The Association of Chartered Certified Accountants (ACCA)published a report in 2017 stating that India will lose 13.6% of its GDP due to the shadow economy by 2025. The report titled as ‘Emerging from the Shadows: The Shadow Economy to 2025’ highlighted the possible toll which SE can take on the economy of the country.
The shadow economy is when businesses and entrepreneurs deal in a business often concealed and illegal from public authorities.
As this leads to continuous shrinkage in GDP growth, Compregi has underscored the growing need for business registration for entrepreneurs. Compregi is a leading consulting firm and service provider for business development.
A bedrock of any successful firm is credibility. A credible business is the primary reason why one must register their business under public authority. Many Fortune 500 companies have shed light on the link between an organisation’s reputation and credibility. Having authorisation from the government, a company is unlocking the trust of doors for investors, customers, and partners. This stands out as a beacon to tick on merits that can contribute to long-term success, possible only via registering the business.
Business registration is significant in providing a legal entity. It provides legal protection by separating personal liability and securing a person from lawsuits and business debts. This also helps entrepreneurs comply with taxes, licensing and legal ownership rights, securing them from heavy penalties and legal liabilities. As the Interim Union Budget 2024 has been passed, the penalty for contravening special registration will be penalized up to ₹1 lakh (Article 122A). This shows how necessary it is to get registered to secure the business.
Banks have established criteria where they provide loans to businesses only if they are registered. Business registration provides certain documents and grants to businesses, which makes them eligible to avail loans or a line of credit. Business registration also removes personal income tax from business finances and provides legal financing and financial transparency.
It also helps entrepreneurs to get favourable interest rates, larger loans, and establish a credit card history.
Now, this further helps businesses with equity financing. Registering a business expands financial structure as it unlocks investing opportunities. By formalizing the structure, investors are attracted to invest more, which helps raise funds. Moreover, this benefits the business to raise money while they sell the shares of their companies.
Furthermore, it shields businesses from the most important part- the right to intellectual property. The right to intellectual property refers to a person’s rights over their creation and creativity. Businesses can assert rights over their logo, brand name, trademarks, and copyrights. When registering the business, a person is given a right, and violation of it by anyone can be entertained in court by the business owner.
Through extensive research, Compregi realized that many companies in India closed their business, lost grip on intellectual property rights and stayed out of benefits. The simple reason behind them all was not registering the business. Unregistered businesses in India have to face dire consequences as the policies are becoming stringent every day.
To conclude, this article suggests that business registration can be proved as a rewarding step. It’s simple, easy, and hassle-free with Compregi services. Therefore, to legitimate the ownership, establish credibility, enhance the reputation, and serve transparently in the eye of the government, business registration is a must-step to take action.
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