Diversification of your business operations from America to India holds much promise in view of the economic growth of India and the widening marketplace. Navigating through the intricacies of registering your new business in India, though, requires an effective grasp of legal, fiscal, and bureaucratic needs. The present article is a step-by-step process of guiding you toward setting up your business in India.
1. Acquaint Yourself with Available Business Structures
India offers various business structures, each with its own legal implications and benefits. Choosing a proper structure is important as it affects taxation, liability, and compliance.
- Private Limited Company (Pvt Ltd): Suitable for companies that require limited liability protection and easy capital raising. It requires a minimum of two directors and two members.
- Limited Liability Partnership (LLP): Provides the advantage of a company and a partnership with the advantage of limited liability to partners. An LLP requires two partners.
- Branch Office: Foreign companies can maintain an office in India without registering a different entity. This comes under RBI approval.
- Liaison Office: Functions as an intermediary between the Indian entities and the parent company but is not permitted to engage in commercial activities.
2. Adhere to Foreign Direct Investment (FDI) Rules
It is necessary for foreign businessmen to be aware of India’s FDI policy. Although 100% FDI is permitted in the majority of sectors under the automatic route (no prior sanction), some sectors are prohibited or under government approval. It is necessary to follow the most recent FDI guidelines to remain in compliance.
3. Maintain a Resident Director
Indian law requires at least one director who is based in India in each company. He is a link between the company and Indian laws and regulations, and is an interface with the Indian government.
4. Procure Digital Signature Certificates (DSC) and Director Identification Numbers (DIN)
Electronic transactions form part of company registration in India. Directors need to apply for a DSC for digital signature and a DIN as a unique director identification number.
5. Reserve a Unique Company Name
It is required to select a distinctive company name to prevent duplicity and ambiguity. The name suggested can be reserved by the Ministry of Corporate Affairs (MCA) website under the Reserve Unique Name (RUN) feature.
6. Draw and File Incorporation Documents
Incorporation comprises the preparation of required documents:
- Memorandum of Association (MoA): Establishes the object of the company and its extent.
- Articles of Association (AoA): Describes rules and regulations which govern the inner functioning of the firm.
They, along with the other back-up forms, are filed at the MCA via the Simplified Proforma for Incorporating Company Electronically (SPICe) platform.
7. Get Permanent Account Number (PAN) and Tax Account Number (TAN)
A PAN is required for taxation purposes, and a TAN is required for deduction and payment of tax at source. Both can be accessed online from the relevant websites.
8. Open a Bank Account in the Company’s Name
With the Certificate of Incorporation, hold a bank account in the company’s name. The account will be utilized for all financial transactions and is compulsory for infusion of capital.
9. Goods and Services Tax (GST) Registration
In case the turnover of the firm exceeds the threshold in any year, GST registration is required. It allows the firm to collect and pay GST on the goods and services supplied.
10. Post-Incorporation Compliance
Indian law compliances need to be ensured at all times. Some of the most significant post-incorporation compliances are:
- Appointment of an Auditor: Within 30 days from the date of incorporation.
- Filing Annual Returns: Periodic filing of the accounts and the returns with the MCA.
- Conducting Board Meetings: As per the frequency as directed, to discuss and record the issues of the company.
Taking Professional Advice
It can be challenging to go through the complexities of business setup in India while remaining in the US. Professional assistance from professionals with experience in setting up a cross-border business makes it simple. Quartis Consulting LLP, having its office in New Delhi, provides door-to-door support to assist foreign entrepreneurs in setting up their business in India. Their services, like global business incorporation, compliance management, and financial planning, make it a cakewalk to enter the Indian market.
Conclusion
Venturing into the Indian market from the US is a strategic step that can reap rich dividends. If you carefully go through the steps provided and use the services of experts, you can sail through the intricacies of new business registration in India and start a successful venture in one of the most vibrant markets of the world.
