Registration of Startup in India: Step-by-Step Guide

Starting a business in India must be structured and in accordance with the law. Whether it’s a start-up or a private limited company, the company registration is a crucial step. A legal existence of a company not only proves to be legally recognised but also ensures that you have the trust of investors and have government benefits. The current business environment in India requires that a businessperson understand both start-up registration and company registration in India in order to establish a business in a competitive business environment.

Importance of Start-up Registration in India

Startup registration gives legitimacy to new business entities and makes them eligible for different government benefits provided under Startup India. It provides access to tax exemptions, funds and intellectual property incentives. Registration assists the entrepreneurs to protect their identity and develop a bond and trust with customers, suppliers and investors. Failure to register the business can expose a business to legal obstacles, challenges related to raising capital, and a lack of growth.

Types of Business Entities for Company Registration

• Private Limited Company is one of the common types of registration in India. It also ensures minimal liability coverage to its owners, easy availability of funds, and much trust between investors.
• Limited Liability Partnership (LLP) is a type of partnership that has the aspects of a company. It allows flexibility of partnership but with the advantage of limited liability, suitable for entities providing professional services and small businesses.
• One Person Company (OPC) is a company that suits the format of one-man entrepreneurship that aims to reap the benefits of a company but does not want to interact with partners.
• Partnership firm registration, which will apply to businesses that are run by individuals having mutual responsibilities and share profits too.
• Sole Proprietorship, where only one owner is involved, involves multiple control and management of the business. It can be met with minimum compliance and has no liability protection

Step-by-Step Process of Start-up Registration in India

1. Selection of a business entity is the first step because it determines the compliance requirements, taxation and benefits that are associated with it.
2. The process to obtain a Digital Signature Certificate (DSC) is important to file online incorporation forms with the Ministry of Corporate Affairs (MCA).
3. The Director Identification Number (DIN) will be needed by persons who are to serve as directors of the company.
4. Name approval is accomplished through application to MCA so that the business name appears to be unique and not similar to an established registered entity or trademark name.
5. There exist incorporation forms that are supposed to be filed like Memorandum Association (MoA) and Articles of Associations (AoA) that purport to define the objectives, rules and regulations of the company.
6. When the RoC approves the completeness of documents, the Certificate of Incorporation shall be issued.
7. Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) are then acquired to be in compliance with taxes.
8. Opening a bank account is the last procedure of initiating financial transactions in the name of the registered company.

Advantages of Registration of Start-ups

1. The benefit of the tax holiday will enable registered startups to reinvest the profits in the business under Section 80 IAC of the Income Tax Act, so that the start-up leads to growth on the path of incubation.
2. They can access funding easily with venture capitalists, angel investors and venture capital funds that are facilitated by the government.
3. The benefits of Intellectual property are expedited trademarks and patents at a lower cost.
4. Registered business entities build trust and credibility that assist in their attraction of customers, partners and global opportunities.

Compliance after Company Registration

After a company is registered, they are charged with the responsibility of complying with the Ministry of Corporate Affairs. This is by performing annual filing, maintaining statutory books, board meeting practice, and filing income tax Returns.

LLPs and private limited companies are expected to keep appropriate books of accounts and have an annual audit, subject to them based on turnover.

Failure to comply can entail fines, fines on directors or even business closure.

Cost of Start-up Registration in India

The price of startup registration also differs with respect to entity type.

1. The registration of Private Limited Company could range between 7,000 -15,000 depending on professional charges and government fees.
2. LLP registration is also a bit cheaper and this may cost the company 5000 to 10,000.
3. The costs of One Person Company formation are similar to those of a private limited company, but have a lesser compliance requirement.

Why is it necessary to Get Legal Help when a Company is to be registered?

Professional assistance guarantees the avoidance of errors in the complete process of filing incorporation papers and adherence to the requirements of the MCA. Failure to take immediate action can result in the loss of opportunities because many startups put off registration due to ignorance of the laws. Professional legal assistants in starting up registration make the process easy and enable business owners to concentrate on the business’s main objectives.

Startup Registration under Startup India Scheme

1. Startup India is an initiative introduced by the Government of India to foster budding entrepreneurship and innovation. Startups registered under this scheme are recognised by the Department of Promotion of Industry and Internal Trade (DPIIT).
2. They are granted access to self-certification of labour and environmental regulation, accelerated exit in the event of winding up and simplification of public procurement standards.
3. The potential of recognition under Startup India assists in gaining credibility among investors and government authorities.

Conclusion

Startup registration and company registration in India are ways of laying down a background foundation of growth and expansion in the business. Be it a single-person firm deciding to incorporate its/own firm or a group of entrepreneurs forming a company, registering your business, even if it is an OPC or a Private limited company, is inclined towards achieving legitimacy, credibility, and future success. The government initiatives, such as Start-up India, give today’s entrepreneurs more business opportunities than in the past to innovate and create a sustainable business.

Making preparations to start a business is not a piece of cake, and you need to do detailed research before coming out to establish your business journey successfully. So, ensure that you get the perfect business form, complete the registration process using the right legal help, and be eligible for different government benefits that are provided to start-ups.