Powai is the next “start up valley”. With a number of start-ups coming up from Powai I would like to list down a few registrations you would need at the start of your venture.
There are various entity forms you could start your business with-:
A sole proprietor – This is the simplest and most common form with least government regulations. Where the single owner shows business income in his/her own income tax return. Momprenuers prefer this form where business individually handled and at a small scale.
Partnership and LLP – It’s a separate legal entity, where two or more people come together to do business. A partnership deed is preferably registered under the Partnership Act 1932. LLP or limited liability partnership is a partnership where partners not liable for other partners. These forms are generally accepted by professional like Lawyers or Chartered accountants.
Company – A Private Limited Company, where the ownership comes with ownership of shares of the company. A minimum of two directors are required for registration. This form is generally accepted by entrepreneurs to get funding from investors.
I have discussed below some basic registrations you will require -:
- Permanent Account No. (PAN) – A number we are all familiar with, It is required to be submitted on a number of transactions, the most basic being opening a bank account. It is provided by the Income tax authorities.
- Sole proprietor requires PAN in his/her name
- Partnership/ LLP requires PAN in the name of partners and partnership and LLP
- PVT. Ltd Company requires PAN for the company and its directors
- Professional Tax No.- (PTAX) All professionals, traders and employers require a P tax no. from the Department of sales tax. An entity will require two numbers 1. PTEC – For entity 2. PTRC-: For employees. The amount payable yearly is Rs 2500/- for each PTEC no. and Rs.2500/- for each employee.
- Shop and establishment -: Every person having a shop or a commercial establishment needs to obtain a shop and establishment licence from the municipal corporation.
- Tax deduction and collection account no-TAN No. –or. given by the Income tax authorities authorises you to deduct tax of others when required.
- Sole proprietor must obtain the TAN no. when the reported sales proceeds cross 1 cr or reported professional income crosses 25 lakhs
- Partnership requires a TAN
- Company must obtain a TAN
- Service Tax-: When a person is in the business of providing taxable services it must obtain a service tax No. when the reported sales are RS 10 Lakhs and above. While dealing with other corporates you might be asked to provide a Service tax no. even if you have not crossed the limit. This is levied by the central government.
- Value added tax or VAT -: This Is to be taken by any person who buys or sells goods for earning commission, remuneration or otherwise. Government has provided a list of goods that attract tax. There are different rates for different goods. This is state specific and handled by the department of sales tax. However there are limits for the same. For an importer (brings goods outside the state)where the Sales are above Rs 100,000 with taxable sales above Rs 10,000 and for other Rs 10,00,000 with taxable sales above Rs 10,000.
- Central Sales Tax-: Any person buying or selling goods from/to outside the state of Maharashtra must get registered with the department of sales, Maharashtra. It is levied by both central government and the State Government. Here also there are goods which do not attract tax.
- Registration of a company-: A company needs to get registered with the registrar of companies ( ROC) with minimum two directors. While registering you will need to provide the companies authorised share capital (maximum capital that can be issued ) broken up as number of shares and value per share. Apart from other required documents one would be required to submit the company’s Article of Association( enlisting the purpose and duties of members) and Memorandum of Articles ( legal document defining its relationship with shareholders) with the ROC.
- Director identification no.( DIN)- Just after registering the company one needs to get the DIN No. of all the directors. Along with the digital signature of each director.
- Employee Provident Fund Organisation (EPFO) and Employee state insurance corporation (ESIC). Any person employing 10 or more employees must get registered with ESIC. Any person employing 20 or more employees must get registered with EPFO .Employers and employees contribution must be deposited with the authorities regularly.
Since the exact nature of each business is different the requirements also differ. I have tried to put down the requirements of some broad business types in the table below-:
|Registrations||E commerce – goods||Software services||Manpower Services|
|TAN NO.||Yes if Co. or if above limit||Yes if Co. or if above limit||Yes if Co. or if above limit|
|Shop and establishment||Yes||Yes||Yes|
|PF & ESIC||Yes if above limit||Yes if above limit||Yes if above limit|
|Service Tax||No||Yes if above limit||Yes if poviding services and above limit|
|VAT||Yes if above limit||Yes If selling rights of products||Yes if buying and selling goods and above limit|
|Central Sales Tax||Yes if buying or selling outside maharashtra||No||Yes if buying or selling goods outside Maharashtra|