How to start a small business in India

6 min read
Vipin Labroo

There has never been a better time to start a small business than now. The advent of the internet has made it that much easier to reach out to one’s target audience without having to spend a bomb on advertising or marketing. One hears so much about the startup boom and how it is not very difficult to get funding to start a new business if one can demonstrate a plausible revenue model. But it takes more than an investor for a business to open its doors. If you’re among those who aren’t sure how to start a small business, you’ve come to the right place.

What are the formalities that I need to comply with? Can I really hit the ground running and start turning a profit?

You needn’t pay an expert to get the answers. The process of setting up a small business in India is an easier affair now. All you need to do is to follow six simple steps given below.

How to start a small business in 6 steps

Follow these steps to get your business up and running.

  1. Decide the format of business.

  2. Give it a name.

  3. Register with the Ministry of Corporate Affairs.

  4. Secure funding.

  5. Set up your infrastructure.

  6. Promote your new business.

People all over India start businesses every day. Here’s how they do it.

1. Decide the format of business

How to Start a Small Business Textiles
Whether it works with wood or fabric, every startup must follow the same steps.
Photo: Francisco Arnela on Unsplash

A business in India has to fit into one of the several different categories — these are the most popular:

Sole proprietorship

This is business in its simplest and most basic form; you run it solely on your own. You may register your sole proprietorship under the Shops and Establishments Act or, if you have an annual turnover of ₹40 lakh or above, under the GST (Goods and Service Tax) Act (read additional details here).


This is a business that is run by two or more people who share the responsibilities as well as any profits or losses that the business makes. Again a very popular type of business that is quite easy to start.

Private or Public Limited Company

This type of business needs to be registered under the law and may comprise between two and 200 shareholders. There needs to be at least seven shareholders in the case of a Private Limited Company, while there’s no limit placed on the maximum number of shareholders in the case of a Public Limited Company. This type of structure easily lends itself to expansion and growth.

2. Give it a name

First, check the desired company name to see if another company is already using it. If no one is currently using it, register it on the Ministry of Corporate Affairs (MCA) website.

Read this post for help naming your business.

Don’t neglect to register a business domain name, preferably one that matches the name of your business. You’ll need a domain name to have a website; having one that matches the name of your business minimizes confusion among customers and suppliers.

Search for a business domain name now

Once you have a business name, you can open a business bank account in your name or the name of your business.

3. Register with the Ministry of Corporate Affairs

The good news is that what was once a five to seven day affair is now much shorter. To register a business:

  • Get a Digital Signature Certificate (DSC). This enables you to sign documents digitally.
  • Apply for a Director Identification Number (DIN). This can be done by completing the eForm here.
  • File the incorporation forms. To do this, you’ll need a passport-size photograph, the PAN (Permanent Account Numbers) card as identity proof and a utility bill not more than two months old (as address proof).
  • Get in line with labour law by getting the necessary registrations done — find details here.

Additional steps for partnerships

In addition to the steps listed above, those filing for partnerships must:

  • Prepare a simple partnership deed on a judicial stamp paper and get all partners to sign it.
  • Submit this deed, along with the address proof of the business and that of the partners, to the Registrar of Partnerships.

Note: A partnership can apply for GST registration by submitting the PAN card, address proof and identity proof of the partners.

4. Secure funding

One of the reasons for new businesses and startups taking off in a major way in India is the easy availability of financing. You have several options:

You could bootstrap

Making do with the money you have spared for the business might help your business grow quicker since it won’t be weighed down by debt.

How to Start a Small Business City Street
Depending on the type of business you’re starting, you could need startup funding.
Photo: arihant daga on Unsplash


This is a blessing of the internet age. You can put up your business plan on a crowdfunding platform and people who find your project viable can provide you with the capital you need to succeed.

Venture capitalist funding

This form of funding is offered by professional fund managers, ever on the lookout for companies they believe have great potential. VC funding can help get you the much-needed initial traction.

Angel investors

You could get financial assistance from rich individuals searching for a startup they can help nurture and grow. Such people are known as angel investors. They are usually very astute businesspeople who can offer both funding and valuable insight about running a business.

5. Set up your infrastructure

The internet and all the digital technologies at our disposal have made it possible to start a business with minimal infrastructure. This is especially true of the service industry — all you really need is a computer and a reliable web connection. You could start working out of your home, garage or basement. These days, one can also work out of a shared office space, like the ones offered by Regus.

6. Promote your new business

How to Start a Small Business Market Stall
Digital media have made it easier than ever to promote even the smallest businesses.
Photo: Pau Casals on Unsplash

Marketing for a startup or new business is no longer a high-cost affair. You’ll need a business website optimised for search engines. From there, any combination of the tactics below can help you create a viable revenue stream even in the short term.

As your revenues stabilize, you will be able to make the necessary investments in infrastructure and a marketing outreach to scale up and grow to the next level.

That’s how to start a small business

Many people can come up with a business idea; far fewer know how to actually turn the idea into reality. We’ve outlined the steps required — from choosing a business structure to securing funding and registering with the Ministry of Corporate Affairs. Follow them for a smooth startup.

Best wishes for your success!