Regardless of the good financial results of IT companies in India, the IT industry is growing dynamically, and there are plenty of orders for programmers, testers and system administrators. In connection with very attractive earnings, which is characterized by the computer industry, it is worth considering setting up your own business of this nature. How to set up IT companies in India step by step is described in the article below and Read more to know more steps. 

How to set up an IT company - general characteristics of an IT company

An IT company may provide services in the field of: 

• building websites,
• management of own and purchased IT systems,
• system administration and configuration,
• computer network security management,
• data archiving. 

Services that IT companies are associated with are: 

• repair of computers, workstations, and servers,
• broadly understood computer service.

Preliminary requirements for running an IT company 

The IT company does not oblige to have permits or concessions. The formalities to be completed include only the standard company registration, which will be described in detail below. However, the owner of an IT company should comply with legal requirements regarding copyright, especially in the sphere of use and sharing licensed programs. 

Acceptable forms of running IT companies in India

An IT company can be run in the form of:

• sole proprietor,
• civil law partnership, 

Which requires registration via the CEIDG-1 form. The CEIDG-1 application is submitted to the commune or city office in person, by post or electronically. It is also an application to the Social Insurance Institution, the Central Statistical Office and the tax office. In the case of a civil law partnership, the fact of its existence must be reported by each partner separately on the CEIDG-1 application, as appropriate. 

Submission of an application is tantamount to an entry in the central register of economic activities, which involves obtaining the NIP and REGON numbers. Getting an entry is free.

The future owner of an IT company may also decide to run the company in the form of a commercial company:

• general partnership,
• limited partnership,
• limited joint-stock partnership,
• limited liability companies,
• joint-stock company. 

A commercial company is registered in the National Court Register. IT companies in India cannot be run in the form of a partner company. 

The best form of taxation for an IT company 

The future owner of an IT company in terms of the form of taxation has to choose, in principle, all possible forms of taxation in force in India. When choosing, he should estimate the planned revenue and the amount of possible tax-deductible costs. 

IT company with or without VAT? 

Entrepreneurs, when opening an IT company, generally do not have to register for VAT - they can take advantage of the exemption from VAT. 

There is, however, an exception that prevents you from taking advantage of the VAT exemption. This situation occurs when an IT company provides consultancy services because this type of service excludes the possibility of using the VAT exemption. 

A taxpayer using a personal exemption must observe the indicated turnover limit during the year. Its exceeding will require registration as an active VAT taxpayer. 

When is it worth being an active VAT taxpayer? This option will be beneficial for those who: 

• will provide services mainly to active VAT payers,
• provide services taxed below 23% (there will be an excess of input tax - expenses, overtax - sales), or
• as part of their activities, they will carry out intra-Community transactions.

If you want to act as a taxable person subject to VAT exemption or an active VAT taxpayer, you must submit a VAT-R declaration to the relevant tax office. 

A cash register for IT companies in India? 

The regulations impose an obligation to record sales at the cash register on entrepreneurs who provide services to natural persons who do not run a business and flat-rate farmers. However, as in the case of VAT, an entrepreneur has the right to benefit from an exemption from the cash register, if he has not exceeded the set turnover limit, and the type of products is not listed in the catalog of goods, which should be purchased.

In the event of using the cash exemption (up to the limit of PLN 20,000), sales should be recorded in the form of the so-called non-accounting sales records, where each sale to natural persons and flat-rate farmers should be included. 

Online accounting 

Modern business can be managed in a modern way. Independent accounting is possible today thanks to numerous online accounting programs. One of the most popular on the market is the accounting system, which thanks to the invoicing or integration with the e-banking system allows you to run a business efficiently and save valuable time for the entrepreneur. Invoicing services or running services through online facilitates everyday work. The program is fully adapted to the structure of IT companies in India and allows for full HR and accounting services.