6 Legal Requirements to Start a Business in India

  • August 23, 2019
  • Registrationwala
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When you think about starting a business, your mind goes through many dreams. You start thinking about success, and then you start dreaming about being at the top of the world. Then, it happens. The reality sets in; you start to realize how daunting it can be to start a business. You stop dreaming and start to stress about the legal and technical requirement to start a business in India. As a result, even simple tasks appear like a giant to you.

You don’t need to worry anymore. We are here to explain to you all the legal requirements to start a business in India. The blog will take you through all the things that you need to take care of when you are starting your business. And once your business is set up, you won’t merely be prepared with a business but will be prepared for success.

First Requirement: Registration of a Business entity

It’s time to start with the very first and the most basic step – registering the business entity. What is a business entity? It’s the infrastructure for your business. There are 6 common business entities that you can choose from, they are the following:

  1. Sole Proprietorship
  2. One Person Company
  3. LLP
  4. Partnership Firm
  5. Private limited company
  6. Public Limited company.

The process of business registration is common for all types of business entities mentioned above, except for Sole Proprietorship, LLP, and partnership. Our experts are well versed with business registration proceedings and can help you with this.

Second Requirement: Creation of a founder’s agreement

There is a saying “Unless you have it in a written note, it doesn’t exist”. Your ideas shall remain ideas unless you keep an actual record of it. That’s why a Founders agreement exists. Drafting a Founders agreement will let you look at your business idea in a realistic way. Does your business tackle the crucial issues you want to tackle? Will it be able to make a profit? What will be its mission, vision, and goal?

Through a Founders agreement, you and your co-founders, even if they are your family members, will be integrated into the business in a realistic and dutiful way. By entering the agreement, even the founder will have a singular vision towards the business. Down the line, it’s going to ensure that there are no issues if one of the founders is not satisfied by his/her profits or the direction of the company.

Third Requirement: Get all the legal licenses and registrations

Once you have set up the company and drafted the agreement, you need the authorization to do business. The authorizations come in the form of legal documents to start a business in India that in turn, come in the form of legal licenses and registrations. Some of them are general, which are required for all the types of business; some of them are specialized, required for a certain type of business.

General registrations:

  1. Income TAX registration
  2. (Goods and Services tax)GST registration
  3. Permanent Account Number
  4. Bank Account

Specialized registrations:

  1. IEC code: To start an import and export business
  2. FSSAI License: To start a food business.
  3. Shop and Establishments license: License for physical premises to set up shops.
  4. Kosher Registration: To deal with kosher goods.
  5. Halal Registration: To deal with Halal goods.
  6. Other licenses for other types of businesses.

Getting all the required licenses is not only a convenience; it’s the only legal way to start a business.

Fourth Requirement: Registering the trademarks

The business world is like a rat race. Everyone wants not only to be greater, but they are also not afraid of stealing and infringing other people’s brands to do so. With the growth of your business, the goodwill will also grow and so will the value of your trademark. The “rats” are never afraid to bank upon your goodwill in the market to gain success. To deter them from stealing your trademark, you should register it.

Although not necessary, trademark registration is a recommended legal requirement to start an online business in India. When you are on the web, your brand is exposed to billions of people. Trademark registration will deter them from infringing your trademark if they get any ideas about stealing it.

Fifth Requirement: Get hold of a sturdy accounting and taxation system

Without a proper way to see, you won’t be able to travel on a long road. Having a proper accounting system will help you not make business mistakes and give you realistic data to make business decisions. On the other hand, when you are busy doing business, there is one thing that can often slip from your mind: income tax returns and other annual compliances. They are all mandatory and pretty much the only way to grow as a business legally.

Filing the returns and/or auditing the accounting documents can be quite daunting. Therefore, there are business experts for you to take advantage of. Leave them with the boring paperwork of account while you do what you do best, your business.

Sixth Requirement: Create a proper business policy

While you are going to create a proper business policy in the Founder’s agreement, AOA, partnership or LLP agreement, it’s always a good idea to revisit those policies and create a proper document that everyone can see.

Therefore, create a proper business policy that you can enforce properly. It will keep your employees and your management in line focused. This way, the employees will be focused, and you can reach the targeted growth of your company on time.


Starting a business in India can be daunting, especially with all the legal requirements that you need to follow. However, now that you know about them, you are not just ready to start your business; you are ready to make it a success.

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