Essential registrations while starting a manufacturing business
Ekta Shah
If you are planning on starting your own business, especially a manufacturing unit, then there are certain essentials that you must know about the business, since they will help ease the process of starting and running the business and also streamline the entire process of operating the business.
A manufacturing business is in essence a business that involves a lot of people and has to deal with a number of other business owners, such as the producers or suppliers of raw materials required for the manufacturing process, the transportation owners who deliver the raw materials to your manufacturing unit and the finished goods to the market, the retailers or the end users user who sells or uses your finished products, the technicians and workers who help handle the machinery and equipment, the employees who carry out the actual manufacturing process and several other people who provide support and help at every stage of the manufacturing process and handle the various miscellaneous jobs. All of this implies that a manufacturing business involves dealing with a number of people and businesses and even has a number of people working for the business too and thus it can be quite a difficult task to handle the business alone and therefore a sole proprietorship or even a partnership with the unlimited liabilities of the business are not the appropriate options while considering to register a manufacturing business.
Registering A Manufacturing Business
Now that it is clear that while deciding to register the manufacturing business under a form of business entity, certain types of business entities are not favourable and thus opting for company registration is an optimum choice for a manufacturing business.
A Company is a legal entity that is composed of a team of people, known as members, wherein the liability of the members or shareholders is limited to their shareholding in the Company. The features of a Company, apart from that it is a separate legal entity, is that it is governed by the Companies Act, 2013 and requires a minimum of one member and one nominee to form the entity. Also, a Company has perpetual succession and needs a legal procedure to be followed in order to dissolve the Company. Additionally, the liabilities and responsibilities within a Company are divided among the members and nobody is completely liable for the others misbehaviour or ill-conduct or for the entire functioning of the business.
The types of Company that a manufacturing business can register as include-
- One Person Company or OPC
- Private Limited Company
- Public Limited Company
Apart from knowing what a company is and its type, it is important to know of the company incorporation documents in order to register the business.
- GST Registration
After registering the business as any one type of company, the next step is to register the manufacturing business under the GST scheme, which stands for Goods and Service Tax scheme. This GST is a uniform taxation structure that is applicable for all the businesses dealing in goods as well as services and is the same throughout the country. This means that even if the manufacturing business is located in one State and is doing business with or procuring raw materials or supplying to another State, the taxation structure will remain the same and unnecessary expenses such as octroi charges at the border checkpoints of the States and several minor taxes levied which can be a burden can be done away with. Thus, GST registration is mandatory for every business, including a manufacturing business and can be applied for via an online application form.
- Udyam Registration
Another registration which is a must for a manufacturing business, which can be categorised as a micro, small and medium enterprise or an MSME is Udyam. The Udyam Registration helps the business benefit from various schemes and also appears as a trust worthy, a registered company that others would readily prefer to do business with. Also, loans are granted sooner, sometimes even at lower interest rates to businesses that are registered under the Udyam Registration scheme and can thus gain from several such similar schemes and benefits. The Udyam Registration is also an online process and the Udyam Registration is received almost immediately after filing in the form and submitting the necessary documents.
Thus, the essential registration for a manufacturing business includes registering as a business entity, registering under GST and Udyam Registration. Apart from these, the registrations can vary according to the State and might be specific to the nature of the manufacturing business.
NOTE-Author Bio: Ekta Shah is a part of the marketing team at deAsra Foundation. She helps entreprenuers in their journey. She loves reading, cooking and travelling in her leisure time. The views expressed are personal.
December 8,2020
