"Writers Block" kind of Situation - Need Guidance

Hi,

I don't know if this is the right forum or not, but I need help.
Please feel free to send me your ideas/suggestion/advice as I would welcome all of it right now.

I have hit a stage where I have done the brainstorming, have set the business purpose, weighed all my options (market research), and even drawn up the business plan..but am stuck with the Registration aspect (details). May be this is the easiest part and I am over-thinking. But I am at a stage where I need a little guidance to move ahead.

My thoughts are:
- should I get into partnership with friends/family (not sure).
- should I get into a sole proprietorship (would this really work for an IT company).
- legal details such as address for registration, tax returns etc.
- if its a partnership, number of directors, etc.

And then a final thought:
- forget the registration and start the business. Put up a site and see the response. (Would this be really illegal?)

I was wondering if there are any start-up experts to discuss these small issues in a serious way. Or is there another forum that can guide me more.

Well, thanks in advance.
If you have any suggestion, I am all ears.

Regards,
Himani

Comments:

Yogender Verma's picture

Hi Himani, so, first things first - putting up a website and starting with your things is definitely not illegal (unless you are conducting any illegal activity on your website, like betting etc.).
So, you definitely need not keep the registration as a blocking point for starting up, you can do that parallel very well.
Now for choosing the right entity, it's better if you could also provide details about few things like - the nature of your business, e.g. is it some service based model or some product you want to offer; would it be for consumers (B2C) or businesses (B2B). Then, are you alone or you are a group of people (if not now, do you need and plan to have one or two co-founders soon) etc.
So, these are the factors that greatly decide which type of entity you should incorporate with. Please shed some light and I am sure we will be able to find the answer to your question :-)

himani N's picture

Thanks Yogendra,

I really appreciate your response.

Well, the nature of business is service based model for B2B (basically IT Businesses).
However, in the second phase I would want to expand the scope to B2C also. But to begin with it would be B2B.

I am skeptical about the co-founder aspect. Should I have a co-founder who would contribute to my business in realistic terms, or in financial terms?
I have a lot of people who get interested in my idea, so having a co-founder for financial partnership isn't a problem, but I have my concerns about how workable it would be?
I would like to hear from people's experience. Right now, I need as much information as I can get.

Ok...first things first...I guess if its not illegal to put up a website and start doing things, I should initiate the first step.

I would also be interested in more meets/seminars/discussions on this subject in and around Gurgaon area. Please let me know if you know of more groups.

Thanks.
:-)

Karan Chowdhary's picture

Hi Himani

You can get in touch with us, if you would need any process / structure assistance to launch your entity. Thank you.

Regards
Karan Chowdhary
+91 95822 55502 | karan@dioconsulting.com

Yogender Verma's picture

Hi Himani, so about the partnership question, you should get a co-founder only if he fills in a gap of some complementary skill needed for your startup. Someone who gives you money would normally expect equity in return but he not a co-founder, he is more of an investor. Normally it is desirable to have a co-founder for various reasons like he fills a skill gap, he can take care of things in cases you are not well or caught-up in any emergency, investors favour startups with couple of co-founders etc. etc. But getting someone in for money should be done only if you really need that money.
Now for incorporation, ideally in case of a services business which is B2B also, it would be quite helpful for you to gain customer and credibility if you are a PLC (a pvt ltd. company). There are people who can help you with the process, please let us know, we'll connect you to someone...

himani N's picture

Thanks Yogender.
I guess I will need some assistance.

I am meeting a few people regarding the same in the coming week, plus, I am looking forward to be a part of the W2E meet on August 2nd to get more information.

I'll keep the forum posted.
I really appreciate your help and support.

Gaurav Mittal's picture

Hi Himani,

Going by your requirements and specifications at present I feel there's no need to get into legal tangles.
It would be preferable to start as a Proprietorship Concern or Partnership Firm (In Case you have a partner) and then if your idea turns viable and is successful then you should convert it into more legal form like a Company.

In case of registrations every registration have certain threshold limit and if that limit is not crossed then there is no liability to get registered. So registrations under this is not compulsory and it can wait for a while.

However, these are just suggestions and views might differ after getting to know your startup more thoroughly.

Thank You

CA Gaurav Mittal
+91-9971312299

himani N's picture

Thanks Gaurav.

I have been considering my options lately. I have had several legal and practical discussions. I would like to include them in my post as it may help someone else sailing in the same boat.

Pro's of a registering a company before doing real business:
- Customer credibility if it's a B2B setup (as mentioned by Yogender).
- No risk of having different name of the website (or operational business) and the name of the actual (registered) business.
- Ease in filing of taxes, because if the business is registered then you are not filing the taxes as a Consultant/Freelancer or using any other option for your services.
- Having a bank account on the company name keeps you away from legal technicalities when you are paying to your partners/employees.
- Most companies are more comfortable in writing a check in the name of a company rather than an individual (Again for B2B models)

Plus, there are other underlying benefits of holding "Business Introduction" seminars/events to attract serious customers. There are several private/govt bodies that provide support to new business start-ups. If it's a registered company then you can actually get a little boast while spreading the word in the market.

Con's of not registering a company before starting actual business:
- Reduced customer credibility for B2B models.
- You may run your business with a certain name, but later when you want to get it registered that name may not be available. Though, it does not create a blocker, but I think if the registered company name and business name is the same it keeps things simpler.
- You get a company bank account so funds can be used in a proper way. Otherwise, if you want to engage someone to provide you technical support in your work, how will you pay to that person. You'll have to either employ that person or pay him/her as a gift, the taxes get a little messy and you might not want to deal with such issues later.
- While introducing your business to your perspective customers you are an individual contributor (or say a freelancer or a consultant). But if it's a registered company, you are representing your business as a structured model.

However, registering a company may not provide you a testing phase for your idea/business. It's like jumping right into water and then learning to swim, without a life jacket on. It may be difficult initially but if you are confident about your idea it's a better approach.

Now this brings us to the next step - Best option to go with while registering a start-up.
Sole Proprietorship or Partnership.
For this I would like to add the link of my other thread - http://www.wannapreneur2entrepreneur.com/content/company-registration-di...

I guess Ramprakash and Gaurav have covered all valid points.

I appreciate the help of this forum for providing me guidance and support.
Best Regards,
Himani

Yogender Verma's picture

Thanks a lot Himani, for posting that valuable experience that you have undergone while finding answers to you questions. It will indeed help a lot of other people. GREAT JOB!!

Karan Chowdhary's picture

Thank you Himani, the information that you have shared will this forum will become a reference point for other budding professionals who are looking forward to become entrepreneurs. I appreciate your effort and gesture. Keep it UP :).

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