You want to start the business? Here is a detailed step by step approach which is useful for startup.
Step-1: Choose your entity type
There are several ways in which business can be started.
1. Sole proprietorship
A single person owns the business. All the risks, profits/losses will be bearded by himself. Registration process is simple here. Decision making can be taken instant. However handling the business alone is not an easy one. Self-confidence factors relevance to move further.
2. Partnership firm
Here more than one person will form the business. The advantage is you will always have a support either in taking risks, providing finance, decision making and share in losses, Operating partnership firm is simple with an additional documentation to cover the partners.
3. Private limited Company
It is a structured way of doing business. If the business involves considerable investment in people or plant & machinery, then it is a safest way. Some business needs to be started as a private company on a mandatory basis depending upon business model, outside investments. It is preferred whenever bigger investments are there. The liability are divided between all the stake holders.
4. Limited liability partnership
It consists of reduced liabilities compared with private limited company as name contains. Personal liabilities will not be liable on closure or insolvency of the business. Hence it facilitates freedom of taking risks for business men. Registration needs to be at with ROC.
Similarly One person Company, Cooperative society, Trust
Step-2: Business identity:
It involves how the people look yourself. Set an identity by naming the company, logo, trademark registration, website and email is a vital requirement for doing business.
Step-3: Finance requirement
Funding can be from personal savings or loans or venture capital funding. One has to open current account to start operating the business and it is mandatory for receiving and paying funds on behalf of entity.
Step-4: Registration Requirements
In India to start a business there are lots of licenses and registrations applicable and which needs to be complied from central, state and local authorities. So one has to analyses the list of licenses or registration applicable to the entity prior to start of the business in a smooth manner.
For example: Trade license should be obtained from the local authorities prior to startup of business and similarly GST registration is required subject to exceptions and if it is a private company ROC formalities are must etc.
Step-5: Set a business plan
A well prepared business plan can save time and money in long run and there will be clarity in what needs to be done. It is advisable to surround yourself with trusted and reliable advisers who can help you with start-up issues and help you in business development.
Step-6: Set up your accounting system
Once you have your bank account set up, choose an accounting program. Start as you intend to go. Set an accounts team with good amount of experience to handle the accounts and finance.
The points discussed above are the basic elements in starting a business, which one has to take care before proceeding to start a business.