To start a shop you just need a business plan, having a business plan provides you with a definite path to follow. First of all, you need to decide the type of shop you want to open, whether it could be related to clothing, food or any other products, etc.
There are two possibilities, either you have the idea about your going to be a business/shop or you don’t have any. For the second one, you need to look at what is in demand for that particular area of the shop. Choosing a legal structure for your shop/business is one of the important tasks. As it determines personal liability, collection of taxes, etc.
There are two main registrations related to a shop/business.
1. Shop & Establishment Act
Most of the businesses take place by this important regulation in India. Every state has a different Shop and establishment Act and every state may have the same or different provisions. The main objective of this Act is to regulate the provisions of the payment of wages, hours of work of employees, leave (compulsory leaves as how much leaves must be provided to a particular person), holidays, terms of service and such other work conditions of employees who work under the Shop and commercial establishments.
According to the provisions of Shop Act, generally “Shop” means the place where goods can be sold and services can be rendered, which may include an office, storeroom, warehouse.
Establishments cover a shop, any commercial establishment, hotel, restaurant, etc.
2. Business Registration Number (BRN)
Business Registration Number (BRN) is a 16 digit unique identification number of an establishment in the Business Register. It may be allotted in different manners in rural and urban areas. BRN gives a different identity to business, and it is written in the Business register. Business Register covers the list of all establishments doing different kinds of economic activities such as related to the production and to the distribution of goods and or services at particular places or places. Such a list when completed provides an ideal framework for conducting their sample survey and will undertake studies of various economic activities for finding their pattern and trend in the country.
Depending on your ownership, you may file for the respective firm registrations.
1. Sole Proprietorship
It is the default when there is no legal business. This type of business is carried out by individuals only. This is generally used by freelancers, business consultants, other low-risk and low visibility working people.
If you register your business as a sole proprietorship then business income will be your personal income. And you will have to pay just sole proprietorship taxes, not employment & corporate taxes. If this faces any loss that would be recovered from personal income, which might be risky.
2. Limited Liability Company
This can be a good option if you are starting a small business, as it protects personal assets. But it needs some paperwork for establishment.
This is objected to and has a legal form for your business. Corporation has strict guidelines. They protect you from personal liability. But paying tax becomes a problem in Corporations.
Points to remember:
It is always advisable to make separate accounts for business despite being any of the business types. It will be easy to file tax and to manage accounts.
You should look for a branch close to your store in case of a small business account, it will be helpful as you will make cash deposits and make changes.
Always store funds for your business, as opening a store needs upfront investment.
If space is yours then you must have property papers and if the place is being taken on rent then you must have a lease or rental agreement duly signed.