Weigh up the pros and cons of an Indian entity set up versus using a PEO partner when expanding your business into India.
In order to expand your business into a new country such as India, you will need to set up a legal entity, a task that can be costly and time-consuming for most companies. It is for these reasons that companies often choose to use a PEO provider when expanding into India.
Here we look at who needs to set up a legal entity, how to establish your company in India and how a PEO can help you expand into India without a legal entity. Therefore, you can make the most informed decision as to whether an entity setup or PEO solution is best for you.
Who needs to set up an Indian entity?
Any business who wishes to operate in India needs to set up a legal subsidiary. This is to ensure that all employment and tax laws are followed.
If a business does not have a physical presence in India, then they do not need to set up a legal entity.
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How do I set up a subsidiary in India?
The process of setting up a legal entity in India varies from state to state and also largely depends on what type of entity you require. However, as a general rule you will need:
- To find a suitable business location in India
- Open an Indian business bank account
- Decide on a company name and ensure it is available
- Produce appropriate registration documents
In addition to the above, different entity types require different numbers of company directors. These directors are also required to obtain visas to set up a company in India, again this visa type can vary depending on what living and working requirements need to be met.
Indian entity laws
In India, subsidiaries and their regulations vary from state to state. This is the same for employment laws, tax laws and company accounts. While this does allow businesses to choose a state and its regulations that work best for their business, it also makes setting up an entity and operating in India more challenging as businesses have to cater their entity setup depending on their chosen state. Likewise, ongoing operations in India will have to comply with these state-by-state regulations. This requires a huge amount of time and resource from initial setup to ongoing compliance. Meanwhile, non-compliance causes an abundance of risk for your business including fines, penalties and even the possibility of being unable to operate in India.
The benefits of setting up an Indian entity
India has the 5th largest economy in the world with an expansive market for business growth, making it a popular location for expanding businesses. Setting up an entity in one of the fastest growing trillion-dollar economies is one way of establishing your company as a long-term, thriving business located in India.
Why use a PEO partner instead of setting up a legal entity?
Setting up a legal entity in India and indeed remaining compliant with entity laws requires ample cost, resource and time from an expanding business. This is on top of the day-to-day logistics of expanding your business into India.
By using a PEO or EOR to support your expansion into India you can start reaping the benefits of India's thriving economy without the burden of a legal entity. This saves you much-needed time, money and resources whilst also providing more flexibility for your business. Meanwhile, using a PEO over establishing a legal subsidiary doesn't limit your business opportunities. Instead, you can rest assured that the legalities of tax, national insurance, onboarding employees, work permits and employment contracts are handled compliantly while you focus on the key aspects of business growth.
At Leap29, our India PEO team have in-depth knowledge of state-specific Indian employment laws and first-hand experience of the Indian business market meaning that they can be fully relied upon to navigate your expansion in India.
If you want to find out more about how our PEO Services in India can support your global expansion, call our experts today on +44 (0) 1625 537 555 or email [email protected].
What Our PEO Clients Say
"For the last few years, we have worked very closely with Simon and the team at Leap29 on a number of different projects in multiple countries across the globe. Leap29 have been a fantastic partner for us and are always willing to think with us to find the best solution. The communication with the team at Leap29 has always been excellent and Simon, in particular, is great to work with! They come highly recommended from us!"
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