What are the legal steps to start a business in Delhi?

Delhi has been a major hotspot since ancient times. Being the capital of India, it is a great spot for any startup to make or break their business. The hyper competitive nature of the city's business landscape may seem a daunting task to the uninitiated; but with enough experience and a penchant for getting your shoes dirty, you may just come out on top.

In this article, we shall elucidate the various things you must know on how to start a business in Delhi, and the legal steps you need to know on how to start a small business in Delhi.

Types of Business Structures

Different types of Business Structures are available for you to choose for your business. You must always make sure that you register your business with the right authorities as it could drastically affect the way you conduct your business and the direction it will take in the future.

• Limited liability partnership (LLP): An updated version of LLC that you're required to register with the registrar of LLP's.
• Private limited company: This type of company needs to be registered with the MCA and the Registrar of Companies, Delhi.
• One-person company: Similar to a Private limited company but requires only a single shareholder or person to register.
• Sole proprietorship: This is the simplest business structure that doesn't have any fixed registration process, and can be started by a single person.

After determining which business structure is best for your needs, you must choose a business name that mirrors the ideology of your venture and ensure that it is not already in use by another entity. Your entity name should protect your business at the state level, a trademark that protects your business at the national level, and a domain name that gives your business an online presence.

Eligibility Criteria

There are certain criteria that you must fulfil before even starting the formalities of registering your company.

• You have to ensure that there is a minimum of 2 shareholders and directors. The shareholders and directors can be the same people.
• One of the directors must be an Indian Resident. It means the person must have resided for a minimum of 182 days in India for the last year.
• You need to have a registered office address out of which you conduct any official business.
• The directors will need to have a Digital Signature Certificate for authorising documents online as well as a Director Identification Number to file applications.
• The owners of the business will have to draft various required documents themselves. This will include a Shareholders agreement, AoA, and MoA.

Required Documents for Registration

The following list of documents and applications are needed to register your business in Delhi :

• ID's and Proof of Address for all directors and shareholders; they may be any one of these - PAN Card, Aadhar Card, Passport, Driving License, or Voting ID.
• A Director Identification number for all directors
• A Digital Signature Certificate for all Shareholders and directors.
• Bank Account Statements and any other attached documents.
• Details of any investments
• Address Proof for Place of Business, Rental agreement, property registration certification.
• NOC from the owner of the place of business is rented.
• Passport size photograph of Directors as well as the shareholders.

A Founder's Agreement is a legal document that contains main information about the venture/founding business's members. As a result, the document serves as a legal agreement that establishes the founders' and the company's rights, ownership, responsibilities, dispute resolution, and other terms. As a result, having a well-drafted Founders Agreement with all necessary details provides a firm foundation for the journey of a business. In the event of a disagreement, it can also be used as a point of reference.

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Registration Procedure

Following is a list of steps that you must follow to get your company registered :

1. To start with, the entrepreneurial team must be aware of the various eligibility criteria that they must fulfil before even thinking of registering your business in Delhi. The best option would be to consult a legal expert that could ensure that you are well aware of the legal steps to start a business in Delhi.
2. Once you're certain of your fulfilment of all criteria, you may proceed to secure the required documents for your registration to initiate legal steps to starting an online business.
3. Initially, the directors, shareholders, and founding members will have to apply for and acquire Digital Signature Certificates and Director Identification Numbers through MCA's official portal.
4. In addition, the entrepreneurs must now apply to reserve a company name. They have the option of submitting up to six preferences via an application form. The MCA will conduct an online name search before allocating a suitable name based on its availability.
5. Following that, the business owners will need to contact a lawyer to draught the company's legal documents, which will include a Memorandum of Association and Articles of Association.
6. The entrepreneurs are now ready to file for incorporation with the RoC by submitting the following forms: INC-7, INC-22, and DIR-12.
7. Following the submission of an application, the entrepreneurs must pay the required stamp duty and processing fee to the RoC. The regional RoC office in Delhi will then review and verify all of the details and, if satisfied, will issue the business with a certificate of incorporation.

The Registrar of Companies will need five to six days to verify all of the documents and issue the necessary certificate. Companies that have received their incorporation certificate can apply for a company PAN card and TAN for tax purposes. Furthermore, other registrations will be required depending on the nature of the proposed business, but the majority of businesses will be required to register for GST.

Benefits of Registering in Delhi

• Have your legal existence and identity.
• Take advantage of perpetual succession, which ensures that external events do not disrupt the company's operations.
• Furthermore, the shareholders and directors benefit from limited liability, which helps them protect their assets.
• Gives businesses the option of purchasing or leasing their property.
• Allows for the free transfer of ownership from one person to another in a business.
• Delhi, being the capital of the country, has superior connectivity to the entire nation.
• If you're a primarily online business, you will have access to better technological facilities.
• If your business operates stores, whether online or brick-and-mortar, you'll have access to the best supply chains.
• Being the capital, you'll have access to a diverse crowd of customers.
• You'll also have proximity to various government departments that you may need to liaison with.

Conclusion

Delhi is a great location for starting your new business. The registration process is fairly quick, and the new regulations are easier to understand and implement. You can follow the information given in this article and initiate the first steps towards your new business.

Also Read:

1) Why You Should Have A Joint or Independent Account With Your Business Partner?
2) Things Business Owners Should Do If They Can’t Pay Credit Card Bills
3) How To Charge for Your Services if You Are an Event Planner?
4) How to Answer the Phone Professionally at your Business?

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FAQs

Q. What's a good business to start in 2021?

Ans - Here are some new business ideas for 2021 :

• Online Coaching
• Feeling Creative? Start a podcast or youtube channel
• Dabble in Web Development and Graphic Design
• Ecommerce

Q. What are the documents required to start a Sole Proprietorship?

Ans - Here are the documents you'll require to secure a Sole Proprietorship

• Address Proof of Owner and Place of Business
• Founders Agreement
• GSTIN
• Bank Account Statements
• Tax returns

Q. What are the advantages of Sole Proprietorship?

Ans - The advantages of Sole Proprietorship are :

• Lesser Paperwork
• Lower Business Taxes
• Straightforward Banking and Loans
• Simplified ownership