How to Open Small Business in India

Small Business Ideas

You can start a small business as either a manufacturing or service unit. According to the Ministry of Micro, Small and Medium Enterprises, a service sector unit that invests in equipment of less than Rs.2 million is considered a small business. A small business is a unit that invests in plant and machinery for less than Rs.5 million. There are many businesses that can be established as small businesses, according to the above definition. Click here for small business ideas that can be started from home. Raksha bandhan 2021 shubh muhurat (panchang ) : mantra rakhi quotes, shayari, gifts for raksha bandhan

When choosing a small business plan to launch, an Entrepreneur should keep these key points in mind:

Market Opportunity

Investment Requirement

Entrepreneurial Experience

Business Objective

Raw Material Requirements

Need for staffing

Business entity

Required Business Licenses


Break-even point

Financial Projections

Business entity

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Because of the ease of compliance, most small businesses in India start as a partnership or proprietorship. The Limited Liability Partnership Act (2008) was introduced by the Government of India to provide limited liability protection and create a registered entity. To provide additional benefits such as limited liability protection, bank financing, business transferability, and easy access to banking finance, small businesses with annual turnovers exceeding Rs.10 lakhs can create a LLP.

Limited Liability Partnerships do not require audits if the annual revenue exceeds Rs.40 lakhs or the capital capital contribution exceeds Rs.25 lakhs. This makes them a great entity for small businesses that have fewer compliance requirements. A private limited company is a registered entity for small businesses that have significant investments in machinery or equipment likely to exceed Rs.25 crores or have an annual turnover exceeding Rs.40 lakhs.

Tax registration

After obtaining the business registration, small businesses may need to obtain various tax registrations depending on the milestones it has reached. These are the major tax registrations required for small businesses and the milestones at which they must obtain them.

PAN Card: This is the first registration that a small business needs to obtain after it has been registered. It is necessary for opening a bank account in India and performing various financial transactions. The Proprietorship Firm’s PAN Card is used. A separate PAN is required for entities such as Partnership Firm, Limited Liability Partnerships, Private Limited Companies, One Person Companies, and others.

TAN Registration: This is required for businesses that are required to deduct tax at the source (also known as TDS). TAN is available for small businesses that are required by law to deduct taxes while paying.

Service tax registration: Any business providing more than Rs.9 Lakhs of taxable services per financial year would need to register for service tax. Once the business’s annual taxable services revenue exceeds Rs.10 million, it must collect and remit service taxes from customers.

VAT Registration: Any business selling goods or products would need to register for VAT. The State Governments control VAT (Value Added Tax). The requirements and processes for VAT registration vary from one state to the next. All businesses that sell goods or products exceeding Rs.5 lakh per year must register for VAT.


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Register your business

A small business can also get tax registrations.

Udyog Aadhaar – The Government introduced Udyog Aadhaar to replace MSME registration in order to simplify the process of registration of small businesses. Small businesses can obtain Udyog Aadhaar registration to be eligible for various Government schemes aimed at small business. You can learn more about online Udyog Aadhaar Registration.

Trademark Registration: A trademark registration can help small businesses protect their identity and invest in advertising. Because of the low cost of advertising through social media channels, such as internet and twitter, small businesses can compete with larger companies. Therefore, it is crucial for every business to register a trademark to protect their brand from potential lawsuits or competitors.

Import Export Code: Businesses involved in import and export of goods from India must have an Import Export Code (or IE Code). IE Code can be used as an optional registration.

ESIC Registration: A small business must register for ESIC registration if it has more than 20 employees. ESIC Registration could be beneficial for small businesses as it will help them hire more effectively and offer better benefits to their employees.

Talk to an IndiaFilings Business Advisor for more information on opening a small business in India.

How to Open Small Business in India

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