Start working ASAP

At my post Legal process to start the company, I had said the following:

When setting up a new business you would like to start giving your service or selling your product immediately so as to begin receiving returns very soon. And it is in deed possible (at least that's what I did)...

And Chitra, a reader of the blog, said in a comment at Final Submission to register your company:

You are right in some sense but clear me one thing if we r going to develop a software company or some what a web development company,then do u think it is possible to start the service(or starting a project)exactly before registration of the firm.
Or in general, for a product based firm it will be tough to set up the machinery before any legal process.

I guess there are two options.

One is dedicate yourself full time to do the process of setting up the company. This way, the process will be quicker and you will perhaps do it better because you will be fully concentrated on it. However, there will be quite a few idle times because you will be just waiting for some of the approvals.

The other option is to work as if the company already existed. You can work in a sole proprietorship basis (which does not require any legal work). Or you can associate with another already setup company which belong to a friend and do the services through that. Or you can start offering the service to clients, invoicing them, if required, in a personal basis, as a professional does. Or you can just tell your clients that you are about to open the Pvt. Ltd. ("I'm just waiting for the final approval") and you will send the invoice at that time. There are countless things you can do.

Besides, during this time, since you are starting, you can have a main focus on the marketing. The only fear could be that you build brand name of a company for which you are not yet the owner, but I think there is little to fear in this respect. You can check availability of the name in the MCA web-site, and besides you will get the approval for the booking of the name (form 1A) in just a few days or maximum weeks. I don't think there are very high probabilities of loosing the name (perhaps the full name yes, but not the main keywords).

Ethics and business

I firmly believe that ethics and morality go before business, any time, even if at times it may be difficult.

If you had visited my blog earlier, you may have noticed there was a video at the bottom. It came from an application which gave an advertisement and then a video from a "channel". For my blog I had chosen Times Now, the TV news channel, because it had interesting news and some pieces about culture or Indian cooking I thought could be interesting for the readers as well.

But a few days ago I received an e-mail from a reader telling me the video being shown was a little "off", meaning immoral. I wrote to the providers asking them not to publish such videos but it seems it was not possible. I thought of giving it a few days...

This morning, when I opened my blog to see a comment which had been posted, I found another video which I thought was not apt for all public... I have removed the widget. It's a pity because there were also interesting news, and in theory I was earning some Rupees through that advertising (perhaps after 10 years I would have been able to buy a new keyboard out of that money!). Goodbye videos on my blog!

Talking about Business Ethics, perhaps you would like to visit and subscribe to this other blog. I subscribed a few weeks ago and seems to be good stuff: Business Ethics Blog, by Chris MacDonald.

Sorry for the pause in posts about the legal process, but the last two posts have come out somehow spontaneously. Next post will be about the forms 1, 18 and 32.

Outsourcing and lifestyle

I came across (not by chance) this article today at MercatorNet: Is outsourcing exploitation?. And I think it is quite an interesting read for those of us working in India and who have somebody working under us. Especially of course, if our clients are abroad. And even more importantly, if we have other companies as providers for us.

Outsourcing is definitely helping the life of many people. Slowly the lifestyle is improving in many parts of the world, and the gap between developed and developing countries is becoming smaller.

Some would like it to be quicker: let's work for that. We are the ones supposed to be helping the people working with us or for us to improve society in general.

Problems with re-submitting

Have I written about re-submission of e-forms earlier? I think I did, but I was quite optimistic. A few weeks back, I submitted a form 1A (to register the name of a new company which we are incorporating). However, it was rejected because a non-compulsory field was not filled up (if it is actually compulsory why they don't mark it as compulsory? I don't know).

At first, I tried re-submitting but the status of my SRN was "to be clarified" thus I couldn't re-submit. I contact the support of the MCA website and they quickly and efficiently changed my status.

Then, again I tried re-submitting. After downloading the latest e-form, filling it up (which in this case does not need digital signature), pre-scrutinizing it and trying to upload it, I was told: that I needed the latest version of the e-form. I thought: "this must be a small programming mistake which will be corrected in a few days time". So, I waited. After a few days, I tried again, but didn't work. So, I again sent an e-mail to same highly efficient people that had helped earlier... this time I wasn't so lucky. They didn't reply.

I decided to try again uploading after a few days... nothing. I wrote again to the support people, and no reply. Finally, the time for re-submitting is due. I have been sent an e-mail telling me that, if I want to submit the form again, I will have to do it afresh (i.e. paying the fee again). I've written to the support team complaining about this, but I only get silence... this is really quite disappointing!

I guess I could try fighting for this out, but perhaps the most efficient and less costly way of getting my things done is simply to spend again the Rs. 500 for submitting the form and forget about the issue (hopefully this time it will work fine). Perhaps I shouldn't forget so easily about this and claim my rights... but unfortunately I don't think I have the time, nor the patience to do so.

Drafting Memorandum and Articles of Association

When I first started setting up the company, I wanted to do as much as possible (I hoped everything would be) on my own, until I reached the point for drafting the Memorandum of Association and Articles of Association. That's what made me decide that I needed professional help.

The MoA and AoA (short forms for Memorandum and Articles of Association respectively) are drafted by solicitors. I think the best way to do it, is through your Company Secretary who already knows well what you want and what you need, and for sure will be in contact with a good solicitor who can do the job within your budget (considering the fees of the CS are already within your budget, of course).

The MoA and AoA are quite important for the future development of your company. They will state what your company does. Hence, if the panorama of the MoA and AoA is not wide enough, you will find yourself into trouble when you plan to expand the services or products offered by your company, as in theory, your company should not be doing that stuff. Thus, when drafting the MoA and AoA ask the solicitor to try to include as many services and products as you can think of, which of course, are in a way related to the main service you are starting with.

For instance, if you are planning to set up a company to sell pencils, don't write just pencils in your MoA and AoA. It would be better if you write manufacturing and selling of stationery items, paper making and recycling, printing, publishing, etc, i.e. all kind of related activities which one day may fall in your sphere. The idea is that, when more business opportunities come your way, you do not be constrained by something as small as this. I guess you would just have to re-draft the MoA and AoA, but why to take the trouble if you can avoid it?

e-Filing: Submitting forms at Ministry of Company Affairs

Submitting a form has always scared me as something being a waste of time: filling up a form without knowing for sure what to write, standing on a queue for a long time, getting a challan and go to pay it at another place, go back with the receipt and get the acknowledgment, etc. Or get a middle man who would do this for you and twenty other people at a much quicker pace but opening a wide space for illegalities and corruption which ultimately harm the whole system.

Thank God, the Ministry of Company Affairs decided to do away with all that not very long ago. Now-a-days, you can only submit forms through their e-Filing system at www.mca.gov.in. From there you can do everything, from downloading the pdf form to paying the fees and getting your approval or whatever you are trying to get.

Today I submitted my application for a new company which I’m opening with my friend.

First, you need to register in the site. At least, for submitting Form 1A it is enough to register as a “Registered User” (the other option is “Business User”).

Once you are inside, do read the steps for filing forms. An interesting warning they give there is that you should download the latest form every time you want to submit a form as they change often (in my case I had filled up an old Form 1A I had saved from last year, and had to do it again in a newly downloaded form).

You will see it is quite a simple procedure: download the form, fill it up, pre-scrutinize it (correct any errors you may get), add your digital signature to the form, submit it… all of this through a Java applet (get ready to wait for few seconds/minutes while the whole thing is uploaded). Then, you will be re-directed to the payment get-way which may be through net banking (there are only a few options of banks), credit card or printing a challan and paying at the bank physically (I guess this is in case you want to remain in the old good times).

After you have paid you will get a confirmation message, but which disappears in almost no time. Thus, just in case, check the payment status. If it says PAID, then great, otherwise you will have to use the re-submission facility (you should have taken note of your SRN) and pay again.

All of this is, of course, for Form 1A, where you don’t need the signature of a Company Secretary or Chartered Accountant. Later on, for other forms you will need it and most probably they will do the for you.

By the way, as a correction to my previous post a name through Form 1A is now only for 60 days, instead of 6 months as it used to be earlier. For renewing you have to pay Rs.250 in case you haven’t incorporated your company yet.