The First Steps to doing Business in India

Summary

This video script outlines the process of setting up a business entity in India, detailing various types of entities such as proprietorship, partnership, LLP, private limited company, one-person company, registered society, trust, and Hindu Undivided Family. It emphasizes the importance of choosing the right entity based on business size and requirements. The script further explains the need for registrations like excise, service tax, and VAT, depending on the nature of the business and turnover, and provides guidance on where to find more information.

Takeaways

• 🏢 To start a business in India, one must first choose the type of business entity based on the scale and requirements.
• 👤 Proprietorship is a simple business entity suitable for small-scale startups with a single owner and requires only a PAN number and a bank account.
• 🤝 A partnership firm requires at least two members and involves creating a notarized partnership deed.
• 🔗 Limited Liability Partnership (LLP) is a partnership with legal standing where partners' liability is limited to their investments, governed by the LLP Act 2008.
• 🏢 Private Limited Company is a more complex entity suitable for businesses with significant capital and efforts, governed by the Companies Act 2013.
• 👤 One Person Company allows a single individual to act as both shareholder and director, introduced by the Companies Act 2013.
• 🏛️ A registered Society is managed by a governing body and is registered under the Societies Registration Act 1867.
• 💼 Trusts involve transferring ownership for the benefit of another person and are governed by a Board of Trustees, registered under the Indian Trusts Act 1882.
• 👨‍👩‍👧‍👦 Hindu Undivided Family (HUF) is a business entity governed by Hindu law, consisting of linear descendants from a common ancestor.
• 💼 After choosing the business entity, one must identify the nature of the business, such as manufacturing, merchant, or service provider, each with specific registration requirements.

Q & A

What are the different types of business entities that can be established in India?

In India, various types of business entities can be established including Proprietorship, Partnership, Limited Liability Partnership (LLP), Private Limited Company, One Person Company, Registered Society, Trust, and Hindu Undivided Family (HUF).

What is the minimum number of members required to start a Partnership business in India?

At least 2 members are required to start a Partnership business in India.

What is the legal framework governing Limited Liability Partnerships (LLP) in India?

LLPs in India are governed by the provisions of the LLP Act 2008.

What is the significance of a Private Limited Company in terms of legal status?

A Private Limited Company is a separate legal entity from its directors and owners, and it is governed by the provisions of the Companies Act 2013.

What is the main difference between a One Person Company and a Private Limited Company?

A One Person Company requires only one person who can be both the shareholder and the director, whereas a Private Limited Company requires at least two directors and two shareholders.

What is the role of a Registered Society in India?

A Registered Society in India is managed by a governing body and is registered under the Societies Registration Act 1867. It is unsuitable for commercial purposes and is informed by the Registrar of Societies.

How does a Trust function in the context of business entities in India?

A Trust enables the transfer of ownership from one person to another for the benefit of a third person. It is governed by a Board of Trustees and private trusts are registered under the Indian Trusts Act 1882.

What is the role of a Hindu Undivided Family (HUF) in business?

A Hindu Undivided Family (HUF) consists of persons linearly descended from a common ancestor and is governed by the provisions of Hindu law. A business entity can be registered as an HUF.

What are the different types of businesses that can be conducted by a registered entity in India?

The types of businesses that can be conducted include manufacturing, merchant activities, and service provision.

What is the necessity of VAT registration for businesses in India?

VAT registration is mandatory for businesses trading or manufacturing goods in India if their turnover exceeds a certain threshold, which varies by state.

What additional registrations might be required for a manufacturing business in India?

For manufacturing businesses, additional registrations such as Central Excise, VAT, industrial license, Pollution Control, and fire safety might be applicable depending on the nature and type of manufacturing activities.