“Starting a business is like jumping out of an airplane without a parachute. In mid air, the entrepreneur begins building a parachute and hopes it opens before hitting the ground.” – Rich Dad
In India when we start thinking about starting a business a lot of questions comes in our mind. The basic question that arises is about licensing, formalities and documentation part.
Registration process has forever been a major hassle for entrepreneurs looking to set up their businesses in India. Although India has been ranked 142nd on the ease of doing business index and 158th on Ease of Starting a Business, still we need a lot of reforms in the current policies for the people to start a business easily. The newly introduced INC-29, a five-in-one form introduced by the Ministry of Corporate Affairs in May 2015, will help in improving this ranking. The INC-29 significantly reduces interaction with the government authorities through the clubbing of various forms.
India is a nation with approx 125 crore population and lack of resources. A lot of aspiring businessmen don’t even take the first step because of the bureaucratic problems they face in registration.
India entrepreneurs also lacks the support for starting a business. Government is trying to support the small entrepreneurs with their new vision. On January 16, 2016, the Prime Minister of India, Narendra Modi announced a new initiative called “Start-Up India” initiative, fostering the promotion of entrepreneurship by creating a system that is conducive for start-ups. This initiative was aimed at providing budding entrepreneurs and experienced businessmen an easier access to funding and incubators by offering them an easy-to-use platform that can be downloaded on to any smartphone device.
Now let’s understand about the Business Registration Process in India in a simplified and user friendly language and we will also see why it’s difficult and so much time consuming. Some steps involved and the time taken for each step in mentioned below:
1) Obtaining Director Identification Number(DIN) from MCA – 1 day
2) Obtaining digital signature certificate online – 3 days
3) Reserving a name – 2 days
4) Stamping of company’s document- 1 day
5) Getting certificate of incorporation from MCA – 5 days
6) Making a seal – 1 day
7) Obtaining PAN – 7 days
8) Obtaining a Tax Account Number (TAN) – 7 days
9) Registration at the officeof inspector, shops and establishment act – 2 days
10) Registration for VAT – 12 days
11) Registration for Profession tax – 2 days
12) Registration with employees’ provident fund organisation – 12 days
13) Medical insurance – 9 days
In addition to the above steps, if we add the period for each individual task to be done, a minimum of 2 months are needed to start a new business. The government must take steps to start business easy and reduce the burden of documentation. Starting a business has significant challenges. It would be wise for the future businessmen to focus more on the business and not be distracted with regulations.