Starting Up a Business in India: Step-by-Step Checklist 

The idea of starting a business in India surrounds your mind with a lot of questions. Although the registration process is now easy and streamlined by the MCA, it can be confusing navigating the process without a proper understanding of the regulatory system. To move ahead with a clear plan, it is important to first have a checklist as part of your incorporation strategy.  

Whether you choose to set up a Private Limited Company or a Limited Liability Partnership, checking all the right boxes is important. This blog work as a starting up a business in India checklist covering the pre-incorporation, incorporation and post-incorporation phases including step-by-step process.  

Starting Up a Business in India Checklist 

In this checklist blog, we have divided the registration process into three main phases for a better understanding. Here are the steps each phase includes:

Phase 1: Pre-Incorporation 

It includes the preparation for company registration:  

• Step 1: Choosing the correct business structure 
• Step 2:  Prepare required documents 
• Step 3: Check minimum eligibility requirements 

Phase 2: Company incorporation 

In this phase the main incorporation process is done, from registration to receiving the COI. 

• Step 4: Reserve name for your company (SPICe+ Part A) 
• Step 5: File SPICe+ (Part B) 
• Step 6: Receive Certificate of Incorporation (COI) 

Phase 3: Post-incorporation compliance 

This is the last phase to a successful company incorporation. It ensures a legal conduction of operation. 

• Step 7: Opening a Bank Account 
• Step 8: Capital Infusion 
• Step 9: GST Registration 
• Step 10: Sector-Specific Licenses 

Let’s discuss about each of the phases and steps in detail.

Phase 1: Pre-Incorporation Preparation 

A proper business plan is crucial before starting the incorporation process. The decision here should be made by understanding the nature of the organisation and how it functions in terms of strategy. In this phase you will take decisions, which will directly impact the flexibility of operation of your business, investment, compliance, eligibility and taxes. Not proper planning or overlooking this phase can cost you heavy penalties or even the closure of your company. 

Step 1: Choosing the Correct Business Structure 

During the pre-incorporation phase, one of the most crucial parts is selecting the right business structure. Let’s look at a comparison between the most preferred types of business registrations in India. 

Private Limited Company (Pvt Ltd): 

This structure is considered the most appropriate business structure for foreign businesses. 

• It allows 100% FDI under the automatic route in most sectors. 

• It allows fundraising in exchange of equity. 

• It protects your personal liability, and the only liability exposed is the amount you have invested in the company. 

• Private limited company is a separate legal entity from its partners under the Companies Act. 

Limited Liability Partnership (LLP) 

This structure is less preffered by foreign companies compared to private limited company. 

• It is simple in compliance, but FDI requires government approval. Less common for foreign companies. 

• There is no mandatory statutory audit below a turnover threshold and fewer ROC forms. 

• This is suitable for Indian founders in services like law, architect, or consulting. 

Wholly Owned Subsidiary (WOS) 

Most foreign businesses prefer this structure in India. It is a private limited company but with a 100% foreign shareholding. 

Step 2:  Prepare Documents  

Ensure that all the core documents required for the incorporation process are correct and valid. Required documents: 

Foreign Directors: 

• Valid passport 

• Overseas Address Proof 

• INC-9 Declaration 

Note: All documents that are originating from Hague member countries must be apostilled by the designated competent authority in that country 

Foreign Shareholders: 

• Foreign parent company’s Certificate of Incorporation 

• Memorandum of Association (MoA) and Articles of Association (AoA) or equivalent constitutional document of the Foreign Parent 

• Board Resolution of the Foreign Parent 

• Subscriber’s Affidavit 

Registered Office Documents: 

• Electricity Bill 

• Rental Agreement (if applicable) 

• No Objection Certificate (NOC) 

Company Formation Documents 

• Memorandum of Association (Form INC-33) 

• Articles of Association (Form INC-34) 

• DIR-2 

Step 3: Confirm Minimum Requirements 

There are certain eligibility criteria to incorporate a foreign company under the Indian law, which should be taken care of in advance to avoid complications later on. Following are some requirements: 

• Directors and Shareholders: A minimum of two directors and two shareholders are required for registration. It is possible that both directors are the same persons and are also the same as shareholders. 

• Indian Resident Director: This one is essential and probably the most commonly misunderstood criterion amongst the foreign founders of the company. Out of the two directors in the company at least one director should be Indian resident who has spent more than 182 days in the country within the last calendar year. 

• Registered Office Address: There should be a verified office address in India. This must be a functional and documentable location. This address will be used for all the official correspondence. 

Phase 2: Company Incorporation 

This is where you proceed with the main incorporation process through the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form.  

Step 4: Reserve Name for Your Company (SPICe+ Part A) 

Decide on a name for the company, making sure that it is unique and does not resemble any existing entity. Check this with the RUN (Reserve Unique Name) portal and submit it via the MCA portal. The name is approved within 1-3 working days. You get 2 name options. 

Step 5: File the SPICe+ (Part B) 

Now file Part B of the SPICe+ form. The form includes company incorporation, DIN allotment, PAN/TAN application, GST, EPFO, ESIC, and Professional Tax (in applicable states). Memorandum and Articles of Association filed electronically via SPICe+ portal. 

Step 6: Receive Certificate of Incorporation (COI)  

COI will be issued digitally by the Registrar of Companies (RoC) contains CIN (Corporate Identity Number).  

Phase 3: Post-Incorporation Compliance 

After the incorporation process, maintaining compliance becomes the next important thing. The real planning comes after the company incorporation. Most entrepreneurs overlook this compliance which can result in penalties and extension of timeline. 

Step 7: Opening a Bank Account 

Open a current account by using COI, PAN, MoA/AoA, and board resolution. It is required before any foreign investment. Also, file the INC-20A form, which declares the commencement of business.  

Step 8: Capital Infusion 

Transfer the foreign investment via banking channels and obtain an FIRC (Foreign Inward Remittance Certificate) from the bank. 

File FC-GPR with RBI within 30 days of allotting shares to foreign investors. This is mandatory under FEMA,1999. 

Step 9: GST Registration 

If your annual turnover exceeds INR 20 lakhs (for services) or INR 40 lakhs (for goods), GST registration is mandatory. GST structure in India allows B2B businesses to register voluntarily. To obtain GSTIN at incorporation, apply via AGILE-PRO-S or separately via GST portal post-incorporation. 

Step 10: Sector-Specific Licenses 

Some sectors need specific licenses to conduct operations. It depends on the type of business activity; here are some licenses according to the sector: 

• IT/ SaaS: No specific license required, however the Digital Personal Data Protection (DPDP Act, 2023), data processing obligations may apply if the company includes processing or handling of personal data of users. Companies must set up proper data protection policies and cybersecurity safeguards. 

• Fintech/ Payments: Entities dealing with online payments, must comply with RBI’s regulations. Payment Aggregator licence from RBI is needed if you are setting up a fintech company, this is separate from a Payment Gateway (PG). 

• Import/Export: For businesses involved in international trade, an IEC (Import Export Code) from Directorate General of Foreign Trade (DGFT) is mandatory.  This is a mandatory requirement for making cross-border payments, clearing customs and conducting global trade operations. 

• Healthcare: In this sector regulations are strict. Central Drugs Standard Control Organization (CDSCO) approvals are needed for any medical devices, Drugs & Cosmetics Act compliance. Additional state level licences may also be required in some cases.  

• Food & Beverage: In this sector an FSSAI license is a must. Whether your company operates in manufacturing, processing or selling of food products, registering with FSSAI is important. 

• EdTech: Generally, there is no central license required for EdTech platforms, however, state-level regulations may apply for formal education platforms. 

Conclusion 

Starting up a business in India checklist blog gives you a clear indication of how your incorporation journey in India should look. Starting a business in India becomes much easier when there is clarity in the decisions you make. Lock in the structure, keep the necessary documents ready, and follow the MCA steps. After incorporation, the first 2-3 months are important to get your compliance cycle on track. Open a bank account and make the necessary registrations. 

While executing the incorporation process after planning, especially first-time founders, can face difficulties. This is where you need expert guidance. Stratrich Consulting has years of experience guiding new businesses to set up their business in India. Contact today to pave the strongest foundation for your business.