (entity) subscribing
to incorporation document.
Pre-requisites for company formation
Approval of Central Government for investing in LLP
Minimum two Partners and Designated Partners (DP) (only individuals as DP)
All DP need to take DPIN( Designated Partner Identification Number) using copy of pass-
port and address proof (it is a number generated created by company registrar website af-
ter filing these documents)
Apply and get Digital signature from Indian certifying authorities ( it is for online authenti-
cation of documents filed)
Registered Office Address in India
Process of Incorporation
Apply DPIN numbers and file name for the LLP
Prepare and execute and File Incorporation document
File Incorporation document
Prepare LLP Agreement and get it executed
File LLP agreement and consent to act as a partner
Regular Compliance and other requirements of a Company or LLP
A. Tax Compliance
1. TDS (Tax deducted at source)

As per tax law, many payments from the company including salary to staff need deduction of tax
from the payments and pay to the government.
Companys or LLPs Responsibility

Deduction of TDS at appropriate rate
Payment to government, every month
File quarterly return and annual return
2. Advance Tax
Every company need to project yearly income and expenses and pay tax every quarter based on
estimate.
3. Yearly Return filing

Every year before September 30th company need to file return with income tax authorities
4. Service tax
Service tax if applicable, company need to collect same and pay to the government every month.
Also, company is required to file return half yearly.
B. Reserve Bank of India filing

Every company having foreign investment need to file return regarding investment and transfer
with RBI before June 30th reporting position of foreign investment in the company.
C. Company law & LLP Law compliance

The compliance requirements of a company incorporated under Companies Act, 1956 are as
given below.
1. Board Meeting and minutes every quarter

2. Annual General Meeting and minutes once in every year
3. Filing Annual Return and Balance Sheet with Registrar
Apart from above, company need event based compliance. This may be for issue of new shares,
appointment of directors etc.
Company law compliance
The compliance requirements of a company incorporated under Companies Act, 1956 are as
given below.
1. Board Meeting and minutes every quarter

2. Annual General Meeting and minutes once in every year
3. Filing Annual Return and Balance Sheet with Registrar
Apart from above, company need event based compliance. This may be for issue of new shares,
appointment of directors etc.
LLP Law compliance

Like company LLP also company with LLP law and other regulations . It is mandatory for a LLP
to file annual return before 30th May and accounts before October. The benefit of LLP is, it is not
required to hold board meetings unless LLP agreement provide for the same.
Labour Law
1. Provident Fund (PF)

Applicable to companies employing 20 or more staff
The First Step for Employer is to maintain a salary register for the purpose of PF compliance
For PF monthly compliance, the Employer is to calculate PF Employee/Employer Cont. State-

ment based below mentioned rate
2. Payroll
Every company need to prepare payroll of all employees working in the company.
3. Professional Tax
This is deduction from staff salary and payable to government. Responsibility is with company or
LLP for deduction and payment.
4. Shops and Establishment

A business shop or office should be registered under the relevant laws of local state. If the com-
pany has multiple offices, all the offices should be registered under this category.
Why choose Companiesinn.com to form your
Company/LLP?
CompaniesInn.com through its dedicated professionals have over 10 years of experience in
business setup services and incorporation consulting. We have advised over 5000 companies
and LLPs in the last 3 years in the setting up of their businesses. Our vast experience in the le-
gal domain coupled with the effective use of information technology ensures the timely deliv-
ery of service, with high professional standards and at an affordable price. This new method of
Company/ LLP incorporation evolved by our research team helps an ordinary investor navi-
gate easily through the various steps required by law.The following factors contribute to our
excellent and highly acclaimed incorporation and compliance services.
Experienced team:
Our experienced team have the expertise to handle any assignment for setting up a Company/
LLP in India. This includes incorporation of a new enterprise or converting an existing business
(i.e. sole proprietorship, partnership etc) into a Company/ LLP.
Low cost:
CompaniesInn business setup services are priced attractively to meet the requirements of both
emerging and established entrepreneurs. Use of standardised processes and information tech-
nology enables us to provide the service at competitive costs, often at 1/4th the rates charged by
other CA/ Law firms. Moreover our prices are pre-defined with no hidden charges. The online
price calculator allows you to get itemised service charges including the standard Government
fees.
All services available under one roof:
To comply with the various laws governing business establishments in India, a Company or
LLP needs to apply for PAN and TAN Numbers (Income Tax Dept), Shops/ Establishment Reg-
istration (Dept of Labour), Service Tax (Central Excise Dept), VAT (State Commercial Tax Dept)
etc depending on the nature of its activity. We can help you file for all these certificates so that
you can focus your time and energies on operating the business which otherwise might be ill
spent in follow ups with various Government departments.
Continued support:
Our associate firm CN Partners Consultants LLP has experience in corporate law compliance
and will ensure timely compliance of your Company/ LLPs legal requirements at an affordable
price.
Tax compliance and accounting services:
Our sister concern CN Business Solutions LLP, is a book keeping and tax law compliance firm.
This firm can help you maintain your Company/ LLPs accounts and file the various returns as
required under law at an affordable charge.
HelpDesk
Running a business as company or LLP need professional held and advise, to cater this we
have our helpdesk for all our clients. After incorporation, you can call any time during business
hours for any help or assistance.
CompaniesInn.com LLP
# 48, 2nd Block |100Ft Road | Opp. Kendriya Sadan | Koramangala | Bangalore560 034
(91) 80 3025 5900, 99009 98111
E-mail : gigi@companiesinn.com
www.companiesinn.com

Guide To Starting A Business in India

Uploaded by

Copyright:

Available Formats

Guide To Starting A Business in India

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Guide To Starting A Business in India

Uploaded by

Copyright:

Available Formats

Guide to Starting a Business In India

By Companiesinn.com LLP V 2.1

Foreign Direct Investment Policy &

As per the present policy, majority of sectors

I n India all most all sec-

Limited Liability Organization

Basically two types of companies available, Private Limited and Limited

Limited Liability Partnership (LLP)

A LLP can be formed by two people or corporate for doing business.

Minimum two Designated Partners required for forming a LLP

If all partners are corporates, their nominees can be designated partner

Easy to manage subject to LLP agreement

Firm taxation applicable

Steps for Starting Business in India - Company

If promoters or investors of a foreign company are foreign nationals or corporates incorporated

Pre-requisites for company formation

Limited Liability Partnership

Prepare and execute and File Incorporation document

File Incorporation document

Prepare LLP Agreement and get it executed

File LLP agreement and consent to act as a partner

Regular Compliance and other requirements of a Company or LLP

1. TDS (Tax deducted at source)

Companys or LLPs Responsibility

3. Yearly Return filing

B. Reserve Bank of India filing

C. Company law & LLP Law compliance

1. Board Meeting and minutes every quarter

1. Board Meeting and minutes every quarter

LLP Law compliance

1. Provident Fund (PF)

For PF monthly compliance, the Employer is to calculate PF Employee/Employer Cont. State-

4. Shops and Establishment

You might also like