Stepping into the entrepreneurial journey is a difficult decision that many fear. You’re a step ahead & learning to understand the common problems you might face while registering a new company.
In a city like Bangalore, there’s been significant growth in many startups since 2020. There are 5,062 startups registered & certified by DPIIT as of March 31st, 2023. Just think of the startup & business ecosystem in Bangalore.
When you take a risky path, that definitely comes with hardships. Hence, I thought of researching & providing you a quick & easy insights about the most common problems faced during & post setting up a new company & how to overcome them.
This article outlines the opinions of experts from Actax India who have registered more than 200 businesses in Bangalore.
Table of Contents
What Are the Common Pitfalls To Register New Company in Bangalore?
So now, I will tell you directly! 44% of all Indian Unicorn startups are in Bangalore. This is more evident to show, how feasible the Bangalore location is to start a new business.
When I started a startup in 2019, I failed in less than 10 months. There are many factors responsible for it. My failed startup was incubated by IIM-K. Still, we failed. I sincerely realized many possible reasons for my startup failure while working on this article.
1. Avoid Choosing Wrong Business Structure for Company Registration
Among the very first and most important considerations that arise when you Register a new company is choosing the correct legal structure.
Possible choices are a Private Limited Company, Limited Liability Partnership (LLP), and One Person Company (OPC). All of these have different legal statuses, tax treatments, and operational freedoms.
A study carried out by the Ministry of Corporate Affairs shows that the main cause of failure among startups is the wrong choice of business structure which results in many issues in dealing with profits and legal matters.
We always recommend founders to first choose an expert consultation before proceeding with a company registration in Bangalore. This helps you to enlist the main challenges to Tax, compliances & competition landscape & make the right decision on the business structure.
2. Name Approval Process Can Be Headache, If not done right!
When you plan to Register a new company, the name has to be unique and reciprocate the legal requirements. Not doing your homework can lead to rejection from the Ministry of Corporate Affairs (MCA). 
An industry study revealed that approximately 23% of registration applications face naming troubles and are hence, likely to be postponed. There are few best practices to be followed before moving ahead with the company registration process.
Best Practices to Follow to Choose Name for New Company Registration –
- Don’t choose names that are identical or similar to the existing business. Also, avoid choosing names that violate legal provisions like emblems or Names (Prevention of Improper Use)Act, 1950.
- Check for name availability from the MCA portal. You can click here to check for name availability. If you don’t find any names similar to yours, then Chartered Accountants can certify applications directly to avoid Registrar of Companies [RoC] intervention.
- Don’t prefer names with restricted words like State, Government, etc., unless you meet specific criteria.
- In order to distinguish yourself from other business names, don’t use phonetic similarities, plurals, or generic words.
- If you want to use sensitive words like Bank, insurance, etc., then complete compliance declarations. Check with your Chartered Accountant for detailed information about it.
Make your company name approval process more easy & quick. Now, it’s taking at least 15 days to get approval. Hence, any rejections faced during this phase of registration can delay the company registration.
3. Improper Documentation Poses Severe Delay in Company Registration
Documentation is very important when you are registering a new company.
Some of the usual documents needed are identity and address proof of directors, and MOA/AOA. Any missing information or wrong data filled in forms may cause the application to be rejected or may take much more time to be accepted.
The survey reveals that about 40% of the respondents experience one problem or another originating from the lack of documentation when someone Register a new company, and I know you won’t want yourself to be counted among those 40%. View the List of Documents Required for Company Registration Here.
4. Stay Compliant with Indian Regulations - Else Lose Heavy
Compliance with the local laws is essential at the time when you are all set to Register a new company.
Some of the compliance issues that affect many business people include taxation, labor, and environmental laws. Lack of awareness can result in further consequences and can lead to severe penalties legally. Statistics show that companies that do not adhere to the legal requirements of a particular jurisdiction may experience more significant business interruptions. Learn – Mandatory Compliances for Pvt Ltd Company in India.
5. Never Ignore DIN & DSC in New Company Registration
All the directors of the company have to apply for a Digital Signature Certificate and Director Identification Number before the registration of the new company in India.
Some new business owners are under the impression that registration does not necessitate these elements, only to discover that it greatly slows down the process. Statistics show that around 15% of the applicants in Bangalore face troubles involving DINs or DSCs and often, they may suffer delays.
If you are an existing director of another business, no need for a new DIN or DSC unless it is up for renewal. If you are new to directorship, then it is mandatory to have a DIN & DSC. You can connect with our Actax India Experts for new DIN & DSC registration.
6. Take Wise Decision About GST Registration While Registering New Company
The post-registration compliance includes GST registration if the inventory crosses the prescribed threshold limit in a year.
If you are a Service-based business expecting an annual turnover of above ₹20 Lakhs, it is advisable to get GST registration in Bangalore. The same is advisable for any new product-based company that is expecting ₹40 Lakhs of annual turnover. This blog on Is GST Registration Mandatory? can help you find more answers about GST registration. 
There are penalties and legal consequences if a person has not registered for GST at the correct time.
A study exposed that organizations that fail to register with the GST at the right time may encounter challenges that slow down their growth rate.
7. Don’t Do It Alone—Get Expert Help to Register New Company in Bangalore
Our experts suggested that more than 70% of businesses have seen no problems or delays when they work with industry experts & professionals like Corporate Lawyers/Chartered Accountants/Company secretaries. Any new founder tends to make decisions on his own. But, according to experts opinion, it is not a good practice to decide things on their own when it comes to compliance.
Most business owners try to manage the complicated registration process on their own and end up incurring losses. Consultants like corporate lawyers or chartered accountants can assist in making these arrangements and undertaking proper legal reviews.
Actax India is working with 500+ businesses assisting them in accounting, tax regulations & business compliances to achieve 2x growth in their business. You can book our expert consultation below.
Book Expert Consultation for Company Registration
Expert-Backed Solutions to Easily Register New Companies in Bangalore
Here are some expert solutions to help Register a new company and at the same time, avoid the pitfalls mentioned above:
1. Do Your Homework Before Starting Company Registration –
- Pick the Right Model: Know the range of structures common to Indian organizations including Private Limited Companies, Limited Liability Partnership (LLP), and Sole Proprietorships. All have different legal and tax conditions, learn it, and check if it align with your business vision & expansion strategy. Then proceed ahead.
- Make Use of Resources: One can also refer to the sources of the government, such as the Ministry of Corporate Affairs (MCA), to comprehend the pros and cons of each structure and also refer to industry reports.
- Define Your Needs: To better understand which structure is suitable for your business, weigh options like legal responsibilities, taxes, and financing.
2. Check for Name Availability for New Company –
- Find Your Perfect Name: Choose possible names for your company that would indicate your brand values.
- Confirm Availability: Check the MCA portal to search for existing companies and trademarks for the name you have chosen for your business.
- Claim the Name: If the desired name is available, apply for a temporary reservation through the MCA’s Reserve Unique Name (RUN) service before completing the registration process.
3. Experts Say – Keep Your Paperwork Accurate
- Details of all documents needed to Register a new company are as follows –
- Digital Signature Certificate (DSC)
- Director Identification Number (DIN)
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Proof of identity and address for directors
- Address proof for the registered office
- Paperwork: Gather all relevant paperwork and make sure that it is complete and up to date.
- Error Check: Make sure to double-check each document to ensure there are no errors that would cause the submission to be rejected.
4. Always Try to Stay Updated with MCA Regulations –
- Up-to-date Info: Read newsletters from the MCA and other relevant authorities to get updates on changes in laws and regulations in your business field.
- Join Workshops/Webinars: Attend industry workshops or webinars that will discuss compliance issues that you may have in your business.
- Seek Legal Help: Contact legal practitioners who have extensive experience in corporate law to advise you on compliance in your business sector.
5. Get DIN/DSC Early for Registration – Expert Hack!
- Apply for DSC: Apply for a Digital Signature Certificate through a Certifying Authority. This can often be done online. But, prefer experts to do it.
- Get Your DIN: Register with the Ministry of Corporate Affairs to receive a Director Identification Number by providing ID and address proof & other essential documents.
- Start Strong: Start this process as early as possible when planning to register a new company because getting these licenses may take some time.
6. It’s Wise To Be Ready with GST while Registration
- Tackle GST: Determine whether the turnover of the business will on average be above the stated threshold for GST registration as you referred earlier.
- Finish the GST Setup: Once incorporated, register for GST through the GST portal by providing basic details of the business activities.
- Stay on Track: Ensure that you monitor the filing and payment of GST to avert attracting penalties.
7. Hire Right Professionals Who Are Also An Expert
- Identify Professionals: Search for consultants with adequate experience or firms offering company registration services. Verify their work experience and client testimonials.
- Cost vs. Value: Relate the fees charged for the professional services with the time that would be required and the mistakes that may occur when registering.
- Choose experienced professionals always. They always stay updated with current regulations & offer optimized services to avoid delays.
Confidently Proceed Ahead with New Company Registration in Bangalore
When you think of registering a new company, it all seems exciting and challenging. But let’s be real here—one stumble can quickly lead to some huge problems.
Hasty decisions such as selecting an improper business structure, not conducting proper research for the business name, lacking or losing documents, not being aware of compliance laws, or forgetting critical certifications like GST responsibilities can disrupt your proposals and agendas.
And let’s not underestimate the role of professional help – because it is better not to do everything yourself, right?
Addressing these issues with professionally developed strategies and realistic planning ensures that your business foundation is strong from the start.
The secret? Careful planning and thinking are your major assets in the current highly competitive market environment.
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