India is the third-largest startup ecosystem globally. There has been a significant increase in startup projects over the past decade, driven by entrepreneurs, businesspeople, and students from all over the nation. When pursuing such initiatives, it is essential to concentrate on the industry and the customers. However, it is also necessary to have a basic understanding of the laws, government assistance programs, and legal requirements that must be followed for the startup to run effectively.
Though you have a well-managed, solid team, good investors, and a distinct business plan, if you haven’t registered your startup legally in India, then a massive storm of legal notices can sink the startup in a day without a prior alarm. In India, several startups overlook or avoid establishing a legal structure and face significant issues within a short time. Therefore, it is essential to be aware of all the legal documents required to establish a startup. A startup-type business has its own financing needs, and experts have some tips to help you figure out how much cash you’ll need. The startup should not be more than 7 years old (or 10 years for biotech) from the date of incorporation. Is incorporated as a Registered Partnership, Limited Liability Company, or Private Limited Company. Turnover in any year should not have exceeded 25 crores.
Government’s Criteria for Star Startupognition
- The startup should be registered as a private limited company, partnership, or limited liability partnership (LLP).
- Less than Rs. One hundred crores in turnover must have been made in any of the prior fiscal years.
- A company will be considered a StarStartup ten years following the date of its incorporation.
- The startup should focus on innovation and improving current goods, services, and procedures, and it should have the potential to generate wealth and create jobs.
- It must be certified by the Inter-Ministerial Board established for that reason.
- No “StarSta”tupsall “e deemed to be an entity created through the division or reconstruction of an existing firm.
Important Documents Required for a StarStartup in India
- Director Identification Number (DIN)
- Certificate of incorporation
- Digital signature certificate
- Shop and establishment license
- GST registration certificate
- Commencement of business certificate
- Registration on the MCA portal
Legal Procedures Required for StarStartupistration in India
Here, we have provided a list of primary legal procedures for start-up administration in India that you should follow.
- Create an LLC or Corporation
- Register Your Business Name
- Apply for a Federal Tax ID Number
- Determine If You Need a State Tax ID Number
- Obtain Business Permits and Licenses
- Protect Your Business with Insurance
- Open a Business Bank Account
- Consult the Professionals
1) IPR (Intellectual Property Right) Certificate
This legal procedure in India enables all kinds of startups to obtain complete ownership of their assets through a legally binding document. The primary use of this document is that it can protect your business from any other companies trying to produce the same service and product as your business model. So, IPR gives you the power to guard your inventions and product designs. Additionally, the IPR procedure can be utilized across countries, as it ensures the original product’s functionality and provides credit to the firm.
Along with these documents, you will also need documents that officially represent your business company’s address, PAN number, GST registration, ROC registration, Professional Tax registration, Provident Fund registration, and ESIC registration.
2) Trademark Certificate Online India
A trademark is one of the most effective ways to refer to a brand or startup nationally. It helps to have a monopoly on a mark that you use to represent a business or startup. It is also a pivotal asset, serving as an effective communication link between customers and the startup’s owners. According to central government policies, trademark licensing is compulsory for all startups. Despite that, this trademark certificate can be used as a property asset by the owners of the startups.
Bylaws are mandatory to formulate the working rules of startups. Startups help establish a strong working culture internally and minimize complications. Additionally, New CEOs or Directors can be added to a startup with the help of the bylaws. So, bylaws can overall sort out every issue between employees, stakeholders, and team leaders.
4) Patent Registration Certificate Online in India
With the help of a Patent certificate, you can have authority over the ideas and products of your startup. To apply for a patent, you are supposed to follow the guidelines set by the respective departments. However, in India, this process is faster than in other countries, following the initiation of a scheme known as the StartUp India Action Plan. To motivate and empower the younger generation to start a business, the Indian government has formulated this scheme. For the first patent registration by a startup, a startup of above 75% would be given a fee waiver.
5) Registration & Business License
When incorporating a startup, certain mandatory registrations are required by law. Some such registrations are PAN, TAN (Tax Deduction and Collection Account Number), and GST registrations.
The business license provided by the government authority allows startups to start up or continue operating within its territorial jurisdiction as per the law. The nature of the startup determines the license requirements. Some other prominent factors include the location of the business, the number of employees, and the business ownership form. A few examples of such licenses are Health licenses, Trade licenses, Establishment licenses, Shop licenses, and Safety licenses.
6) Tax Exemption
To encourage and motivate startups, the Indian government has introduced a tax exemption scheme. According to this scheme, a startup is entitled to 100% profit without paying tax, and there is also an exemption for the first three consecutive years out of the initial five years. Yet, the Minimum Alternate Tax is applicable.
The Capital gain from the sale of long-term assets is exempted from income tax if the gain is invested in business funds that are used to purchase computers, hardware, software, and other requirements. Additionally, for investments made by resident investors, there are substantial tax exemptions. For patents registered and developed in India, a discount of nearly 10% of the income it generates worldwide is available.
7) Third-Party (Or) Non-Disclosure Certificate
It is advisable to have a non-disclosure agreement before negotiating the terms of Startup India Startup-party contracts. Suppose the development or creation of a property (intellectual) is a component of a third-party agreement. In that case, it should state clearly that all rights to the property (rights) must vest and be owned/claimed by the startup, and the startup party in the startup shall not claim on the same. It should possess all the acts to ensure the saving of the intellectual property. Issues related to termination, breach, or dispute resolution should be negotiated appropriately and clearly outlined in every third-party agreement.
