Categories: Accounting

Things to know before starting your own business

Things to know before starting your own business.

The world is constantly buzzing with ideas at all times, but not all of them see the light of the day. It takes great might to become an entrepreneur and transform your business idea into a reality. Even if you have a multimillion-dollar idea, you need to have an intricate understanding of the volatile business landscape. Fortunately, here is a collection of details you need to add to your checklist for forming a company, added to that we have our expert accountants to facilitate you in this process.

Picking a company profile for your business idea:

Once you have a thorough understanding of your business idea and the entrepreneurial concept and aspects related to it, you must determine the type of company you wish to create. Here are the select few models, suitable for small business ideas in 2020:-

Sole Proprietorship– Some individuals are not natural team players and wish to run a one-person show; for them, this profile of the company is best suited. The proprietor is the beneficiary of all profits and bearer of all losses. Any of the above two scenarios may extend to an unlimited extent.
Partnership– It is defined as, “The relation between persons who have agreed to share the profits carried on by all or any one of them acting for all”. It is of two subtypes, namely, Unlimited and Limited Liability Partnership (LLP). In the case of an unlimited partnership, all the profits and losses will be shared amongst partners based on their share percentage, where the profit or loss may exceed their capital. This format is unpredictable and risky. LLP, on the other hand, is comparatively a safe bet, wherein one of the partners is unlimited partner others are limited members, gaining and loosing under the limit of their capital.
Private ltd– This kind of enterprise is usually suitable for novel business ideas due to a variety of factors. Primarily, as it restricts the right of shareholders to transfer their shares and does not allow the public to contribute to share capital of the company. The number of members in this type of company ranges from 2 to 50. The most lucrative factor in this type is the authority and control that members possess with regards to the company.

Registering your company

It may seem annoying or unnecessary, but fine print does give your company the required level of legitimacy and marks its existence in the entrepreneurial arena. Once you’re done with paperwork and a current commercial bank account, you can proudly claim that now you are the owner of a company and a registered entrepreneur. Over the time, governments have tried to lessen the hassle and adopt entrepreneur-friendly strategies, but by its very nature, it remains a complicated task. There are five significant steps to register your company in official records:-

Obtaining Company name: – Once the company profile is decided, one must think of a company name and get it registered from a local registrar office.
Filing for a taxation number: – Under the Taxation laws, all freelancers and corporations must have a taxation identity number and pay the required tax. It can be procured from the online portal by submitting various documents comprising of identification number of directors, Address proofs and Article and Memorandum of association for PVT LTD firms.
Procure a Digital Signature Certificate (DSC):– Every business is required to have a digital signature certificate for the use of digital signatures on documents and ease of filing them electronically. DSC is of multiple varieties, depending on Validity, class, and sign in, or encryption included. It can be procured by filling a form online at the government-run website and filling in the necessary details, which are basic in nature and sending an amount of payment to local registrar office.
Acquire Director Identification Number (DIN):– DIN is a mandatory detail for any startup as it ensures investors funds and certifies the director’s past relations to different firms and his present affiliation to the firm. The online form is available on the government-run website, and it requires basic information.
Create an account: – The next step in registration is the creation of an account on the official government-run website. The portal will be for a new user. After creating an account, Apply for the company to be registered.

The list of documents required for the aforementioned procedure:–

Original letter issued by Registrar office regarding availability of company name.

Taxation number

a) Identity proofs of directors b) Address proofs c) Article and Memorandum of association for PVT LTD firms.

Digital Signature Certificate

a) Residential Proof b) Identity proofs c) High-resolution Photographs d) Attestation

Director Identification Number

a) Residential Proof b) Identity proofs c) High-resolution Photographs d) Proof of Birth and Identity One must also note that for manufacturing units, OSHA (Occupational Safety and Hazard Act) and Ministry Of Environment’s recommendations must be followed.

Problems faced by new entrepreneurs :

Once you’re a part of the entrepreneurial fraternity, you must keep your enterprise guarded from malignant entities. The sheer hard work involved in running a successful business pushes many individuals into falling into vicious traps. Here are some issues faced by modern entrepreneurs

Financial Management: – While abstract concepts like determination and passion are regarded as a key to run a successful business, on a more pragmatic level, the currency is the lifeline of commerce. Many new, upcoming business owners face a regular issue regarding cash flow. It is eminent an enterprise cannot be run paycheck solely to paycheck, while market demands debt and discounts. The lack of income during extended periods hinders the progress and results in the decline of survival rate for your startup.
Hiring Employees: – A startup can be an individual’s idea, but to take that idea to the next level, manpower is definitely required. One business can be divided into a variety of departments dealing with a number of activities. Hiring employees who are skilled in their job and trustworthy is a conundrum in itself. It requires a high level of sophisticated approach by the HR Department.
Finding Customers: – Entrepreneurship is the art of providing what is needed or creating a need for what is provided. Many new entrepreneurs seem to forget this fine detail and are unable to market their products well. Profits are not simply the cash coming in from the market but also a reflection of fame your product is gaining. Many people fail to understand that successful products may not be desirable products.
Business Growth: – Plenty of business owners are able to implement phase one of their product but fail to have a vision for the future and seem to strangulate in their current surroundings due to proverbial market suffocation.

Before Concluding, Entrepreneurship is a challenging yet necessary task that propels society and individuals to the peak of excellence. For any entrepreneur out there, success and failure are part and parcel of this trade. Your hard work, in any case, is going to be an asset in your future endeavors. Still, a slight help can overturn the situation into your favor, a bit of expert advice from our brilliant accountants can make a world of difference for your brand.