Why Company Registration is important for small businesses

Registering a small business can help you build a solid foundation for strong and long-term success. It creates a clear structure in the company by defining roles and tasks, which can help speed up decisions and increase organisational productivity. All in all, company registration in India is more than just a legal requirement; it can increase credibility, protect assets, and cover how small businesses grow and prosper.

Are you going to start a small business in India? Whether you’re planning to sell artificial jewellery or handmade chocolates, it can be an exciting journey. However, registering a company or business is an important step that many entrepreneurs forget to take. Using real-world examples, let’s learn why company registration is important for a small business in India and discuss various selling platforms and business structures.

Example: Artificial Jewellery and Handmade Chocolates

You are passionate about making delicious handmade chocolates or beautiful handmade jewellery. So, before anything else, you may sell these goods in your neighbourhood markets or to your friends and family. But as demand increases, you have to expand your reach. At this point, company registration becomes a very important step.

Benefits of Company Registration for Small Businesses

1. Legal Recognition and Protection 

• Brand Protection: Company registration is a legal process, so legally registering your business can protect your brand name and stop others from using it.

• Liability Protection: Your business is protected if you registered it as a company. 

  
  

2. Access to Funding and Loans

• Investor Confidence: If you want to attract investors or any financial institutions, you must register your business because they prefer to work with a registered company due to their legal compliance and market visibility. 

• Bank Loans: Banks usually give loans to registered companies because of their credibility and well-structured financial records.

  
  

3. Transparency and Credibility

• Customer Trust: Customers are more likely to trust a registered company, improving your brand's image. 

• Supplier Confidence: Suppliers are more willing to offer credit and better terms to registered companies.

  
  

4. Business Growth and Expansion

• Government Schemes: There are many government programs that are available to registered businesses to promote small businesses. 

• Market Opportunities: Company registration of small businesses opens up a wide range of opportunities to collaborate with larger businesses.

  
  

5. Quality and Certification

• ISO Certification: ISO and other quality certifications are available to registered businesses, increasing their reputation and fostering trust with partners and customers.

• Other Certifications: Depending on the industry, various quality certifications can be pursued to meet industry standards and customer expectations.

Selling Platforms for Small Businesses

Did you know that once your company registration is complete for your small business, you can use various internet platforms to sell your products or goods? Are you looking for such platforms? So let’s know some platforms where you can sell your goods:

1. E-commerce Marketplaces

   
   

• Amazon India: Perfect for reaching a huge audience.

• Flipkart: Another well-liked platform with vast reach.

• Etsy: Etsy is a platform which is ideal for handmade and unique products like artificial jewellery and handmade chocolates.

  
  

2. Social Media Platforms

   
   

• Instagram and Facebook: Great fit for products with a stunning appearance. You can also use their purchasing services and can create a page for your business. 

• WhatsApp Business: Enables easy sharing of product catalogues and direct communication with customers.

  
  

3. Dedicated Online Stores

   
   

• Shopify: Make it simpler for you to create your own online store. 

• Wix eCommerce: Another stunning option for building an online presence of your small business

Business Structures and Their Benefits

Do you need clarification about choosing the right business structure? I can make it simpler for you. Read on to learn several business structures you can choose from, each with its advantages.

1. Proprietorship

   
   

• Ease of Setup: Easy to get started and reasonable in price. 

• Full Control: The business is totally under control of you. 

  
  

2. Partnership

   
   

• Shared Responsibility: Responsibilities and liabilities are shared between Partners.

• Combined Resources: Knowledge and resources are integration

  
  

3. Private Limited Company

   
   

• Limited Liability: Protects personal assets from business liabilities.

• Greater Credibility: More attractive to investors and lenders.

Licences Required for Small Businesses

Hold on! You obtained all the knowledge of selling platforms and a business structure, but do you know how to sell on various platforms and ensure smooth business operations? And you’ll need to get certain licences: 

1. GST Registration: Compulsory for the business that is making ₹20 lakhs annually turnover (10 lakhs for states of northeast India).

2. FSSAI Licence: Required for businesses dealing with food-related products like handmade chocolates.

3. Trade License: Issued by the local municipal corporation for operating the business.

4. MSME Registration: For obtaining advantages under the Micro, Small, and Medium-Sized Enterprise Development Act 

5. Trademark Registration: This is important to protect your brand name and logo.

6. ISO Certification: This certificate is required to ensure quality standards and enhance customer trust.

Registered vs. Unregistered Small Businesses

Are you curious about knowing how company registration affects the performance of your business? Let me explain a statistical comparison between Registered vs Unregistered Businesses to clarify your perspective on how registering a business can affect your access to credit, revenue growth and market reach. According to a survey by the International Finance Corporation (IFC) and World Bank:

Conclusion

Skipping company registration is like building a house without a foundation. Registering your small business in India is crucial for success, providing legal protection, credibility, funding, and growth opportunities. You can reach a wider audience and establish a strong market presence with the right structure and licences. Registering allows you to protect your brand through trademark and copyright registrations and obtain quality certifications like ISO. Statistical insights show that registered businesses outperform unregistered ones in terms of access to credit, revenue growth, employment generation, and market access.

Don’t let another day go by without securing your business’s future. Register now and read the benefits!