Launching a new business is a very thrilling experience. It involves strategic planning, thinking, and proactive efforts. The two most important aspects of business commencement are registering appropriate business entities and getting funds to start the business.
When you register a new company in India, you are opening yourself to a lot of funding opportunities in the near and far future. Through this article, you can get a clear idea about how registering a new company in India will help in paving your way to the best fundraising options!
Steps to registering a new company in India
Choose the appropriate Business Structure
After you decide on the final business idea with which you’d like to trade, you need to figure out the business structure or the model that’s best suitable for you. In choosing this, you need to consider a lot of factors such as the number of owners, liabilities, taxation liabilities, compliance and maintenance costs, fundraising options, etc. When you have a clear idea of this, you can choose from the following options:
- Sole proprietorship firm;
- Limited Liability Partnership;
- Partnership Firm;
- One Person Company; or
- Private Limited Company.
Choose a Business Name
Once you know the structure that you want to form, you also need to come up with a unique and distinctive business name. Then, depending on the business structure that you choose, you will be required to reserve the name of your business before the commencement of the registration process.
Registering a Business
If you choose a sole proprietorship or a partnership firm, you do not have any particular registration to follow. However, if you choose any of the other three you will have to undergo the registration process as per the Ministry of corporate affairs (MCA). Once the registration is complete and you receive all your certificates and other necessary governmental licenses you can commence your business.
Exploring Fund-Raising Options post registration
Self Funding
The most basic way of raising capital is bringing in your capital. This can be done through various modes such as your assets, money, savings, capital gains, etc. This mode of funding comes with its limitations unless your net worth is in the billions. It is most suitable for small-scale businesses such as proprietorship firms where you are the sole investor and the reaper.
Friends and Family
You can even take help from your friends and family to raise funds for your newly formed business. This is possible in any sort of business structure that you choose. Moreover, since your friends and family know you and believe in you, they are more likely to have a positive response to your visions than a third-party investor. Even though they’re your known and loved ones, it is ideal to have proper legal documentation to protect both your rights during this fundraising option.
Angel Investors
These are high-net-worth individuals who invest in newly established businesses with high growth potential. They usually invest in exchange for a profit-sharing ratio in an LLP business structure, or in consideration of becoming an equity shareholder in a private company. In most cases, the angel investors are successful entrepreneurs and hence, they not only provide financial assistance but also mentorship to the startup they invest in.
Venture Capital Firms
These firms are formed by a pool of investors who jointly invest in companies with growth potential. They usually invest in exchange for equity shares of the startup. This fundraising option is most suitable for companies that have an immensely scalable business model.
CrowdFunding
This concept is gaining popularity with the passing of time and the development of technology. Many platforms such as Kickstarter allow small and innovative businesses to raise funds from the general public in exchange for early access, rewards, etc. This is an easy and less risky method of raising funds. However, in India, we are yet to explore it to its fullest potential.
Business Loans
Another smart funding option is taking up loans. The Indian government has taken a lot of active efforts to help small businesses grow. This includes low-interest rate loans in government-recognized banks etc for small businesses.s further, financial institutions such as NBFCs or banks also provide business loans with certain features that are beneficial to the growth of small and new businesses.
Government accredited grants
Many governmental, nonprofit, and other organizations work towards the growth of the Indian economy by supporting newly formed businesses. These organizations and firms hold different competitions or open grants to innovative startups. You can apply for such grants, approvals, and competitions and win funds for your business!
Conclusion
In an entrepreneurial journey, new company incorporation and raising funds for it are the most crucial steps for its fundamental development. Taking these steps carefully will help in building a strong foundation for your new company. Further, it will also position you for success and growth. Lastly, you should never forget that the journey of all entrepreneurs is different and you should pave your path to success.
