Have a great business idea in mind

Have a great business idea in mind

Have a great business idea in mind? Here’s what you need to know to give it shape

People are usually driven by the prospect of starting something of their own, being their boss, and calling the shots. As attractive as this idea sounds, starting a business is not a simple task. Apart from the passion, finance, and space requirements, there are several legal aspects that one needs to know before diving into something like this.

 

What are the first steps when starting a business?

When bringing an idea to fruition, the first thing is to know the rules and regulations necessary for the smooth functioning of the business. Thus, before embarking on any entrepreneurial venture, one needs to formalize the business. The individual will need to decide whether they wish to start it as a sole proprietorship, private limited, public limited, limited liability partnership, and so on.

 

Based on the type of business, some additional legal requirements and regulations will need to be understood. For instance, business owners need to register a Limited Liability Company (LLP) with the Ministry of Corporate Affairs, Proprietorships do not need formal registrations. Similarly, proprietorships and partnerships have unlimited liability when it comes to members while LLP’s have limited member liability to the extent of contribution towards the LLP.

 

Once the difference between each is understood, and the legal implications of opting for one as opposed to the other are clearly defined, deciding which category one wants to fall into will be much easier.

 

What kinds of licenses need to be obtained?

The next important step is applying for a business license. As this is an essential part of the process, one needs to do a good amount of studying to understand which licenses pertain to their enterprise. India has different licenses for different businesses and enterprises based on the nature of the business. While this may be a little confusing, it is an important aspect to look into as not having a license can have legal repercussions or may even lead to lawsuits.

Shop and Establishment Act: One license that all establishments need is the Shop and Establishment Act, which is required by all companies dealing in trade or business. Aimed at regulating different factors about the business and ensuring the general health of employees, this license is obtained from the concerned state authority.

 

FSSAI: For a food business, the Food Safety and Standards Authority of Indian (FSSAI) License is a must. To ensure standardization in quality across the nation, this body was brought into the picture. Whether the individual is starting a small food outlet, a kiosk, a restaurant, or manufacturing food-related products, an FSSAI licence is mandatory. Under this, based on the scale of the business, individuals will further have to choose between obtaining the FSSAI Central License, FSSAI State License, and FSSAI State Registration. Much like all licences, the entity should remember to get through the process and get an FSSAI renewal in time to make sure that they can continue running their business.

 

In Haryana, as in other parts of India, food businesses having a turnover of fewer than 12 lakhs can opt for the State Registration and need not go in for an FSSAI license. However, when their turnover crosses the 12 lakh limit, they need to upgrade to the state license. Thus, every industry or unit involved in the food business from preparation to handling, distributing, and selling to the customer through a mess or canteen needs to ensure they have the desired license. That becomes a clear indicator of maintaining the required standards of quality. It also assures that the food items are not hazardous or toxic to a customer’s health. There are several documents needed when applying for this license, so it is best to check the online portal for guidance.

 

Udyam Registration: Small businesses or MSMEs, as they are more popularly known, should consider obtaining an Udyam Registration. Very often, people get confused between the Udyog Aadhar Registration and the Udyam Registration. The MSME or Udyam Registration aims to simplify and streamline the registration process of micro, small and medium enterprises. The process is entirely paperless and can be done very easily. All ventures that fall under the small and medium-scale would need to register themselves on the Udyam Registration Portal to obtain the manifold benefits that can then assist in starting up the enterprise.

 

There are several other licenses that individuals may need to look at based on the nature of the business from Health Trade License to Service Tax Registration, VAT Registration, and so on.

Why is there a need for a keen understanding of taxation laws?

If you start your enterprise, knowing about the different taxes that your business might attract is important. For instance, the ‘Start-up India’ initiative by the Indian Government provides many tax exemptions to upcoming start-ups to give them an initial boost. However, they need to fulfill several conditions to avail themselves of these benefits. Without possessing knowledge about such initiatives, individuals could very well find themselves struggling unnecessarily during the initial years of the venture.

 

Another important factor to learn about is whether the business venture falls under the state tax, local tax, or central tax. To make sure everything is in place in terms of finances, having one’s books in order helps make the process smoother. Many entrepreneurs just starting to tend to push their accounting aside during their initial years, however, this is found to be

counter-productive. Thus, it is advisable to have a learned person handling your books right from the start so that there are no discrepancies that later surface.

 

Getting an FSSAI licence can be quite challenging for companies who are trying to get through the process in the metros because the fees are slightly higher. Getting a food licence in Delhi, like in most other parts of the country is a lot easier now because the processes have been moved to the internet and they can be done with ease, and at your convenience.

 

Do you need to be familiar with labor laws?

Finally, when venturing out and starting something of your own, if you are planning on having employees, you should ensure that the company follows the labor laws. Whether it is about work hours, minimum wages, benefits, holidays, etc., knowing what laws have to be complied with and what are the added benefits that can be offered to employees would be a good way to start.

 

Thus, starting a business of one’s own may not be a difficult process, but it does require forethought, a considerable amount of research, and proper planning right from the start. Once an individual knows exactly what rules and regulations pertain to their business, the execution will automatically become infinitely simpler.