Is it mandatory to register a company before starting a business in India? The answer is no!
Registering a company is not the only way to start a business in India. There are many other ways to start your business in India, but people are not familiar with.
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The simplest way to start your own business is to acquire any tax license, like service tax registration. Here are four steps that need to be followed to start your own business in India:
Now, here are five reasons why you should not register your company to start your business in India.
Let us compare the cost incurred to run a private limited company and the service way.
*We have assumed the least possible cost for company. The figures may increase depending upon the revenue numbers
Apart from the cost difference above, there are 25 percent of people who also strike off the company as they are not able to run their business freely.
Also, in the year 2015-16, more than two lakh people have chosen the service tax way to start their business in India.
Here are few restrictions that you are supposed to comply failing which might end up you in trouble:
These are just few restrictions. There are a number of transactions that are under lens of the law. However, when you start your business simply with tax registration, there is no law restriction. You are free to do anything!
The compliance burden on entrepreneurs is so high that they tend to waste a lot of time into legal troubles. Further, the heavy penalties on disobey of any provision only makes things worst.
Sometimes, government does introduce some schemes under which a company gets dissolved easily. However, those schemes are not permanent and then you have to follow the worst and the longest procedure to strike off your company.
There is no point wasting time, money, and energy on something which is not worthy of it. Hence, one should start a business as a proprietor in the beginning and then gradually upgrade it to a full fledge company.
We have explained to you the advantages of starting as a proprietor. Be like a lean startup and gradually evolve your business. We recommend registering for service tax first and then you built your business and gradually upgrade yourself to a fully fledged company.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory)