About Me

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Mumbai, India
I run an IT Security consulting firm based out of India. We started off from scratch in 2001 when I was 21, and have offices in Mumbai, Bahrain, and UAE. The idea behind the blog is to share the stories of how we run the business, the deals we make, the deals that break, the heartburn, and the sheer joy.

The Ultimate Startup Guide

The Ultimate Startup Guide is an e-book that provides answers to all your questions related to starting and growing a business in India. Everything you wanted to know about entrepreneurship in India from ideation to registration to marketing to hiring. The book contains a large number of practical examples, anecdotes, interviews, and motivational material to help you get started, and to grow rapidly in a booming Indian economy. If you've got the idea, this book will help you through with the execution and realize your dreams. Here are some of the key questions you will find answered in this book:
  • When starting a business, what are the legal issues involved?
  • What form of incorporation is better suited to which type of business?
  • What tax issues are involved?
  • How do I start a business and what are the pitfalls?
  • How do I market my business in the absence of significant funding?
  • How do I get funded?
  • What are the basic accounting concepts I should be aware of?
  • What is a business plan and how should I build one?
The brief table of contents of the book is as follows:
  1. Getting started
  2. Ideation
  3. Forms of Enterprises
  4. Funding
  5. Basic Accounting and Taxation
  6. Import and Export Licensing
  7. Trademark and Patenting
  8. Rules for NRIs and Foreigners
  9. Building a Business Plan
  10. Marketing on a Shoestring
  11. Website and Branding
  12. Women Entrepreneurs
  13. Templates
To order the Ultimate Startup Guide - email me at kkmookhey@gmail.com.

Details of the book are:
Title: The Ultimate Startup Guide
Author: Kanwal Mookhey
Pages: 150
Additional: Companion CD contains numerous templates for building your business plan, calculating cashflow, preparing profit and loss, and balance sheets, preparing invoices, your resume and profile, marketing material, websites, contracts, and many other useful and motivational material.

Monday, April 24, 2006

Starting your own business in India

So you want to start your own business. Well that's excellent, but instead of having to learn the hard way, what route is best, here are some pointers:

1. Proprietorship. If you are starting a one-person, self-employment kind of thing, then you're better of starting a proprietorship firm. This is usually for enterprises like digital artists, consultants, trainers, etc. Even if you're a work-from-home Mom, it's always a good idea to run your enterprise under a proprietorship account. My Mom does. :) That way, you can put in a lot of your daily expenses and reduce your tax burden. I started out this way, and eventually converted the proprietorship into a private limited company. If you run your proprietorship firm from a location other than your home, you'll also need clearances from the Municipality and local authorities. Also, you can't run a full-fledged commercial establishment from out of your residence. So if you start to grow well, move into a reasonably good commercial area.

2. Private Limited company. This is a more complicated option, but has a number of advantages. The complications arise from the need to comply with various regulations and laws. For instance, I got trumped once, when we realised we had to not only file our income tax returns with the IT department, but also with the Registrar of Companies (RoC). The fines for not doing this are pretty steep. So for the moment, we've decided to simply go ahead and continue not filing returns with the RoC, and hope they come up with some sort of an amnesty scheme. For a Private Limited company, you need:
a. Startup capital - I think the minimum is Rs. 2 lakhs, and that's what I started off with
b. Registered office - I had given my home address, although our office was elsewhere
c. Name of the company - you need to fill up the form with suggested names and go to the RoC. Avoid generic names, or you'll have to end up adding words like (India) or (Mumbai) to your name. Makes it kludgy. You also need justifications for why you chose that name.
d. Directors - I think you need at least 3 directors. I have my Dad and sibling registered as directors, and they have an equity holding in the company as well. When your company becomes successful, you can pay them a salary, thus increasing your expenses, reducing tax, and getting the money back into your own account. Needless to say, paying them a salary means increasing their tax liability, so you need to balance it all out.

For all this, you'll need to hire the services of a good Company Secretary, who will fill up the necessary forms for you, prepare the Articles of Association and Memoranda of Association, and do the rounds of the necessary departments to register your firm. Remember, keep this as generic as possible. More information on this is available at the ICSI site.

3. Partnership firm: I think this option is open to lawyers, CA's and such-like. I never explored this option, and can't provide much inputs. But you'll probably know someone else who's in a partnership firm, and can advise you on the legalities and advantages of it.

In any of these situations, a good Chartered Accountant is a must. When you're starting out, the fees you pay to the CA might seem very high, but a good CA will save you tons of money in the long run by reducing your taxes, and showing you the best way to increase your expenses.

Don't forget to register for service tax. A very wide range of services now come under the ST net.

86 comments:

Bernard Leong said...

Hi there,

We have started one on "Starting a business in Singapore", and we have linked your article in our latest blog entry today (12 May). Check it out later.

Anonymous said...

Hi,

I too wanted to start of a Consulting firm. I am planning to continue working in the current firm and on the parallel front carry on the activities of my own firm. To what extent is it possible. My concern is how leaglly is it possible to start of a Proprietorship or Private Limited company when you are already working in one.

Cheers
Lubhit Singhvi

Anonymous said...

Hellooo,

I too wanted to start of a Consulting firm though I am getting some international projects. But still, I am planning to continue working in the current firm and on the parallel front carry on this activity of my own firm. To what extent is it possible. My concern is how leaglly is it possible to start of a Proprietorship or Private Limited company when you are already working in one. I can manage my time and so work load is not a concern.

Kanwal K Mookhey said...

Lubhit: While your idea is good to start your own enterprise while still at your company, I am pretty sure that your current company's employee contract specifically prohibits you from having your own business or earning any side-income.

Do check your contract on this one.

Nakul Mehra said...

Speaking of working side-by-side along with an existing job where your contract does specify that you cannot engage in any other economic sctivity -
there is and always will be a Loop-Hole.
You need not declare that you are economically benefitting from the 'side' activity and instead you are 'consultant' or 'freelanceer' diong it for your C.V or experience rather than money.
But guys if you want to get on top there, nothing can take you faster and better than your own baby...not someone else's baby - you're bbysitting!

Cheers!

Anonymous said...

To my opinion, the easiest way to start your own business is starting a franchise. Franchise business doesn't need so many efforts as your own business, but still you don not work for someone else and earn your money by yourself.

Anonymous said...

I think that if we are talking here about LLC, we need to show up limited liability advantages and disadvantages to stay objective.

Edouard said...

Hi! I'm Edouard, I was working in bollywood last Year and I'm now back to France... I've got a project to build a Production company between France and Mumbaï, I hope somebody could help me about the condition of legacy for the foreign company or for foreigners who want to build an indian company.

Anonymous said...

Hello

There are many complications when you wish to start the business in some other country like India. You have to undergo the registration process, which is previously mentioned by Registrar of Companies (ROC), or work in accordance to the rules that are mentioned by various Acts of Indian Law. You can find more details on the resource section of Pitchindia (http://www.pitchindia.com)

Anonymous said...

Hi,
I would appreciate if somebody could provide me with info on how to go about a new idea.
It's something like a kids' store which I would like to register and in future hope to franchise it out.

Kanwal K Mookhey said...

aa: You need to register a few trademarks, including the name of your franchise and its tagline. You could also patent your store layout, I think, though not sure. For this, contact your local trademark registration office. You could even do it online here: http://ipindia.nic.in/

Chandrashekhar said...

Hi,

I have a web & other designing services business which has its own separate name and is basically being run as a sole proprietorship. Can you please tell me if service tax is applicable in India for this category of business? Also, are there any other taxes applicable apart from service and income tax?

Kanwal K Mookhey said...

Chandrashekhar: you will need to register for service tax only if your turnover from Indian clients exceeds Rs. 8 lakhs per annum. And yes, service tax is applicable. Please read my blog post on service tax for full details.

CA Ashish Ahuja said...

Very useful article. You are very articulate in writing article

Regards,

CA Ashish Ahuja
Indian Chartered Accountants New Delhi India

Avinash said...

Hi Everyone, need some help there..my wife plan to start a sole proprietorship firm for property consultancy. I want to know what exactly is the process here. Do we need to get the name registered somewhere? Also, I am told we need a current account...what all does it require to open the current account? Do we need a proof of company...would be great if anyone can guide me.
Rgds

Kanwal K Mookhey said...

Hi Avinash, you will need to open up a bank account in order to accept payments in the name of the sole prop firm. Ask your bank what documents they need. Sometimes just a letter requesting them to open up a bank account on a letterhead of the prop. firm's name will do. You will also need to get a rubber stamp made. In Mumbai you need to get a BMC Shops & Establishment Act registration done. There are touts that will do it for you in about Rs. 6,000. Or you could do it yourself by inquiring with your local BMC office. If you have this, then your bank account can also be very easily opened up, and you're all set...

CA Ashish Ahuja said...

For any clarification on setting up business in India or Delhi feel free to contact the undersigned

Anonymous said...

Hello,

Thanks for the info. I've been searching long time for the info on how to register my business. I've subscribed to your blog as well. Keep posting..

Kishor V.R. said...

Your blog is the simplest and the best blog about starting and running a business that there is. At least I know what it takes to take your business off the ground in the simplest of ways. Thank you.

Lakshmi said...

I plan to start up a sole-proprietorship concern. Can you please tell me if I need to have a name board outside my address for such concerns? I live in a university campus and am not allowed to put name boards.
Thank you for the informative post, and in advance for your clarification.

Harshang Shah said...

KK your blogs very inspiring. My wife is planning to start a business from home in the service industry for which i wanted to know what all should i do for a propritorship business E.g do I need to open a seperate bank account or the income can come in her account? Does the name of the company have to be registered ? I file my wifves individual incometax but now will i have to file incometax seperately also ?

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Unknown said...

Interesting article, it is definitely difficult to get your business off the ground. If you want, feel free to check out Franchise Expo, they can be found here. franchise Thank you again for submitting your article!

Science & Spiritualism said...

Hi Intrepid,
I want to start my own online retail business on the lines of Flipkart in Delhi. I have a PAN No. & a savings bank a/c in SBI but with the addresses of Jharkhand, my home state. As of now i am working in a small media agency and living in a rented accomodation in Delhi. So what are the formalities that need to be completed and how can i start my business from my rented accomodation in delhi. Do i also need a VAT or service tax reg.?

Will be very grateful to you if you could help me in this.

thanks & best regards,

Unknown said...

just linked this article on my Facebook account. it’s a very interesting article for all.
How to Start a Company in India

Kamini Prajapati said...

Hello friends, i want to open in new Local Business India so this is more guidelines for me before start new business india.

Anonymous said...

Memorandum of Association: - Company name, the registered office address and the company objects are essential to form a company. The company's memorandum delivered to the Registrar is signed by each subscriber in front of a witness who must attest the signature. Visit http://www.companyformationsindia.in/ for more

Company Formation in Dubai said...

Thanks for the info. I've been searching long time for the info on how to register my business.


Unknown said...

Wow! amazing post.
Thank for the informative post, I am looking for the info. relevant to
company formation in india from long time. thanks for posting it.

Unknown said...

Your points are quite interesting Kanwal and it is very good to put importance on them. I am totally agree with you. But starting a new business then registration after that appropriate place for office, all these takes hard work and much more time than your think. So it is good consult with a professional like Ucity India to handle these complicated cases.

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Thanks for posting an informative article.
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This is a very informative article. I am planning to acquire a business through business brokers brisbane and am reading up on all useful information posted online related to starting a business.

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varun mishra said...

ery useful article. You are very articulate in writing article

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Ritu Verma said...

Very good article for the start ups.It is very difficult to start a new business. It is good to have some guidance before jumping into waters.

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