How to start a business in India

Before anything else: two questions that decide your whole path

There is a version of starting a business in India that takes six months and a consultant, and a version that takes a fortnight and a laptop. Which one you need comes down to two questions. Are you selling goods or services? And are you selling to people in your own state, across India, or abroad? A home baker delivering in one city, a freelance designer invoicing clients overseas and a founder raising seed capital share almost nothing on paper, and most confusion about starting up in India comes from reading advice written for one of them while being another.

The eight steps below are the sequence most first-time founders actually follow in 2026. Steps one to six are plumbing. Steps seven and eight are the business. The single most common mistake is letting the plumbing eat the first three months: plenty of legitimate Indian businesses start as a sole proprietorship, sell for a year, and only then incorporate — once there is something worth incorporating.

A necessary caveat, stated once and meant throughout. Registration rules, fees and turnover thresholds change with each budget and vary by state and by what you sell. Everything here is a starting point for your own research, not tax or legal advice — confirm the current position on the official MCA, GST, Udyam or your state government portal (or with a chartered accountant) before you file anything.

The eight steps, in order

1. 1

   Choose a business structure

   Sole proprietorship, partnership, LLP or private limited company. This one decision drives your registration route, your compliance load, your tax treatment and whether you can raise outside money later.

2. 2

   Register the business

   A company or LLP is incorporated with the Ministry of Corporate Affairs, currently through the SPICe+ form on the MCA portal. A sole proprietorship has no incorporation certificate — you establish it through Udyam (MSME) registration, a state Shops and Establishments registration and a current account.

3. 3

   Get PAN and, if you need it, TAN

   A company gets its own PAN and TAN as part of incorporation. A proprietor usually trades on their personal PAN. TAN is required once you have to deduct tax at source — typically when you pay salaries, rent or contractor fees above the prescribed limits.

4. 4

   Decide whether you need GST registration

   GST is turnover-driven and rule-driven rather than optional-by-preference. Check the current turnover thresholds for goods and for services, whether you supply across state lines, and whether you sell through a marketplace — each of these can make registration compulsory.

5. 5

   Open a current account

   Keep business money out of your personal savings account from day one. Banks ask for proof that the business exists — an incorporation certificate for a company, or usually two business-existence proofs for a proprietor, such as the Udyam certificate, a GST registration or a Shops and Establishments registration.

6. 6

   Take the licences your trade needs

   Food needs an FSSAI registration or licence. Most states require a Shops and Establishments registration for any premises with employees. Municipal trade licences, professional tax, an import-export code and product-specific approvals apply depending on what you sell and where.

7. 7

   Get online: a place to sell, a way to be paid, a way to deliver

   You need somewhere customers can see what you sell, a payment method they already trust (UPI, cards, cash on delivery), and a courier. That can be a marketplace, a social account, your own store, or a combination — the trade-offs are real and are covered below.

8. 8

   Get your first ten customers

   Nothing before this step earns a rupee. Tell everyone you know, list where your buyers already look, answer questions faster than anyone else, and treat the first ten orders as research rather than revenue.

Step 1 — Choose a business structure

This is the decision everything else hangs off, and it is reversible, which people forget. You are trading three things against each other: how much personal risk you carry, how much paperwork you do every year, and whether an investor or a large customer will take you seriously.

A rough rule that holds for most people reading this: if you are one person selling goods or services with limited downside risk, start as a sole proprietorship. If you are two or more people sharing profits in a service business, an LLP gives you limited liability without full company compliance. If you intend to raise money, issue equity to a co-founder or employee, or sign contracts where the counterparty will ask who they are contracting with, incorporate a private limited company and accept the compliance load that comes with it.

Step 2 — Register the business

What registration means depends entirely on the structure you picked, and this trips up almost everyone.

• ✓A sole proprietorship is never incorporated. There is no certificate that says the business exists. You establish it sideways, through the registrations your work requires: Udyam for MSME status, a Shops and Establishments registration from your state where applicable, GST if you need it, and a current account in the business name.
• ✓An LLP or a private limited company is incorporated with the Ministry of Corporate Affairs. The current route is the SPICe+ application on the MCA portal, which bundles name reservation, incorporation, director identification numbers, PAN and TAN — and usually the employee provident fund and state insurance registrations — into one filing. Directors need digital signature certificates before filing.
• ✓Udyam is the MSME registration, and it is worth doing early. It is free on the official Udyam portal, self-declared, and based on Aadhaar and PAN. Most government schemes, priority-sector lending and the statutory protections against delayed payment by larger buyers key off this registration rather than off incorporation.
• ✓Your business name is not automatically protected. An MCA name approval stops another company using the same name; it is not a trade mark. If the name matters commercially, look at a trade mark application separately.

Fees are the part where articles age badly. MCA charges depend on authorised capital and on state stamp duty, digital signature certificates are priced per director by the issuing agency, and professional fees vary by an order of magnitude between cities. Check the current fee schedule on the official MCA portal and get two quotes before you commit — do not budget from any number you read in a blog post, this one included.

Step 3 — PAN, TAN and the tax basics

A company or LLP receives its own PAN as part of incorporation, and it is a separate taxpayer from you. A sole proprietor has no separate PAN — the business income is your income and is filed on your personal return, which is one of the genuine simplicity advantages of the structure.

TAN is a separate number, needed once you have to deduct tax at source. In practice that arrives when you start paying salaries, rent above the prescribed limit, or professional and contractor fees above the prescribed limit. Many first-year one-person businesses never need one. Some states also levy professional tax on businesses and employees; whether it applies to you is a state question, so check your own state portal.

Step 4 — Decide whether you need GST registration

This is the single most misunderstood step for people starting an online business, so it is worth being precise about what is uncertain.

As of 2026 the thresholds commonly cited are annual turnover of around ₹40 lakh for a supplier of goods and around ₹20 lakh for a supplier of services, with lower limits applying in some special-category states. Treat those figures as orientation, not as your answer: thresholds have been revised more than once, they differ between goods and services, and states have opted into different limits. Verify the current numbers on the official GST portal.

Turnover is also not the only trigger. Several situations have historically made registration compulsory regardless of how little you sell — supplying goods from one state to another, and selling through certain e-commerce operators among them. That last one matters enormously if you are choosing between a marketplace and your own store, because it can change a zero-compliance business into a monthly-filing business. Ask the specific question before you list, not after.

• ✓Registering voluntarily can be worth it if your customers are businesses that want input tax credit, or if you buy taxable inputs and want to claim credit yourself.
• ✓Registering also means returns — monthly or quarterly depending on the scheme — so factor in either your time or an accountant's fee.
• ✓There is a composition scheme for small suppliers with a lower rate and lighter filing, with its own eligibility limits and restrictions. It is a real option and is worth asking about.
• ✓If you sell to customers abroad, export treatment under GST has its own rules and paperwork. Do not assume it works like a domestic sale.

If you want to sanity-check what GST does to a price you are quoting, we keep a free GST calculator that adds or removes GST at the common slabs. It is arithmetic, not advice — it will not tell you whether you are required to register.

Step 5 — Open a current account

Do this before your first sale, not after your accountant asks for statements. Mixing business receipts into a personal savings account makes your books unreadable, complicates any future loan application, and in some cases breaches the terms of the savings account itself.

Banks want evidence the business exists. For a company or LLP that is straightforward: the incorporation certificate, the entity PAN, the constitutional documents and a board resolution. For a proprietorship, banks typically ask for two independent proofs of business existence, and the usual combination is the Udyam certificate plus a GST registration, a Shops and Establishments registration or a professional licence. Requirements differ between banks, so ask two before you gather documents for one.

Step 6 — Take the licences your trade needs

Nobody needs all of these. You need the ones that match what you sell, where you sell it and whether you employ anyone. The list below is a prompt for your own research rather than a checklist to work through.

• ✓FSSAI — anything edible. Home kitchens, cloud kitchens, packaged food, spices, sweets and beverages all fall under food safety regulation, with a basic registration at the small end and licences at higher turnover. Labelling rules apply on top.
• ✓Shops and Establishments — a state registration. Most states require it for commercial premises, particularly once you employ anyone. The name of the act, the trigger and the renewal cycle all differ by state.
• ✓Municipal trade licence. Some local bodies require one for trading or manufacturing at a given address. This is a city-level question, not a national one.
• ✓Import-export code. Needed if you intend to import stock or export goods. Separate from GST, and separate from any courier paperwork.
• ✓Product-specific approvals. Cosmetics, drugs, ayurvedic products, toys, electronics and several other categories carry their own licensing or quality-mark requirements. Packaged goods sold by weight or measure also attract legal metrology declarations, and plastic packaging can carry extended producer responsibility obligations.
• ✓Employment registrations. Provident fund and state insurance registrations become applicable once headcount crosses the prescribed thresholds. A company incorporation via SPICe+ usually takes care of the registration itself; the obligations start when the headcount does.

Step 7 — Get online: a place to sell, a way to be paid, a way to deliver

Once the paperwork is moving, the business needs three practical things: somewhere a customer can see what you sell, a way for them to pay that they already trust, and a way to get the thing to them. In India in 2026 there are three realistic routes, and they are not mutually exclusive.

• ✓A marketplace— Amazon, Flipkart, Meesho and the category-specific ones. You get demand on day one and infrastructure you did not have to build. In exchange you pay a per-sale commission, compete on price inside someone else's search results, do not own the customer relationship, and may trigger registration requirements you would not otherwise have.
• ✓Selling through Instagram or WhatsApp alone — how a very large number of Indian businesses actually start. It is free and it works, until the volume arrives: orders live in chat threads, payment confirmation is a screenshot, and nobody can tell you what you sold last month.
• ✓Your own store — a page you control, with prices, stock, a checkout and a record of every order. It carries none of the reach of a marketplace, so it works best pointed at from the places where your customers already are.

Most first-time sellers end up combining the second and third: keep finding customers on Instagram and WhatsApp, and send them to a store that takes the order properly. That way the commission stays at zero and the customer stays yours.

Where SitesPlaced fits, honestly. We build one of the store options, so treat this paragraph as what it is. On SitesPlaced, publishing a store costs ₹0, with unlimited products, Razorpay for UPI, cards and net banking, cash on delivery, WhatsApp checkout, Shiprocket and Shipmozo for shipping, PDF invoices and 17 store themes — at 0% commission on your sales. The paid Ecommerce plan is ₹499 a month (an early-bird price for the first 30 stores; ₹999 after) and adds a custom domain, removal of the SitesPlaced badge, AI-written copy, store analytics, Meta Pixel with the Conversions API, and WhatsApp Business API order alerts from your own number. There are other builders with genuine free plans in India, and we compare them fairly on our ranked list of free store builders. If you are still choosing between a marketplace, social selling and your own store, the route comparison is the page to read next.

Step 8 — Get your first ten customers

Everything above this line is cost. This is the first step that produces revenue, and it is the step people postpone by going back to fiddle with the logo. The first ten orders are not really about money — they are the cheapest market research you will ever run, and they tell you whether the price is right, what the objections are, and which product you should have led with.

• ✓Tell every person you already know, individually, once. This is not marketing and it is not beneath you; it is how most Indian small businesses get their first month.
• ✓Be present where your buyers already look — the local WhatsApp groups, the Instagram hashtags, the community forums, the two or three local shops that would stock you.
• ✓Answer faster than your competitors. In a market where most enquiries arrive as a DM, response time is a genuine differentiator.
• ✓Photograph the real product on a plain background in daylight. Bad photography costs more sales in India than bad pricing.
• ✓Publish a return and delivery policy before you are asked for one. It removes the largest single objection a first-time buyer has.
• ✓Track where each of the first ten orders came from, so you know what to do twice.

What it actually costs to start

Nobody can give you a single number, but the shape of the spend is predictable. Udyam registration is free on the official portal. GST registration itself carries no government fee, though compliance costs time or an accountant. Incorporation is the real cost line, and it varies with authorised capital, state stamp duty, digital signature certificates and professional fees. Licences are trade-specific. Inventory, if you hold any, is usually the largest number in year one.

On the online side the floor has genuinely dropped: a published store, a payment gateway account and a courier integration can cost nothing until you sell, which means the honest minimum for a services or made-to-order business is close to zero. Before you set prices, run them through a profit margin calculator with your real shipping, packaging and payment-gateway costs in it. The most common first-year mistake in Indian ecommerce is a price that looked fine until a courier charge and a return landed on it.

Mistakes that cost first-time founders the most

• ✓Incorporating a private limited company on day one for a business that has not yet made a sale, then paying compliance costs on a shell.
• ✓Assuming GST is optional because sales are small — the turnover threshold is not the only trigger, and marketplace and inter-state rules can catch you.
• ✓Running business money through a personal savings account for the first year.
• ✓Waiting for the paperwork to be complete before talking to a single customer.
• ✓Building on a marketplace or a social account alone, and discovering in year two that you have no customer list of your own.
• ✓Pricing without shipping, packaging, payment-gateway charges and returns in the calculation.
• ✓Taking legal or tax specifics from an article instead of the official portal or a chartered accountant. Including this one.