Setting Up a Business in India – The Mandates and Must Do’sShuchita Gupta
With rapid growth, and a diverse economy, a dramatically different environment and the varied business landscape, India is attracting international business interest and many western investors. With start-ups on rise and the sustained progress of India’s economy, all has helped the country build a prominent place for itself in the world business stage. And today more and more people from foreign lands or from the country itself are looking out to begin their entrepreneurial journey and set up their business in India. Now, whether you are setting up a business in India as a foreigner or as a domestic owner you need to know the policies, procedures, licensing documentation etc. The favourable business environment may be welcoming, but setting-up a business is no cake walk –starting with a strong idea to a strong foundation, from legal mandates to team building, one has to focus on every detail and build a strategy around it so that you can successfully launch your business. Once you’ve decided that you want to take the leap of faith and start your new business, the most important question arises is, what steps should a founder consider taking right after incorporation? Well, the article aims to answer this question, helping you get your new business in India off to the right start.
Pre- and post-incorporation checklists
Here’s listing a bunch of key issues that one needs to consider when setting up a new company in India.
For your new business, pick a name – One of the first things you will need in order to incorporate a new business in India is a name for the new corporation. A basic Google search isn’t enough, a preliminary trademark search is highly recommended. Most companies also check the availability of a URL and social media handles before making a final decision on the company’s name.
For businesses with multiple founders, determine how stock will be allocated for each – Companies
with more than one founder, have an additional task to decide how to allocate the company’s stock amongst themselves.
For smooth running of the company, identify board of directors and officers – Every company has a board of directors, and the number of directors is specified in the corporations by laws. The mandate officer positions for a corporation are President and/or Chief Financial Officer, and Secretary. You may have individuals covering for different positions or one may serve all three positions.
Legal documents filed and prepared – Make sure all the legal documentation is taken care of. Incorporation of the company may not take much time but documentation would. Right from indemnification agreements to property assignment to employer identification number, the process can be quite complex. So make sure you avail professional services to meet the requirements.
Have appropriate forms for hiring employees or consultants – Having an appropriate offer letter and employee proprietary information and inventions assignment agreement is essential to establish an effective on boarding process. Having the right document in place will help in preserving the company’s intellectual property and confidential information.
Appropriate commercial agreements are must haves –Your new business in India should consider what agreements are needed to execute on its business model. For software companies, having an appropriate form of license agreement and distribution agreements is usually a good start. Those agreements may include just end user terms or beta, trial or evaluation terms. For ecommerce businesses in India or companies that are selling tangible products, sales terms and conditions may be needed.
A company with chartered accountants, a CFO and Corporate Relationships can be the guiding party. You can also look at hiring an Interim or Virtual CFO who can manage all the legal & licencing matters for you.
Finance Effectiveness and CFO Services
While starting up a new business, as a founder you may play multiple roles in your company –starting from employee management to bookkeeping to customer service to looking after the payroll and what not! Why? May be to save cost, may be you can’t trust someone with company decisions or you feel the need to do multi-tasking to have an eye on everything. No matter the reason, remember, multitasking can be tedious. And besides managing various responsibilities, you have to prepare your business for future growth and development. And financial management is one of the most crucial aspects of planning for the future. Without a solid financial plan, you will struggle to stay ahead of the business growth. So, you need to bring in the right people to infuse your business plan with the expertise that is needed.
Need of a CFO
Putting together a solid financial system is not about hiring an accountant or a bookkeeper to track the invoices. A new business would need someone who can assess the current cash flow and long-term projections. An expert who can help you make educated decisions regarding the management of your business. A finance trainer who will look at the intended outcomes for the company and help you create systems to set the company up for success. A CFO on board can create a detailed plan for business growth and success. They not only chalk out the plan but oversee the steps to implement the necessary systems.
Outsourced CFO Services as Finance Business Function
As a new business owner, you are always looking for ways to save money and there’s nothing wrong in it. A penny saved is a penny earned after all! Therefore outsourcing financial advice or outsourced CFO services can be a great tool to save costs. You can avoid the large overhead salary that many CFOs demand, while still accessing the guidance that you need. These services can be a great way to boost profitability, revenue, and support the financial health of your company. Here’s how:
CFOs bring ‘a going forward’ strategy
CFO services fill a critical role in setting up a business by bringing deep industry experience and a broad perspective. A CFO Service adds a third-party view with the ability to do more in-depth internal assessment and help you locate your unique place in the Indian market. The right outsourced team will help you break down your overall business goals into quantifiable and measurable goals to lead the company along its strategic path.
CFOs bring in insights
A CFO can identify the data, understand the factors that may affect or influence products and services. They can provide you with the type of small business financial insight you need to make decisions about where you want your future focus. An outsourced or virtual CFO will set up a financial dashboard designed specifically for your business and business type that will continuously present key metrics, for your quick reference.
CFOs keep the finance running
For a new business, finances can become more complex and may need a greater security and oversight. When a CFO takes the task of financial management, she will implement a system of internal controls to ensure compliance, avoid errors and fraud and manage the privacy of information for your employees and customers and your business overall. A CFO will also ensure that all the finance work is done in a timely fashion to manage cash flow and optimize processes as well as resources.
Whether you’re facing an existing challenge such as cash flow problems or sustaining growth or looking to achieve an accelerating growth, no matter the challenge, a CFO can come up with a suitable solution. We are experts in financial strategy, industry analysis, optimizing systems, and maximizing profits and we stand ready to offer expertise and guidance through any business running scenario. Get in touch to learn more!