Legal Guide

Starting a New Business in India – Advantages and Legal Requirements

by Nandita Meenakshi · 3 min read

Starting a new business in India


A business is an organization or entity that engages in commercial or industrial activities.

The basic definition of business is the practice of buying and selling any product for a monetary value in order to earn profits and make a living. Starting a new business can have a positive impact on your life and be helpful to others. At the same time, starting a new business may also be a daunting task for first-timers; nevertheless, with proper knowledge, it is a simple procedure.

Types of companies for starting a new business

1)Private Limited Company

This type of company is a private corporation that registers a firm for small enterprises. A company can have as few as two members and as many as 200 members, according to the rules of the 2013 Companies Act.

2) Public Limited Company

The shares of a public limited company can be bought by the general public. The company must have three directors and at least seven shareholders. The number of shares in a public limited company is unlimited.

3)Unlimited Business

An unlimited company is a sort of business association in which each of its members bears unlimited liability. It can re-register as a restricted organization at any time under Section 32 of the Companies Act.

4) Sole proprietorship

A sole proprietorship is a type of business structure in which a single person manages the whole business organization. He is the sole beneficiary of all profits and the sole bearer of all losses. 

5) Partnership

This is a type of business in which economic transactions and operations are handled by partners. The legal partnership agreement specifies the two partners’ obligations, positions, and the number of shares they own.

Requirements for Starting a New Business

1) A business strategy

A strategy is crucial because it allows businesses to assess how they are performing, what their capabilities are, and how this can help them flourish. Furthermore, by having a solid business strategy, the corporation might gain an edge over its competitors. Business strategies help companies have a better understanding of themselves and their goals.

2) A name for the company

Entrepreneurs must select a name when starting a new business that will persist and that represents both their vision and the unique traits of their business. It is better to avoid using business names that may cause confusion between your company and another similar sort of company that is developing in the same area or field.

3) A proper structure for the company

Planning the structure guarantees that there are adequate human resources with the necessary skills to achieve the company’s objectives, as well as that duties, are clearly defined. When the structure is properly outlined, communication among company employees becomes rather simple. They would know who to report to and would have established clear lines of communication.

4) A business registration certificate

Business registration certificates are required for starting a new business entity. The registration criteria are determined by state regulations. It is a statutory requirement in most jurisdictions and ensures that a business operates in accordance with the lawful duties under its control.

5) A financing source:

One of the most crucial parts of starting a new business is financing. The entrepreneur must make sure there are adequate funds for running the business more efficiently. Finance is essential in any business because it allows businesses to acquire things that are out of their immediate reach.

3)Trademark Registration

As the business expands, the value of its brand will rise. As a result, protecting your intellectual property from infringers, which includes the company name, logo, slogan, and other key phrases is critical.

Legal documents required for starting a new business

1) Bylaws

Bylaws serve as a set of rules for starting a new business. In addition to making sure that every company runs smoothly and correctly, the bylaws also make sure that everyone involved in the activities of the company has a voice.

2) Memorandum of Understanding

It includes all the formal communications that have been had with suppliers, potential partners, and other business stakeholders. A Mou is an excellent approach to put in writing the terms and conditions between employees and employers while starting a new business.

4)Non-Disclosure Agreement

This is one of the first things you should look for when working with any customer or client. It guarantees that your company’s, as well as the other party’s, privacy is safeguarded.

5) Franchise agreement

This is a legally enforceable contract between the franchisor and the franchisee. The contract specifies the franchisor’s expectations of the franchisee, as well as how the firm must be run.

Benefits of starting a new business

1) Independence:You are your own boss as a business owner. The owner gets to handle the activities of the company and run it on his own terms. More significantly, you have the flexibility to make critical decisions for your own business’s growth.

2) Flow of Income: whether an entrepreneur is starting a new business as an economic necessity or as a method to supplement their income, he/she may discover that it provides a new stream of revenue.

3) Learning opportunities: The entrepreneur will be active in all parts of the firm as a business owner when starting a new business. This environment offers multiple opportunities to get a comprehensive grasp of the various company operations.

4) Self- satisfaction: Nothing beats the satisfaction of starting a new business. Making the goal a reality and knowing that all of your hard work has finally paid off is a wonderful feeling that is well worth the stress and long hours required to get there.


With India’s growing middle class, young people’s business dreams are developing. Technology has created innumerable business opportunities and eased the process of starting a new business. All that is required to start a new business is determination and passion.

Every company structure in India has a different identity and is useful for a variety of business activities. Therefore, the first step is to plan and discuss your company requirements with a lawyer online before deciding on the best business structure for you.

Starting a new business includes several key elements, legal requirements, and a straightforward structure. Talk to a legal advisor for a business consultation.

Nandita Meenakshi

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Nandita Meenakshi

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