Business in India is an adventurous move and is supported by an expanding support space for businesses. India is now regarded as one of the most favourable start-up destinations in the world due to government programs to invest in start-ups, increased interest in startups by investors and an easier legal process. To take advantage of these opportunities, it is important that you legalise and formally register your start-up. Here’s a complete guide to help you understand how to register a startup in India with ease and confidence.
Start-up Registration in India
Startup Registration in India is a legal procedure of entrenching a new commerce enactment within the relevant regulations, i.e. the Companies Act, 2013 or the LLP Act, 2008. Registered startup gets its perks such as legal beneficial status, access to funds, tax reductions, and government support through measures such as Startup India.
The registration also paves the way to organised operations, patents of intellectual property, business bank accounts and funding by investors, which are essential to growth and credibility.
Eligibility Criteria for Registering a Startup in India
Your business has to meet the following criteria to be able to register a startup in India under the Startup India program and access the support system of the government associated with it:
- The entity must be incorporated as a Private Limited Company, a Registered Partnership Firm, or a Limited Liability Partnership (LLP)
- The incorporation or registration date should be no more than 10 years ago
- The turnover of the startup should not be more than INR 100 crore in any year of operation.
- The startup ought to participate in innovation, growth, upgrading of products or services, or show a scaled-up enterprise model that can create jobs or lead to wealth accumulation
- The business should not have been created as a result of dividing or rebuilding an existing one
Process of Startup Registration
1. Choose Your Business Structure
The initial consideration that you should make before registering your startup is the design of the business structure. Your taxation, compliance, ownership distribution, and scalability over a long period should be influenced by this decision.
Common start-up structures in India include:
- Private Limited Company- This is the most popular among the startups as the company is scalable, has funding options, and offers limited liability.
- Limited Liability Partnership (LLP) – Offers flexibility with less compliance and is ideal for small or medium startups.
- One Person Company (OPC) – Suitable for solo founders who want a corporate structure with limited liability.
- Sole Proprietorship / Partnership –Less difficult to get off the ground, but no limited liability and no capital assistance.
Structured governance and infusion of equity are better suited in the Private Limited Company structure, thus making it the most popular Indian startup structure amongst most investors.
2. Registering with MCA (Ministry of Corporate Affairs)
Once your structure is decided, you will be required to have the business incorporated under the Ministry of Corporate Affairs. The procedure is generally composed of:
- Name Reservation: File a name application through RUN (Reserve Unique Name) on the MCA portal. The name ought to be original and not violate the trademarks already existing.
- Digital Signature Certificate (DSC): Founders and directors need to obtain a DSC for signing documents digitally during registration.
- Director Identification Number (DIN): Apply for a DIN for each proposed director if not already obtained.
- Incorporation Form: File incorporated form used over SPICe form, whereby PAN, TAN, GST and ESIC registration is made available in a single action.
When this is accepted, you will be given the Certificate of Incorporation, which is considered a legal confirmation of the existence of your startup.
3. Register with Startup India Portal
In order to get the benefits offered by the government, such as tax exemptions, seed capital, and relaxed compliance, you need to register your startup under Startup India.
Go to Startup India.com and register yourself. Then complete the DPIIT (Department for Promotion of Industry and Internal Trade) recognition application by submitting business details, nature of innovation, incorporation certificate, and PAN.
Upon successful verification, your startup will be recognised by DPIIT and eligible for various benefits, including income tax exemption under Section 80-IAC, angel tax exemption under Section 56(2)(viib), and access to government tenders and funding schemes.
4. Apply PAN and TAN
PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) are essential for any business entity. All financial transactions are made through PAN, and when TDS is to be deducted during the payment of salaries or payments to vendors, TAN is necessary. They are usually automatically produced when registering SPICe+, so you do not have to take additional actions.
5. Open a Bank Account for the Business
Once you are incorporated and have gotten a PAN, you must open a current account in the name of your startup. This assists in ensuring there is openness in the financial transactions, and one develops credibility with stakeholders. The copies of the Certificate of Incorporation, PAN, and KYC documents of the directors or partners of most of the banks are necessary.
6. Register for GST
If your startup is involved in goods or services and your turnover exceeds the threshold limit (₹40 lakh for goods, ₹20 lakh for services), you must register for Goods and Services Tax (GST). Voluntary registration occurs, whereby in most instances, startups opt to register to enjoy input tax credits and do interstate business freely.
GST registration now comes along with SPICe+ form, and it is integrated and takes a shorter time to complete.
7. Trademark and IP Registration
In case your startup is based on unique branding, products or innovations, then it is important that you register your intellectual property. You are taking the first step in registering your company brand name, logo or tagline with a trademark. Protection of your company’s technology or artistic work is accomplished with a patent and copyright. Registering under the Controller General of Patents, Designs and Trademarks makes the identity and innovation of your startup legally safeguarded against being stolen.
Conclusion
Although starting a business in India appears to be a complicated process at first, with online registration, streamlined forms and government programs, it is now much easier to be registered as a startup, with less involvement on the side of the founders. Selection of structure, incorporation, and compliance has a very important role to play in achieving a legally perfect and growth-ready startup.
Suppose you are embarking on an entrepreneurship adventure and require professional help to register your startup. Kanakkupillai will provide you with end-to-end legal guidance with professionals supporting you every step of the way, starting with paperwork to filings.
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