What to know to setup a new firm

Setting up a new firm

Checklist to keep in mind while setting up a new business/start-up:

1.     Make sure you have a properly drafted business plan – This is extremely important since after a while you would need to go back to basics and look back at what it was that you wanted to do as a firm, what is your company fundamental and why did you start off the business in the first place.

a.     A raw plan with a lot of detail is anyday better than a strong idea with no detail.

b.     A business plan has components describing the whole answers to what, why, where, when and how of the business.

2.     Registering a company – Initially the whole setup of the company and registering the firm with the legalities of the system gets over whelming for the majority of people. Let me give you some pointers from my own experience on where you could water-down your company registration:

a.     Start off your firm with just a name, and that can be done by defining yourself as a partnership firm (if there are multiple people as founding partners) or as a sole proprietorship (for a single owner firm), since these 2 do not require a lot of money to start off and can be done by any rotary person.

b.     An initial setup does not require a brand name and any company name that you want to identify as can be used as per the partnership agreement and a bank account can be setup using that.

c.     Further the registration process takes a long time to happen so as soon as you agree with each other, you can apply for a registration of the firm, while doing business practice in the meanwhile as an un-registered firm.

3.     PAN card – As soon as you draft your legal partnership/proprietorship agreement, you can apply for a PAN card in the name of the firm. This is a simple process and the form for this can be applied online even on the basis of your un-registered partnership agreement.

4.     Opening a bank account – You can open a current account on the firm’s name on the basis of the agreement made as well as the PAN card application receipt (or you can wait for the final PAN number to be allotted since that does not take much time either!) and share the PAN number with the bank later on when you get allotted a number.

5.     GST number – GST has become the need of the hour and any firm that you want to deal with would like to know your GST number for tax purposes, so do make sure to apply for the GST number when you are ready with the previous points.

a.     Also note that, you do not need GST number if your annual income is less than Rs. 2.5 lakhs, since that is the non-taxable bracket of income tax.

These are the basic requirements for any individual or group of individuals to start their business. My suggestion would be to not spend money on CA or accounting firms initially and start with your business plan and when you do get to earn the money later on in your business careers, restructure the firm as required (as a private limited or a LLP), which can continue on the same name as the original agreement named firm.

Some other good practices:

1. Setup a website and online presence across social media like Facebook, twitter, LinkedIn and Instagram.
2. Any promotion is good promotion, so do try to contact related firms and industry guys to follow and promote your website and social media profiles.
3. Always have a good story behind why you are starting the business that you are starting. People rarely buy into products, especially in this day and age where every single product out there is a repeat of existing products. In order to stand out, tell your audience why you are selling something, they need to have a reason to invest in you rather than your competition.
4. Do not create a business to kill off another business. Despite what you think, the final consumers or your product or service do not care how good your offering is, but do care about an existing business and have a reason to be associated with them.

All the best. Feel free to hit me back with any comments, queries/doubts or suggestions.

I am a first generation entrepreneur myself, and just wanted to help with the initial difficulties we faced (getting CA bills of upto Rs 75k just for setting up the firm!).