In India, there is the number of businesses that are established or in the process of establishing have more or fewer turnovers. Different businesses have different sizes; some are small, Medium, or big. Indian Government is now taking steps to help Start-up businesses to grow. Firstly we have to understand the concept of a Small Company, including its benefits and how to get a Startup Business Loan to start one.
What is a Small Company according to Indian Law?
Section 2(85) of the 2013 Companies Act provides the new modified definition of a Small Company. The Act identifies a small business as one that is not publicly traded.
Characteristics of a Small Company:
- A paid-up share capital of at least Rs. 4 crores, or if greater, an amount mentioned therein that does not exceed Rs. 10 crores.
- Revenue of at least Rs. Forty crores or a greater sum specified but not exceeding Rs. 100 crores.
Businesses that are not considered small businesses:
- A subsidiary or holding firm.
- A registered business under section 8.
- A legal entity or business covered by a certain law.
Characteristics of Small Company
- Smaller in size
As the name itself shows, the size of the company is small and revenue generated through it is also less in comparison to big companies.
The whole company is managed by the owner himself or with small teams, so decision-making is fast, easy, and without any interference.
- Fewer Workers
In comparison to other corporates, the company only has a tiny team of people.
- Tiny market
Start-up businesses have a limited amount of area in which to carry out their daily activities because they are designed to serve the smaller segments of society or the community, like the convenience store in a rural township.
- Fewer legal requirements
Small businesses have fewer formalities which results in lesser legal work.
- Responsibility for Risk
All the risk which occurs in a Startup business is bear by the owner himself.
Advantages of a Small Company
- Yearly return
A company director or the Company Secretary (CS) can sign the annual return filing of a small business.
- Board Meetings
Small businesses are only allowed to have a maximum of two meetings each fiscal year.
Small businesses are much more adaptable and capable of making the required changes than large organizations.
- Rotations of auditors
Small businesses do not need to rotate their auditors.
- Charges & Fees
The Act specifies less severe sanctions for Small companies than it does for other private or public businesses. In comparison to the rates charged by other businesses, it also offers lower fees for filing documents with the ROC.
Start-up Business Loan Procedure
- Business Plan
Having a good and strong business plan is necessary to get a Loan so that the lenders get attracted and give a Loan. Lenders first see the business plan as they want to know what is going to happen with the funds they provide.
- Select the Funding You Will Apply For
There are many Start- up Business loans like the government, banks, online lenders, and outside financiers. There are actually a huge variety of start-up finance choices.
- Assess Lenders
While receiving a Start-up business Loan, an offer can be a tremendous relief, you shouldn’t accept it straight immediately. Try to get the best deals you can—it will cost you less money in the long run.
- Fill out the paperwork needed, then submit an application
Three years’ worth of personal and business tax returns, copies of your different licenses and registrations, and a comprehensive financial report that includes accounting records and bank statements are the most frequently requested documents by lenders for lending Start-up Business Loans. Submit your application after gathering this documentation!
Ways in which small-scale industries or Startups help the Indian economy
- Reduces the problem of unemployment as it gives employment to locals and a larger number of people.
- It assists in mobilizing and utilizing local resources, such as the entrepreneurs’ little funds, entrepreneurial talent, etc., which could otherwise go unused and idle. Consequently, it aids in the efficient use of resources.
- As some Small scale industries provide accessories to large-scale industries, it plays a complementary role for large industries.
- India’s per capita income is increased in a number of ways by small-size industries.
- Industrializing rural and underdeveloped areas eliminates regional inequities and promotes balanced regional growth.
So as above mentioned benefits and other thing shows, Small scale industries is as necessary as large-scale industries. Infact, they sometimes help large-scale industries to work in a proper manner by providing equipment, raw materials, etc. There are many ways to get a Start- up Business Loan but for that, a proper plan, procedure, and documentation are needed.
To know more about the procedure and valid documentation or business-related consultation, get online legal advicefrom Business Lawyer here.