Starting up? Legal Primer – Basic Registrations that you should know
You have just started on your own and trying to understand different registrations required for conducting your business. Statutory or regulatory registrations are largely related to the kind of business or operations.
You may need registration under the software technology parks (STPI) if in software development or require import-export code number, if you are exporting or importing; or obtain a factory licence or environmental clearances, if you are in the manufacturing sector.
But there are a few registrations which are required for all kinds of business, like sales / service tax.
Then, there are certain registrations which are not mandatory but required, like the trademark registrations. Let’s take a look at some of the basic and important ones.
Given the complexity of our legislations, it is hard to populate the requirements in a simple statement. But here’s my humble attempt.
| Registration | When triggered | Process and basic documents | Probable timelines | More info here |
| Permanent Account Number (PAN) | Forms a basic registration. It is a pre-requisite even for opening a bank account. | Submission of Form 49A along with proof of identity and proof of address. – Form | About 15 days. | Link |
| Service Tax | If income from services is above Rs. 10 lakhs, then the service provider has to pay service tax. List of services falling under this ambit can be found here. http://www.servicetax.gov.in/ (point 3) | Submission of Form ST1 along with proof of address,charter documents of your legal entity and PAN copy. | About 15 days. | Link |
| Provident Fund | If you are employing 20 or more persons. | Submission of Form along with the charter documents, PAN, proof of business and details about your business. | No SLA established | Link |
| Employee State Insurance (ESI) | It is a social insurance scheme. Interpreting applicability is pretty complex. | Submission of Form 01 along with list of employees, charter documents, PAN, bank account details. | No SLA established | Link |
| Shops and Commercial Establishment | Provides for regulation and conditions of employment. If your office space is located in an area notified by the Labor department. Since this is a State legislation (vs. a Central legislation), applicability is dependent on the State as well. For ex. this registration is not applicable in Delhi. | Submission of Form along with the details of the business. Registration to be renewed once in 5 years. | About a week. | Link. Have captured only Karnataka here. |
| Sales Tax / VAT | It is a tax on the sales. There is central sales tax and local sales tax. Many States in our country have adopted the uniform Value Added Tax. Also, the applicability is dependent on your company’s business | Submission of Form STR1 along with charter documents, details of business, expected turnover, bank account details and the like. | About 15 days. | Karnataka, Mumbai |
Please leave your questions in the comments section.
- Sharda Balaji Legal Counsel and Corporate Secretary. Co-founder of Novojuris Services India Pvt. Ltd., a legal consulting company. Email: sharda@novojuris.com
Disclaimer: This article is for informational purposes only and is intended but not promised or guaranteed to be correct, complete and up-to-date. This is not a legal advice or opinion.
About the author - 
Recently I was offered a position in a startup. They asked me to sign an NDA that had a Non Competition section in it. Its verbiage was very sweeping in what I cannot do for a period of two years from the time of termination in the future. I did some research on the web on the validity of non competition agreements in India and discovered the following:
http://www.majmudarindia.com/download.php?id_files=37
http://www.thehindubusinessline.com/2002/10/25/stories/2002102502730100.htm
http://www.hindu.com/thehindu/holnus/006200706141110.htm
The questions that I have are:
1) From the point of view of an employee, how much valid are these agreements? What is the worst that can happen if the employee were to violate the agreement before the specified period after termination.
2) From the point of view of an employer, how can he or she protect their “trade secrets” from getting out by an employee who leaves and violates the agreement?
Given the trials and tribulations dealing with Indian courts, what can an employee or employer do?
Thanks!
KK
You also need TAN (Tax Authorisation number) to be able to deduct TDS which is mandatorily deductible on any payment above Rs. 20K (100K on rentals)
Pan can be obtained online – the fee is Rs. 67, and you can mail them the papers once you’ve paid.
Service Tax: While hte limit is 10 lakhs from 08-09, you need to register once you cross 9 lakhs.
The registrations increase dramatically when you become a pvt. ltd. company.
Thanks Deepak.
Dear KK, On the non-compete clause, in most cases the restriction has not stood the test of law. I have come across one proven exception:- In cases where the employer has spent substantial amount to train the employee, where the cost incurred can be proved, then the courts do agree for non-compete clause but for a ‘reasonable’ period (2 years is found be ‘reasonable’). Most of the other interpretations, requirements are mentioned in the articles that you have provided links for.
On the protection of Trade Secrets, it is a combination of process and relevant agreements. NDA with the employee + Education / training on trade secrets + Policy in the company on treatment of confidential information + exit policy, exit interview, signing of trade secret acknowledgment form by the employee while leaving. If the employee is hired from a competitor, may be a joining-in interview too.
sir,
i want to start my own consultancy (which will provide jobs)….
i want to know what procedure shall i follow and what are the basic legal things i wud require to do…..
do i need service tax code, if yes waht is the process to obtain it… what is the tan number…. i do have pan of my name… do i need one more on the company name…. i am going to be the sole owner of the the consultancy…
Dear Nikhil,
I guess you mean you are starting a sole proprietary concern. Your PAN is sufficient and no separate PAN is required. You will also need Service Tax registration once your billing reaches Rs.9 lakhs pa. Pls. see above for the link on applying for the same.
Thanks,
Sharda Balaji
Dear Sir
I have recently started a small business providing Consulting/Advisory,Advertising and Recruitment services(India & Abroad).Do I have to take an EXIM licence.I have a personal PAN number. Do I need to take one in the name of my company also.I dont have more than 20 employees and a revenue of more than 10Lp.a because its a startup.
Please let me know as to what other legal formalities/documentation do I have to undergo ?
Regards
Karan Jain
dear sir
i run a website development firm with 4 of us as partners
now i want to convert it into a pvt. ltd. co
what all procedures do i need to follow.
kindly tell me in complete detail.
thanks & regards
Mohit
Dear Sharda,
I sincerely appreciate your efforts to help entrepreneurs. Thanks a million for the post and keep up the good work.
I don’t understand one thing; Why does everyone start there query with “dear sir”?
Cheers
Nasee Khan
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Hi,
i want to start up a company for website development. it will be a sole propritory concern. can i made recipt book and visiting card having company name and would it be legal. if no then how i register the name of company .
u can not use company name without registering it.If u want to register a company, then the details will be provided to you by email or phone call, as it involves a long process. U MAY CONTACT me regarding this matter on mobile no. 9873058461.
I wanted to know if an online retalier of consumer goods (sales around 25% domestic & 75% Export) become a STPI member.