Small businesses are the spine of the Indian Economy. The Ease of Doing Business (EODB) in India is notably getting better and according to a new report from the World Bank, India ranks 63rd out of 190 countries and has moved up by 14 spots this year.
With the change in time and requirement there are series of reforms that are emerging and making it easier to obtain construction permits, trade around the world and pay taxes for the companies and small firms. Among the top 10 most improved economies, India is one of them and is increasing its pace in the business field.
Business Model that a Small Business Can Pick
Due to the recent reforms and Government’s MSME schemes, the ease of doing business is expanding and with the increase in competition many new small firms are opening up in the market. Thus, there are few business models that can opt for a small business as has been given below:
- Sole proprietorship
Brief on Registration Procedure for Small business as Sole Proprietorship
Sole Proprietorship is a business run by one person. The sole responsibility of decision making and administration of the whole business is on that single person. Therefore, the registrations required for a sole proprietorship are given below, which are as follows:-
Registering as SME
It will be best for the small business firm to get it registered under the MSME Act as a Small and Medium Enterprise (SME). As the government offers various schemes and provides loans with concessional interest rate so it will be beneficial to register as an SME and the application for the same can be filed electronically.
Shop and Establishment Act License
According to the local laws this license is required to be obtained but it is not mandatory at every place. This license is issued by the municipal corporation on the basis of the employees count.
If the annual turnover is more than Rs. 40 lakhs (Rs 20 lakhs for North Eastern – All hilly states) the person can get the GST registration. Also, while doing online business the person is required to obtain a GST number.
The following documents are mandatory for small business-
- PAN card, Aadhaar Card, photo and contact details of the proprietor
- Business place proof (rent agreement or electricity bill)
- Copy of the bank statement (for verification of account number, IFSC code and address.
Read our article:An Analysis on What is a Partnership Firm and How to Register It!
Brief on Registration Procedure for Small Business as Partnership
A partnership is where two or more people come together to form a business and divide the profits. The registration process in the partnership business is on the discretion of partners but it is highly recommended to register so as to avail registration benefits.
The partners are required to submit the signed application form to the Registrar of firms of the state together with the fees. The compulsory documents required for the same is:-
- Form 1 application for partnership registration.
- Affidavit specimen
- Partnership Deed certified original copy
- Principal place business proof like rent agreement or ownership documents
After the registrar gets satisfied with the submitted documents he shall register the partnership firm in the Register of Firms and shall issue the Registration Certificate.
Brief on Registration Procedure for Small Business As Company
In India, registration of a company is now an easy step process. The given below are the mandatory things to acquire:-
- Digital Signature Certificate(DSC)
- Spice+ Part A Form
- Spice+ Part B Form
- AGILE Pro
- Incorporation Certificate
The mandatory documents required are:-
- Aadhaar Cards, PAN cards and other contact details of the proposed directors of the company
- Passport-size photographs for all the directors
- In DIR-2 form, the consent to manage as a director together with the DIN details.
- Form INC-9 – a declaration by subscribers and directors.
- Subscribers and Directors Application for obtaining Digital Signature Certificate (DSC)
- Furthermore, the proof of the registered office address of the company like evidence of a sale deed or registered title document in the name of the company.
- In case of a rented office- the Non Objection Certificate from the owner as a proof to show the use of the property as a registered office address.
- In additional, a copy of the resolution of the board or any formal authorization for the use of trademark or company name or
- Draft for Memorandum of Association (MoA) and the Articles of Association (AoA) and Certificate of Incorporation
Brief on Registration procedure for Small Business as MSME
The small business firms can register themselves based on Aadhaar number only. In addition, now the small business firms are no longer obligated to upload documents and certificates for online registration. It will be sufficient if the applicants provide these details with a self-declaration.
“Udyam Registration” is the name of the new form of registration and only after the successful integration of the process of registration with GST and Income Tax it is made possible. Furthermore, the self-declaration details will be duly confirmed by the authorities based on GSTIN and PAN.
The registration of MSMEs can be done in the following two categories as has been given below –
- For New Entrepreneurs
- For those already having registration as EM-II or UAM and
For those with registration as EM-II or UAM by Assisted filing
The important documents necessary for the registration process:-
- Aadhar card number
- Name, PAN number, other contact details of the applicant.
- PAN and address of the business.
- Account number of bank and IFSC code
- NIC 2 digit code
- Investment in plant and machinery equipment
- MoA and AoA
- The Copy of Purchase Bill and Sales Bill
Registration of small business firm is voluntary and not compulsory. But the registration of the small business firm can yield various legal benefits. It will be easy for the business person to take any legal action against anyone infringing the rights and violating the policies of the firm.
There are several benefits under the Acts and Government policies for the registered firms. Few of the named benefits like ISO-9000 reimbursement certification, scheme for credit guarantee, tax laws exemption, less custom duty, priority sector lending , power tariff and capital subsidies, etc.
The registration of small business firm is done under the State Directorate or Commissioner of the Industries or District Industries Centres which is done by taking into consideration the product and location of the small business firm.
Benefits of Registering Small Business Firm in India
The common benefit for every business model including sole proprietorship, partnership, company, MSME shall on registering with small business firm are given below:-
Small business firms are the reason of the growth in GDP and development in the socio-economic condition of our country. According to the report of MSME there are more than 36 million small businesses presently in India that are generating employment to more than 80 million persons.
The Government of India appreciates the remarkable contribution made by these small businesses and also supports them by coming up with various subsidy schemes and different initiatives. Therefore, small business firms should be expanded to promote ease of business in India.
Read our article:Procedure & Reasons for Change in Partnership Deed