What Is Startup?
A start-up is a business usually established by one person, two or even by the group of people. The major role of the start-up is that it should offer a new service or product that is not being offered anywhere else or to provide the service in a unique way than the other existing organizations in the same domain. Since India is the third-largest country that has and getting more start-ups every year, here we have given the registration process, eligibility and procedures to fulfill the dreams of your business start-ups in a hustle freeway.
1. Startup India Scheme
Start-up India is a scheme announced by the Government of India in 2016 to support and motivate innovative start-ups in India. Via this scheme govt provides a wide range of options to youngsters to begin a business & the country’s economic growth also gets boosted. The following are the procedures under the Start-up India scheme to register a start-up.
2. Eligibility To Register A Startup
- Should have incorporated as a Private Limited Company under Companies Act, 2013 or Should possess Limited Liability Partnership certificate under the LLP Act of 2008.
- Yearly turnover should not exceed 25 crores, as mentioned in the Company Act 2013.
- Start-up should be working on innovations and commercialization of new products or services.
- The start-up should not be older than 5 years.
- Should have got an approval from the DIPP (Department of Industrial Policy and Promotion).
- The start-up must have got a patron guarantee from the IPTO ( Indian Patent and Trademark Office).
- Must possess have recommendation letter by an incubation.
3. Procedure To Register
1. Assimilate The Business
Initially, you must incorporate the business as either a Private Limited Company or a Partnership firm. For doing so, you should go after the general business registration processes like getting the Partnership registration certificate or LLP, and PAN.
2. Register To Startup India Scheme
The next step is to register the business as a start-up in the Start-up India Scheme. This is one of the easiest processes that you can complete sitting at your home. For doing so, Just log into the Start-up India Website, fill the form with mandatory details and documents and submit.
3. Documents Needed To Apply
Support / Recommendation Letter
The letter of support is a must document for registering as a start-up. The list of documents that can be used as a support letter is as follows,
- An incubator from an established PG college in college should provide a letter stating the original innovative concepts of your business; a format provided by the Department of Industrial Policy and Promotion ( DIPP). Or
- A recommendation letter by the incubator who is in relation to the project, funded by the Government of India. Or
- One of the recognized incubators from the Government of India must provide a support letter regarding your distinct business start-up in the format specified by DIPP. Or
- Any Private Equity Fund or accelerator or Incubation Fund which does not possess less than 20% equity, registered to SEBI, should emphasis your innovative nature of the start-up in the prescribed format. Or
- A funding letter from either the Central Government of India or the State Government of India to promote innovation as a part of specified schemes.
- Getting a promotional letter from a patent filed or a person who has published journals (Indian Patent Office) in the domain correlating to your start-up.
Certificate of Incorporation of the company / LLP or Registration certificate in case of the partnership must be uploaded as a mandatory document.
4. Choose Tax Benefits
In general, every Start-up is income tax exempted for a 3-year span. Yet, to avail this tax benefit, the start-up should have been certified by the IMB ( Inter-Ministerial Board). In addition to this, the Central Government offers this tax benefit even without the IMB certificate; if your start-up is recognized by DIPP (Department for Promotion of Industry and Internal Trade).
5. Self Certification
- Make sure you have registered your start-up as an LLP ( Limited Liability Partnership) or a Private limited
- Your business start-up should have been registered in India; Not 5 years before. Your business should not be formed by splitting up / reconstruction of an existing business
- Make sure your start-up turnover per year is within 25 crores.
- Your start-up should bring innovation in the domain the business is engaged or at least should improve the existing technologies and provide a better product or service.
6. Recognition Number
On applying all the documents in the web portal, you will get the recognition number for your business start-up. But the recognition certificate will be issued only after the successful verification of every mandatory document.
One of the things to be considered while uploading these documents is that they should be liable if on verification found to be forged or faked, then you are subjected to pay a fine amount 50 % capital of the capital start-up with a minimum fine amount of Rs. 25,000.
7. Additional Procedures
- Patent / Trademark
To get Patent or a Trademark for your ideas or innovation, you are subjected to approach any facilitators issued by the Government of India. Here, you need to pay only the statutory fees.
The key challenge faced by many start-ups is to obtain funding. In order to support and encourage start-ups, the Indian Government has formulated a funding system with a beginning corpus value 2,500 crores ₹ to 10,000 crores ₹ for a span of 4 years, which is roughly 2500 crore ₹ a year. This fund is provided in the nature named Fund of Funds, that is, the government never directly invest in your start-up, but will invest in the capital value of SEBI venture funds.