If you’re launching a startup in India, the first thing you need to sort out is tax registration. Without the right paperwork you’ll face penalties, delayed refunds, or even a shutdown. The good news is the process is straightforward once you know the exact steps and the documents required.
Start by deciding your legal structure – sole proprietorship, partnership, private limited, or LLP. Each form has its own set of tax IDs and compliance requirements. Most founders pick a private limited company because it offers limited liability and easier access to investors.
Next, apply for a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN). PAN is your main tax identity; you’ll use it for filing income tax returns, opening bank accounts, and signing contracts. TAN is needed if you plan to deduct tax at source on salaries or vendor payments.
Once PAN and TAN are in place, check if your business needs Goods and Services Tax (GST) registration. If your turnover exceeds the threshold (₹20 lakhs for most states, ₹10 lakhs for special category states) or you sell online, you must register for GST. The GSTIN you receive will appear on all your invoices and helps you claim input tax credits.
For startups in Andhra Pradesh, you also have to register with the state tax department for Professional Tax and Employee State Insurance (ESI) if you have more than ten employees. These registrations are done online through the AP Labour Department portal and keep you clear of state‑level fines.
Finally, keep a record of all your incorporation documents, PAN, TAN, GST certificates, and any state tax IDs. Store them digitally and maintain a hard copy. Good record‑keeping makes filing returns smoother and protects you during audits.
One common mistake is delaying PAN or GST registration. The tax department can freeze your bank account or reject invoices if you’re not registered on time. Apply as soon as you get your business name and CIN.
Another pitfall is mixing personal and business expenses. Keep a separate bank account for your startup and track every transaction. Mixing funds makes it hard to claim deductions and can raise red flags during assessments.
Missing quarterly GST returns is a big risk. Set calendar reminders for each due date and file on time, even if you have zero sales. Late filing incurs interest and penalties that add up quickly.
Lastly, ignore state‑specific registrations. Andhra Pradesh has its own Professional Tax rules, and failing to register can lead to penalties that could have been avoided with a quick online form.
To stay compliant, create a simple checklist: legal structure → PAN/TAN → GST → state tax IDs → dedicated bank account → regular bookkeeping. Review it every month and update any changes in turnover or employee count.
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