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5 Reasons Why Company Registration Is Not a Good Idea

Is it mandatory to register a company before starting a business in India? No, it ain’t! You need not do it. There are many other ways to start a business in India that most of the people are not familiar with. The simplest way to start your own business is to acquire a tax license. There are several others ways to do it. Registering a company in India is not always a good idea in this part of the world. Here are the 5 reasons why you should not register a company in this part of the world.
1. Costly Affair
A startup already has limited funds and it would not like to waste them by company registration. Since it has many ideas and limited money, it would focus on value addition. Using that money in company registration is a poor idea as it is a costly affair. This will also further annual compliances and the penalties that come along make it worse.
2. Complexities of Companies Act
Once you are registered as a company, then you have to follow the stringent and binding provisions of the Companies Act. You are bound to comply several restrictions once you have registered as a company. This may also lead to you getting in trouble. There are a number of transactions that are under the lends of the law.
3. Not serious
As per the data available, only 50% of the registered companies are operative and active. The rest are not working at all. This is due to non-commitment. If you want to register a company, be sure that you’re committed to work and your business idea. If you are not sure, then first give your idea a try and then register the company.
4. Yearly compliance cost
If a company is registered, there are annual compliance costs for audit, filing of board meetings, annual filings etc. which depend on the turnover of the company. A minimum of it would be around ten thousand. Hence there is no point in spending on a thing that is not necessary to do. It would only add burden for a company.
5. The MVP dilemma

Before reaching to any conclusion or spending big, you should check the minimum viability of the product. Hence if you had already incorporated a company and then checking the MVP, then you might have to think again before you are planning to do these things.

This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for GST Software, GST Return Filing, GST Registration, Section 8 Company Registration, Nidhi Company Registration, IEC Registration, Fssai License, File ITR Online.

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