Start a Small Business in India

Most small businesses in India are self-financed or launched with funds from family and friends. You will require astute estimates about how much money you will require to launch the business.

Also calculate finances you will require to keep the business afloat till it becomes profitable. Entrepreneurs launching micro, small and medium enterprises can seek funding from

Banks: Check with various banks for start-up capital offers.

Cooperative credit societies: These offer loans for small businesses if you buy their shares.

Community development funds: Focused on welfare of specific communities, they offer small business loans.

Crowd funding: By attracting investment from a group of friends, neighbours, community or the general public in exchange of company stock.

Venture capitalists/ angel investors: These have sprung up in India over the last three years and offer excellent funding opportunities for small, innovative businesses.

Lending rates and other details are prone to vary and depend upon factors including type of venture, projected Return on Investment, risk factors among others.

Decide on your location

Starting a small business in India requires spare at home or a shop, stall, workshop or office. Registering your business with local municipality/ village administration is mandatory under Indian laws.

The civic body or gram panchayat will give permits to operate your business from area under its jurisdiction. Utilities providers ask for municipal/ village panchayat registration before giving electricity and water connections to the premises. It serves as proof of physical address of the business. Taxes levied on businesses in rural areas are lower.

Business registration and legalization

This is a messy, daunting job for every entrepreneur. Registering a business in India can be lengthy and perplexing. Thanks to direct instructions from Prime Minister Narendra Modi, the Ministry of Corporate Affairs now registers new companies within one working day.

All formalities for registering a company can be completed online. Details about documentation required and other FAQs are listed on the ministry’s website. Licenses from various state and Central governments are mandatory when launching a small business.

Get yourself tax registered

Setting up a small business entails you to procure a Permanent Account Number (PAN) and Taxpayers Identification Number (TIN). These are issued by the Income Tax Department. Getting a PAN and TIN number is relatively easy.

You can approach any PAN and TIN service centre authorized by National Securities Depository Ltd, submit completed forms by attaching required documents and paying a nominal fee. PAN and TIN numbers are allotted within 30 working days from date of application.

PAN and TIN numbers are useful when paying taxes to the government every year.

Ministry of Micro, Small and Medium Industries

India’s MSME Ministry is tasked with development of small businesses. Ministry of MSME has offices in capital cities of each 29 Indian states and seven Union Territories. The ministry regulates licensing, rules and regulations for MSMEs.

It develops and launches schemes and programs for entrepreneurial development. Schemes offering funds on soft terms to prospective entrepreneurs are floated regularly by this ministry.

Details about ongoing funding schemes, investment opportunities in various Indian states, training programs and rules, regulations currently in force can be had from Ministry of MSME.

Mudra Bank

On April 8, 2015, Pradhan Mantri Mudra Yojana and Micro Units Development and Refinance Agency Bank were flagged off by Prime Minister Narendra Modi. Getting finance for start-ups, existing small businesses is easier from Mudra Bank.

Street vendors are also eligible for credit under Mudra Bank. Business finance under Mudra Bank schemes can be availed from any Public Sector Bank, cooperative banks and authorized financial institutions.

A good start translates to healthy returns

Having all licenses and permits, proper bank accounts and agreements with suppliers before launch ensures a great start. Recent policies for investors have cut and eliminated red tape to great extent.

Yet bureaucrats accustomed to unhealthy practices tend to pick faults. Reading news related to your business daily. This helps to stay abreast with developments as well as any new regulations that may come into force.

And all the best to start your small business in India..