small business

इस बिज़नेस में होगी सालाना 10 लाख रुपए की कमाई, शुरुआत करने के लिए केंद्र सरकार की भी मिलेगी मदद

आज हम आपको ऐसे एक बिज़नेस के बारे में बता रहे हैं, जिसमें निवेश ज्यादा होने के साथ ही मुनाफा भी ज्यादा मिल रहा है। और, दूसरी बात यह है कि यह बिज़नेस MSME स्कीम से भी जुड़ा हुआ है मतलब इसके तहत बिज़नेस शुरु करने पर केंद्र सरकार से मदद भी मिलती है। सरकार से बिज़नेस स्ट्रक्चर के हिसाब से आपको इस बिज़नेस से सालाना 10 लाख रुपए तक प्रॉफिट हो सकता है।

देश भर में फैले कोरोना वायरस की वजह से कई सारे लोगों को अपना रोज़गार गंवाना पड़ा है। ऐसी स्थिति में लोगों के बीच अब खुद की रोजगार की ललक बढ़ती दिखाई दे रही है। और हो भी क्यूं ना। दरअसल, बिजनेस एक ऐसा पेशा है जिसका क्रेज हर जमाने में लोगों के बीच रहा है। चूंकि, किसी भी बिजनेस को शुरु करने में सबसे पहले निवेश की जरुरत पड़ती है इसलिए आपके मन में भी यह सवाल आ रहा होगा कि आखिर पैसे कितने लगेगें ? और, मुनाफा कितना होगा ? तो घबराईए नहीं, हम आपके इन सभी सवालों का जवाब लेकर आये हैं।

अन्य देशों की तरह भारत में भी बीते कुछ सालों से युवाओं के बीच नौकरी की छोड़कर स्टार्ट अप अपना खुद का बिज़नेस शुरु करने का क्रेज देखा गया है। जैसा कि आप भी जानते होंगे कि किसी भी कारोबार को शुरु करने में होने वाले निवेश और उससे आने वाली मुनाफे की खासी अहमियत होती है।

यह भी पढ़ें: स्टार्टअप कहानी: पति का वजन घटाकर आया आईडिया, अब दूसरों को घर बैठे वजन घटाने में मदद कर रही यह हेल्थ स्टार्टअप

शुरू करें यह बिजनेस

जैसा कि आप जानते है, भारत में इस समय ट्रेंडी और स्टाइलिस फुटवियर की डिमांड काफी बढ़ी हुई है। फुटवियर की बढ़ती डिमांड के बीच इस सेक्टर में आप अच्छा करियर बना सकते हैं। मतलब, आप फुटवियर की मैन्युफैक्चरिंग यूनिट शुरू कर अच्छी खासी कमाई कर सकते हैं। इस बिज़नेस में पॉजिटिव बात यह है कि, डिमांड काफी रहने से आपका कारोबार सफल होने की उम्मीद भी ज्यादा है। इतना ही नहीं, इसमें खास बात है कि इस बिजनेस के लिए सरकार अपनी मुद्रा स्कीम के तहत कारोबारियों को सपोर्ट भी कर रही है।

यह भी पढ़ें: बस 50 रुपये लेकर निकले थे मंज़िल की तलाश में, आज 75 करोड़ है उनकी कंपनी का सालाना टर्नओवर

बिजनेस कॉस्ट को समझिए

आइए समझते हैं, फुटवियर मैन्युफैक्चरिंग का बिजनेस शुरू होने में पूरा खर्च तो वैसे 41.32 लाख रुपए आंका गया है। लेकिन, घबराने की जरुरत नहीं है क्यूँकि इसमें से आपको खुद के पास से सिर्फ 16.32 लाख रुपए ही निवेश करना होगा।

जमीन- 4 लाख रुपए
बिल्डिंग- 8 लाख रुपए
प्लांट एंड मशीनरी- 19,85,990 रुपए
इलेक्ट्रिफिकेशन- 96,610 रुपए
प्री ऑपरेशन खर्च- 35,000 रुपए
अन्य खर्च- 33,000 रुपए
वर्किंग कैपिटल- 7,81,450 रुपए
कुल- 41,32,050 रुपए

यह भी पढ़ें: कोरोना संकट और लॉक डाउन में Google का कमाल, ऐसे कर रहा है परेशान और भूखे लोगों की मदद

लोन देकर सपोर्ट करेगी सरकार

वर्किंग कैपिटल लोन – 3 लाख रुपए
टर्म लोन – 22 लाख रुपए

ये सरकारी लोन मुद्रा स्कीम के तहत किसी भी बैंक से आसानी से हो जाएगा।

जानिए कैसे होगा प्रॉफिट

16.32 लाख रुपए के निवेश पर जो एस्टीमेट तैयार किया गया है, उस लिहाज से मंथली टर्नओवर 9,07,050 रुपए हो सकता है।

कॉस्ट ऑफ प्रोडक्शन – 8,26,080 रुपए मंथली
नेट प्रॉफिट – 80,970 रुपए मंथली
सालाना बिक्री – 108.90 लाख रुपए
सालाना प्रॉफिट – 9.72 लाख रुपए

How a small business can keep hold of employees

Retaining staff members is critical to success for a small business.

Retaining staff members is critical to success for a small business. It is impossible to be consistent and to take the company forward when you constantly have to recruit and train staff (it is also expensive). However, it can be hard for a small business to retain the top performers because the larger companies are likely to offer a bigger salary and may have prestige. It will be difficult, but there are ways that you retain your best employees, which will help your business to stay competitive while also allowing you to build the right atmosphere at work. Here are a few ideas.

Flexible & Remote Working

The days of 9-5 in the office are disappearing and being replaced by flexible and remote working. Offering these can keep staff happy and allow them a better work-life balance while also showing that you are an employer that cares, plus in many cases, you will find that it can increase productivity too.

Relaxed Atmosphere

Having a relaxed atmosphere in the office where people can communicate freely will help to boost morale, allow staff to build relationships with co-workers, and bring fun into the office. Of course, you must be careful when creating a relaxed atmosphere because you do not want productivity to dip, so you need to make sure that work always comes first.

Social Benefits

Following this, you should also encourage socialising outside of the workplace. People spend an enormous amount of their time with colleagues, so if they can develop friendships, it makes it much more likely that they will stay while also helping to create the relaxed atmosphere described above. You cannot force people to spend time together outside the office or be friends, but arranging social events will certainly help.

Perks

While you may not be able to match the salary that they command elsewhere (but it should at least be competitive), you can encourage employees to stay with various perks and incentives. These might include:

Bonuses
Birthdays off
Staff discounts
Team holidays
Gym memberships

Support Through Change

Periods of any type of change in the workplace can be unsettling and difficult for staff. Places like inpulse.com allow you to survey staff before, during, and after change so that you can carefully monitor morale and provide support to staff members that need it. This should help you to keep each individual team member happy while showing that you care and are also successful in implementing the change.

Promote From Within

Most employees will be looking to advance their career and will start to look elsewhere when the time is right if this is not possible within your company. This is why you should always look to promote from within so that you can keep hold of top performers and show to other employees that they are able to progress without moving organization.

It can be a struggle to keep hold of staff as a small business, but it is important to realise that it is not always all about money, and these strategies should help you to keep hold of your best workers.

Key tech that every small business should be using

The importance of technology for any type of small business can’t be ignored. It not only facilitates communication with clients, potential customers, employees, and partnering businesses, but it also helps companies operate more efficiently in many ways. Although there are costs involved, using the right tech empowers small businesses to set (and accomplish) bigger goals and ultimately make more money. In fact, the absence of tech can significantly hinder a company’s success in today’s world, which is why businesses should keep up to date with the latest trends. Listening to a tech news podcast can be a great way to stay informed about new developments and insights in the tech world. While social media is important for any small business, this article will provide tips for deeper ways you can integrate tech into your company’s operations.

Dropshipping

One way that tech can make your business money is by using dropshipping. It doesn’t cost a lot to invest in dropshipping as a second business, and it doesn’t require you to keep a physical inventory. Many companies find that this dovetails nicely with their business.

There are numerous products that are selling well right now that you may consider integrating into your business, such as:

● Gifts
● Apparel
● Jewelry
● Electronics
● Gadgets
● Coffee mugs
● Stickers
● Toys
● Office supplies
● Books
● Furniture

Depending on what kind of small business you run, selling a variety of items could bring in some additional income. With minimal time and money involved, using dropshipping wholesalers is considered a win-win by many companies. Do not choose a dropshipper blindy, however. Ask for product samples before you begin shipping to your customers so that you can access the quality of the products that you are promoting.

Point-of-Sale Systems

Creating a quick and easy checkout process for customers is critical these days because customers now expect it more than ever before. And if your company makes customers jump through a bunch of complicated hoops and fill out a bunch of information before they can purchase something, don’t be surprised if they abandon their shopping cart and look to spend their money elsewhere.

You can simplify your checkout process by purchasing a point-of-sale (POS) system, which should streamline your sales — both online and in-store. Also, a good POS system will have built-in tracking, help you manage your inventory and offer insightful financial reports that help foster your company’s growth. Many are portable, too, meaning that you can give your clients a seamless buying experience if you attended fairs and community events.

Mobile Communication

Today, people want answers as they ask questions. This means that you might need to communicate with your employees at odd and off-the-clock hours. Because of this, it makes sense to provide key members of your team with a reliable smart device — preferably one with unlimited data since overage charges can quickly eat into your budget. Many providers now offer monthly phone plans specifically for small businesses. For example, Verizon’s Business Unlimited plan includes up to five lines. There are many options out there; do your research first to determine what best fits into your budget.

Data Security

The recent advances in technology mean that small businesses are susceptible to cybercrime — a type of crime that appears to be growing by the day. Protecting your company from malware, breaches, and fraud should be a top priority.

There are a number of cybersecurity practices you can implement within your company to help protect it from such crimes, including:

● Installing security software (e.g., antivirus software, encryption software)
● Keeping security software, operating systems, and web browsers up-to-date
● Making sure all employees’ cell phones are protected (e.g., password protection, security apps, encryption)
● Encrypting and hiding your company’s on-site WiFi network
● Having all employees change their passwords every three months

Failure to implement basic data protection can leave your business scrambling to recover after a cybercrime event. This can negatively impact the public’s perception of your business, and it can take years to regain your reputation.

Time Tracking

Time is money in business, and investing in time tracking can save both for your company. Time tracking tools — such as online tools and desktop software — can help you manage hourly billing and hourly wages, as well as help you keep track of how long you spend on each project so that you can maximize the time you have. Moreover, it helps to increase productivity among employees and make your business more efficient overall. Search online for the most popular time-tracking software, and choose the option that works best for your company’s needs.

Technology is a vital component of virtually any successful small business these days. Consider dropshipping products to customers as a second business, as it can add to your profits with little cost up front. Next, look into improving your checkout process by investing in a quality point-of-sale system. Finally, take the steps to stay in touch with your employees, secure your company’s data, and utilize time tracking tools to make your business operate more efficiently. Take advantage of the many tech options available to businesses everywhere that can save (and make) your company money.

Photo Credit: Unsplash

4 Easy and cost effective ways to advertise your small business on your own

Lack of money doesn’t mean you can’t advertise, you need to find some inexpensive ways to advertise.

If you’re just starting out in business, then you know how difficult it can be to build up your list of clients. Chances are you probably don’t have a very big advertising budget, either. However, a lack of money doesn’t mean you can’t advertise. Instead, you need to find some inexpensive ways to advertise. Here’s a look at four of them.

Social Media

Business owners who understand who their ideal customer is can use social media to interact with these potential customers in a natural way. One simple way to do this is to utilize Twitter chats. Also, you can take help from professionals like Sarah Mae Ives Social Media, Inc.

For example, say you own an online specialty food store. One way to find potential customers is to participate in a foodie chat on Twitter. The people who are on the chat would be potential customers for you because many of them are foodies who like to try new things. You can chat with them, encourage them to follow you on social media and eventually, you may even turn them into customers. You can find a list of chats related to your business on Tweet Reports.

Paint on Your Car

Car paints can do more for your business than just give your vehicle a nice, shiny new color. Your car can become a traveling billboard for your business, especially if your business is primarily local. If you must drive around town a lot, then make sure that you paint information about your business on the exterior of your car. This information should include your business name, the phone and location if it’s relevant.

Email Newsletters

Do you know that nearly 90% of all marketers believe that email marketing is their most effective way to advertise? If you have an established email list, then make good use of it by sending out regular newsletters to your subscribers. You can advertise upcoming sales, offer industry advice or highlight a particular customer of yours.

Video By Julian Goldie

Attend Conventions

For many business owners, business-related conventions can be the lifeblood of their new business. If you’re looking for a way to find people who would be interested in what you offer, conventions are the place to go. By their nature, they appeal to people who are involved in specific industries or who have specific hobbies.

In other words, if you sell comic books (for example), then you should go to ComicCon. The people who attend a convention like this tend to love comics. While you may not be in the comics industry, it’s likely that there are appropriate conventions for your industry. Setting up a trade show booth at one of these events pretty much guarantees that you’ll have a steady stream of potential new customers.

Every business needs a steady supply of customers to remain afloat. However, if you are a new business owner, then a steady supply of customers is probably something you don’t yet have. You may also be short on money, but that doesn’t have to stop you from advertising.

Using any one of the advertising methods in this post, either by itself or in tandem with another one on the list, can help you grow your business, even if you don’t have much money.

3 Ways to get your small business running like a fortune 500 company

It is not a smooth transition from working out of your home office to owning an office building.

Congratulations! You’ve taken a leap of faith, and you’ve started your company. Most people are probably calling you crazy, and your parents are worried, but you have your business plan and business cards in tow. However, it is not a smooth transition from working out of your home office to owning an office building. It takes hard work. But don’t fret! Here are three ways to make that process easier.

Market Yourself

Your business being small or new, is no excuse not to market it. People can’t give you their money in exchange for the excellent good or services you provide if they don’t know you! For a small business CRM (customer relationship management) is vital. You have to be actively searching for and to communicate with potential customers and long-standing customers. The easiest way to do this is to use a service that handles it all for you. Think of mass emails and social media marketing. If you use a service that handles all of this for you, you’ll have more time to build your company. Yeah, it will cost you, but by now, you know that to succeed, you have to invest in yourself. Using a small business CRM takes care of the hard part (marketing emails, social media) or the part you may know nothing about. Small business CRM is the definition of working smarter, not harder. And in the world of small business, you probably already know this is super important.

Utilize (and Respect) Your Human Resources

Don’t be afraid to ask for help when you need it. Not sure how your proposal sounds? Run it by someone you trust. Perhaps they will catch something you missed in all the stress that comes with running a company. It’s much easier to fail in front of someone you trust than to fail in front of potential clients. Or maybe you are terrible at organizing all the essential documents that come with starting a new business? Ask your super organized roommate from college if they’ll help you come up with a system. The worst someone can say is no, so ask.

However, once you’ve got this fantastic feedback, advice, or support—say thank you. It might mean sending a hand-written note, candy, flowers, or taking your “human resource” out to lunch. Always show your appreciation, even with the little things, because it all adds up. If you want to run a successful company, act as you do already. Show gratitude.

Be Patient

It may be the hardest thing to do. Being patient when you know you have the next Apple or Netflix running out of your home office is hard. You want the success now, and you want all eyes on you in the big board room meeting. But it takes time. Just look at one of the most successful businessmen of all time, Steve Jobs. He failed monumentally and more than once. However, his persistence and patience are what got him the company of his dreams. And the rest of the world, some of the most significant technology ever invented. It’s cheesy, but it’s true. Rome was not built in a day, and neither will your amazing company. Be patient.

How do small business owners pay themselves?

Here’s how to compensate yourself.

If you’re asking this, you probably run a sole proprietorship. Here’s how to compensate yourself.

Answering the question, how do small business owners pay themselves is vital if you have any designs on starting and running a profitable business. The temptation is to put all your money back into the business so it will become self-sustaining. But in the meantime, you have to eat!

In the following article, we’ll show you how to go about keeping your business operational while also giving yourself the needed capital to live on. Let’s begin!

How Do Small Business Owners Pay Themselves? They Start with Business Classification

There are different ways to classify your business. Three, in particular:

• Sole proprietorship: Where the business and the owner are one and the same, and income is reported as such.

• Partnership: Two or more individual business owners or entities join forces to move toward a common goal but maintain autonomy in their overall business. Sole proprietors can form partnerships but they would continue to pay themselves as sole proprietors.

• Corporation: corporations are a group of business entities that function as a single entity by law.

Payment-wise, the corporation makes payment to the individuals through salary and benefits.

Because more than 70 percent of all small businesses are sole proprietorships, the remainder of this article will focus on how to pay yourself as a sole proprietor. Let’s continue!

1. Calculate All Forms of Revenue

When calculating your sole proprietorship payroll, you need to bring together all forms of revenue, from products sold to services rendered. (Don’t worry. Not all of this information will be taxable.)

2. Add Up Your Expenses

You won’t know your true sole proprietor salary until you’ve taken the time to calculate expenses. In the beginning, list out every expense from what it takes to run your business to how much you pay for groceries each month. (Don’t get excited; groceries aren’t usually deductible.)

3. Separate Personal from Business

You’re closer to learning your full sole proprietorship income, but you still have one very important step to take. That’s separating the personal expenses from the business expenses.

You may wish to secure the help of an accountant for this part. They can help you decipher the clear business expenses from the personal, and they can figure out the options you have for any gray areas.

Sample gray area: you need the Internet for work but also use it for recreation. How you handle that will ultimately affect your taxable income.

4. Make the Payment

A self-employed salary consists of your revenues minus your business expenses. From there, you can determine the amount of taxes that you pay which will depend on your overall income bracket.

As a sole proprietor, the profits of your business are income. That’s what you’ll list as your salary. And that’s what local, state, and federal entities will acknowledge when calculating what you owe.

Logistically, you’ll pay yourself from whichever account the money goes to. Remember: you and the company is one and the same.

5. Find a Way to Track It

Paystubs are among the best tools for tracking what you’ve made, how much you’ve paid in taxes, and what your benefits are costing you. Finding a way to simplify this process is vital.

It helps you know where you are at all times financially and this leads to avoiding large tax bills each April 15. Click here for more information on how to simplify the administrative process.

And That Is How You Do It

So if the question of how do small business owners pay themselves has kept you from starting a business, you now know the answers. Don’t let it intimidate you.

This is something you can do. And while you’re here, check out more of our entrepreneurial tips and advice to help you along. Best of luck on your journey!

6 Reasons your small business needs a dedicated phone service

Every business needs to have access to affordable and reliable voice communication services if its owner wants it to succeed.

Every business, no matter how small it is right now, needs to have access to affordable and reliable voice communication services if its owner wants it to succeed. Some small business owners assume that they can just continue to use their personal phones to conduct business until their offices become large enough to require many phone lines, but this is a mistake. Read on to find out why every small business needs a dedicated phone service.

Look Professional

Startup entrepreneurs who work out of home offices might assume they can save money by relying on their personal cell phones, but in reality, they stand to lose money. First impressions count for everything, and a dedicated phone line will show customers that the business is serious even if it isn’t very large yet. Entrepreneurs can check out gabbit.net to learn about one business phone service that’s tailored to the needs of startups and small businesses.

Make it Easier to Scale Up

Don’t assume that it’s best to wait until the business needs more than one phone line to make the switch. Instead, find a provider that specializes in providing voice communication services to small businesses and will charge the same amount of money for one phone line as they will for dozens. This makes it affordable to maintain a dedicated business line when the business is just getting off the ground but also offers the possibility of easy scalability when it begins to expand.

VoIP, short for Voice over Internet Protocol, providers are the best bet. VoIP systems are cheaper than traditional landline office phones since they use the company’s existing Internet connection to facilitate calls more efficiently. Plus, there’s no need to worry about missing calls if the company’s Internet goes out when business owners work with a VoIP provider that offers continuity of service and automatically transfers calls to employees’ cell phones until the Internet goes back up.

Advanced Features

VoIP service providers offer all kinds of advanced features, which can really come in handy for business owners, managers, and employees. Not only will a good provider offer automatic call forwarding, but business owners can also expect to get access to voicemail, caller ID, and other features that might cost extra if they went through another provider.

Business owners can also use dedicated VoIP services for things such as teleconferencing, videoconferencing, and instant messaging. This gives them more options when it comes to communicating with both customers or clients and business associates. Plus, it makes it easier for small businesses to expand since they can hire employees from just about anywhere without requiring them to work in the company office.

Shared Resources

The ability to share communication resources makes it easier for employees to work together. As small business owners add more phone lines to their systems, employees can transfer calls between them and ensure that customers receive the best level of service. Plus, it won’t cost a fortune to install new phone lines.

Instead of using a personal phone provider then switching to a business network once the company is already established and they already have a lot of extra work on their hands, business owners can continue to work with the same company as their organizations expand. It will make things easier for customers and employees. Employees will be able to work together more effectively both in the office and from outside of it, and customers only need to keep track of one phone number and any relevant extensions instead of calling different numbers to contact different company representatives.

Lower Cost

Most small business owners find that communication costs form a large part of the startup budgets in their earliest years. Moving toward an integrated voice communication system can mitigate some of those costs while simultaneously simplifying monthly invoicing. Plus, it makes it easier to review monthly charges and keep track of employee behaviors, such as making personal calls on company time.

Not all business phone and VoIP providers offer the same value to small business owners. The ones that cater primarily to huge corporations rarely offer discounts until businesses need a dozen or more phone lines. That’s why it’s important for business owners to do some research and find a company that offers affordable options for all businesses, even if they’re just getting started.

Increased Employee Productivity

No matter what kind of company business owners are running, they can expect increased employee productivity when they switch to a dedicated business communications system. Doing so will eliminate the phone tag and prevent the need for wasting time walking around looking for other employees. Business owners can program VoIP phone systems for small businesses to forward calls to multiple devices, which allows any employee who has the free time to take the call to step up.

Decreasing the time that employees must spend playing phone tag with customers and business associates won’t just increase their productivity. It will also increase employee satisfaction and customer satisfaction by eliminating the frustration associated with common communication difficulties.

The Bottom Line

Starting and growing a small business can be tough, but the right resources will make it easier. Having at least one dedicated business phone line with its own number is a great way to show existing and future customers or clients that the business is serious and committed to providing high-quality, convenient service. Plus, prospective employees will take a growing business more seriously if it has all the infrastructure in place to support a full team of employees either in an office or dispersed as remote workers, and a dedicated phone line is an absolute must when it comes to infrastructure.

Those who are anxious about signing a contract before even getting their businesses off the ground can look for a provider that offers monthly, no-contract service. That way, they can start off their business operations on the right foot with professionalism and convenience but won’t have to worry about spending a small fortune if they wind up having to terminate their services.

Planning to Buy Equipment for Your Small Business? Don’t Proceed Without Reading These 4 Essential Tips

If you need equipment for your business, you’ve come to the right place

Starting a small business can be one of the most exciting times of your life, and the idea of how many opportunities and the direction your life could be heading is amazing, which is why it’s important to make sure you’re doing things right.

One of the most important things you’ll want to be thinking about is investing in the equipment you’ll need to get everything off the ground, but this is a serious consideration because you won’t want to waste your money, nor experience problems later down the line.

If you need equipment for your business, you’ve come to the right place as today we’re going to explore the four essential tips you need to know to have the best experience possible.

1. Only Getting What You Need

The first thing you’ll need to do is make sure you’re only investing in the equipment you actually need. It can be tempting to think ahead and try and get everything you could possibly want, but in most cases, you won’t need all this, and you’ll be wasting your money.

Instead, ensure you’re only purchasing the bare essentials to help you start becoming profiting, and then think about what you need when you need it later down the line.

2. Securing Your Investment

The chances are you won’t have all the money you need to invest in expensive equipment off the bat, so you’ll need to think about where you’re going to get your investment from.

You may have investors, or a bank or business loan, but wherever you’re getting your funds from, make sure the payment plan is best suited to you and your financial needs.

3. Storing Your Equipment Securely

One of the most overlooked aspects of buying equipment for your business is the security of it. It can be heartbreaking to invest so much money into your business, only to have it stolen or damaged when you least expect it. Think about security.

If you’re keeping your equipment in an office, make sure you have cameras, locks, and passwords on everything to keep things as safe as possible. If you have larger equipment, consider what secure equipment storage options are available to you.

4. Balancing Quality and Price

It can be easy to fork out a ton of money on the best equipment possible, as it can be easy to spend as little as possible on the cheapest version of the equipment.

Instead, try to find the right balance on buying equipment that suits your budget, but isn’t too cheap it’s going to break or malfunction easily which means you’ll need to reinvest and waste your money.

Summary

As you can see, there are lots of things you’ll need to think about when it comes to investing in equipment for your business, and this is only scratching the surface. When kitting out your business, it’s important to make sure you’re staying neutral and not getting too excited, while buying smart, instead of potentially throwing your money away.

How will the GST impact your startup business?

GST is deemed to benefit all businesses in India, but small businesses can rejoice for the following reasons.

The Goods and Services Tax (GST) Bill, introduced in the Lok Sabha in December, 2014, is finally passed in this monsoon session. A decision on GST has been held off for a long time due to the Opposition’s disagreement in the Rajya Sabha, where the ruling government has no majority.

A huge change like GST requires a constitutional amendment, which requires a bill to passed in both houses of Parliament.

What is GST?

The biggest indirect tax reform since 1947, GST bill is expected to bring about an economic integration of the Indian economy. GST will help consolidate and streamline the process of indirect taxation and make it easier and more effective. The tax payers will pay one consolidated tax instead of the plethora of taxes including State Value-Added Tax (VAT), Central Excise, Service Tax, Entry Tax or Octroi and a few other indirect taxes.

“The challenges faced due to a complicated tax system on business transactions has been debated for a long time,” said R Narayan, Founder and CEO, Power 2SME. This tax will be levied on manufacture, sale and consumption of goods as well as services at the Central and State government levels. “The distinction between Goods and Services will be reduced gradually, thereby making tax compliances easier,” he added. Most of the developed countries use this form of taxation for ease and convenience and to avoid double taxation.

GST would be payable on price actually paid or payable, termed as “transaction value”, which will include packing cost, commission, and all other expenses incurred for sales. This tax will be payable at the final point of the consumption. The GST will have two components – the Central GST and the State GST, thus, empowering both the State and Central government to legislate and administer their respective taxes.

Except the Tamil Nadu government, which believes that this bill will take away the autonomy of the State government, all other States are in support of the bill.

Why are startups and SMEs so excited about GST?

GST is deemed to benefit all businesses in India, but small businesses can rejoice for the following reasons:

1. Ease of starting business

Any new business needs to have a VAT registration from sales tax department. A business operating in many States has to face a lot of issues regarding the different procedures and fees in each state. GST will bring about a uniformity in process and centralised registration that will make starting business and expanding in different States much simpler.

2. Higher exemptions to new businesses

As per the current structure, any business with a turnover of more than Rs five lakh has to get VAT registration and pay VAT. GST will make this limit higher, to upto Rs 10 lakh and, further to it, businesses with turnover between Rs 10 and 50 lakh will be taxed at a lower rates. This will bring respite from tax burdens to newly established businesses.

3. Simple taxation

Currently, a startup spends a lot of time and energy to manage the various taxes at various points. Adhering to different regulations at different States make the process very complex. GST will simplify the process by integrating all taxes, making the process of paying tax simpler.

4. Respite for businesses in both sales and services

Businesses like restaurants, which fall under both sales and service taxation, have to calculate the VAT and service tax on both items separately. This makes the calculations process very complex. GST will not distinguish between sales and services, and thus the tax calculation will be done on total.

5. Reduction in logistics cost and time across States

Many transport vehicles get delayed during movement across States due to small border tax and checkpost issues. Interstate movement will become cheaper and less time consuming, as these taxes will be eliminated. “The whole Indian market opens up for manufacturers as interstate supply becomes tax-neutral,” explained Narayan. This will also bring down costs associated with maintaining high stocks, as there will be undisrupted movement of goods. As per a CRISIL analysis, GST can reduce logistics costs of companies producing non-bulk goods (comprising all goods besides the primary bulk commodities transported by railways – coal, iron ore, cement, steel, food grains, fertilisers) by as much as 20 percent.

GST to assist curb the fiscal deficit

GST is expected to bring economic integration in the country and a boost in GDP growth, bringing down the fiscal deficit. According to a CRISIL analysis, GST will boost the GDP growth and push the tax revenue of the government higher to work in a dual way to bring down the fiscal deficit.

GST will boost the GDP. “By eliminating the cascading effect of multiple Central and State taxes, GST would reduce the cost of doing business and increase profitability, which in turn, would attract investments and ultimately help GDP growth,” the report stated.

How does GST reduce the cost of doing business? Unlike VAT and service tax, GST is essentially a tax on value addition at each stage, and levied at point of sale and not purchase. This means that the consumer bears the GST charged by only the last dealer in the supply chain, thus making it cheaper for the consumer and increasing the profitability of his business.

Secondly, there are various other taxes levied by the Central and State government on production, manufacture and distributive trade, where no set-off is available in the form of input tax credit. These taxes accumulate and lead to increasing the cost of final product which the consumer has to bear. GST subsumes all these taxes which are set off at each stage starting from producer and ending at the retailer, thus easing the burden on final consumer.

GST will assist in bringing down fiscal deficit by boosting tax collection and simplifying the tax regime, which is expected to bring about better compliance.

“The impact on fiscal deficit might be negative in short term as States are expecting a dip in revenues, but GST will definitely bring down the fiscal deficit over a period of time,” says Rahul Agarwalla, Senior Consultant at Taxmantra.

Thus, a win-win situation both for the government and the tax payers, a situation quite unheard of.

Conclusion

Critics of GST argue that implementation of this tax will lead to losing the fiscal autonomy of the States and cause permanent revenue loss. For a manufacturing State like Tamil Nadu, if taxes are levied at the point of purchase (point of destination) and not on point of sale (point of origin), it can lead to permanent losses close to the tune of Rs 9,270 crore. However, the government has offered to pay compensations to States for the losses borne by them for a transition period.

“Also, the government could not bring complete amendment in the bill. The separate State and Central GST system will not completely eliminate the irregular and double taxation problem and only bring it down,” said Rahul, adding, “The States will be presenting their policies in the upcoming monsoon session, thus it remains to be seen how uniform these policies will turn out to be”.

Related Post: 8 Start-up ideas for Indian entrepreneurs

This article was originally published in YourStory

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