Startup Company Registration Process in India

Introduction

The number of businesses has increased dramatically since the country’s Prime Minister, Narendra Modi, established the Startup India initiative. The most intriguing aspect is that most firms have youthful founders and owners, which says volumes about India’s tremendous creative brains. Because they did not have the government’s support previously and had to accomplish everything independently, not many individuals got involved wholeheartedly.

People have ideas, but many have no idea how to start a business or turn their concept into a profitable operation. People are unsure how to register their firm as a startup. However, since the program’s inception, individuals have become more courageous, knowing that the government will support them throughout the process. As a result, they are coming up with fresh ideas.

Furthermore, some people are unsure if their firm qualifies as a startup. Keeping all of this in mind, we produced a blog article to assist you in this respect by discussing the qualifying requirements for being designated a startup and the method for registering your firm as one.

Before delving into the complexities of eligibility and company registration in India, let us define a startup.

What is a Startup?

A startup is a firm operated by a small group of individuals that addresses a problem per the companies act 2013. Such firms are formed when the founders identify flaws in the present system in which they have been working and aim to address the issues by forming their own company.

Summary

Company registration in India: A startup can also be formed when the founder(s) come up with a potentially brilliant concept. Such startups offer services that they believe are currently of poor quality or do not exist at all. The most significant advantage of a startup is that it increases employment in the country as a direct result of more and more businesses opening up. With the prospect of more job possibilities, the Indian government has attempted to assist fledgling enterprises in growing and thriving in the Indian market. The Startup India project assists you in innovating and improving economic sustainability.

Now that you understand what a startup is and what Startup India is all about let us look at which firms in India qualify as startups.

Are You Eligible For Company Registration in India?

What makes you eligible to participate in Startup India?

• The organization must be an LLP or limited company.
• For the first ten years after registration, the firm remains a startup. The Indian government has increased the period from 7 to 10 years to give enterprises more chances and tax breaks in the long term.
• If the company’s annual revenue does not exceed Rs 100 crore in the first ten years, it is considered a startup. Once the threshold is reached, the firm is no longer considered a startup. The Indian government has just raised the Rs 100 crore threshold from Rs 25 crore.
• An Incubation Support, an Angel Fund, or a Private Equity Fund should fund the company.
• Obtaining a patron guarantee from the Indian Patent and Trademark Office is important.
• You must have a letter of recommendation from an incubation program.
• The company must come up with novel concepts and plans.
• All financing information must be filed with SEBI (Securities and Exchange Board of India)

Company Registration Process Of Startups In India

Step 1: Company Incorporation

• First and foremost, you must incorporate your company as a Private Limited Company, Limited Liability Partnership, or Partnership organization.
• To get registration, follow the standard procedure, which involves filling out a form.

Step 2: Company Registration in India

• You must register your organization or corporation as a startup under the government’s Startup India initiative. You only need to complete the form on the Startup India website.
• You must fill out all of the data and submit a specified amount of documents.

Step 3: Document Uploading

1. A letter of recommendation is required in addition to the registration form. You can obtain any of the recommendation letters listed below.

• A reference letter from an Incubator recognized at an Indian post-graduate college, in the DIPP-approved format. This is about the company’s inventive character; OR
• A letter of reference from an incubator funded by the Government of India as part of any designated plan to stimulate innovation; OR
• A recommendation later by the Central or any State Government of India; OR
• A patent in areas related to the nature of the company being marketed has been filed and published in the Journal of the Indian Patent Office.

1. Certification of Registration or incorporation of the company

You must submit your business’s or LLP’s certificate of incorporation or the registration certificate for a partnership company.

Step 4: Tax Exemption Details

Startups in India are exempt from paying income tax for the first three years, but to qualify, the firm must be approved by the Inter-Ministerial Board (IMB). Registered companies with DIPP are exempt from this requirement because mere registration entitles them to the advantages.

Step 5: Self-certification

• You are a private limited corporation, a limited liability partnership, or a partnership business.
• Your company must be formed or registered in India within the next five years.
• Your company’s annual revenue cannot exceed Rs 100 crore.
• The firm must continue to innovate something new or improve the present system uniquely.
• Your firm must be a new concept, not a division or reconstruction of an existing one.

Step 6: Get Your Company Number

• When you apply for this registration (micro finance company registration), you will immediately receive a recognition number. Only when the authorities have reviewed your supplied papers will you be issued a certificate of registration or incorporation of the company.
• You must exercise caution when submitting the data, as any errors might result in massive penalties of up to 50% of your paid-up capital of Rs 25,000 at the absolute least.

Once you understand the qualifying and registration (micro finance company registration) criteria for a business, enroll your firm in the Startup India initiative and reap all of the government’s advantages.

Documents Which Have Been Waived Off

Since its beginning, Startup India has altered the registration process. It has now waived the majority of the former criteria. Many paperwork that was previously required to be filed has been waived. The following documents are not required to be filed at the time of registration:

• Letter of Recommendations
• Letter of funding
• Sanction Letters
• Udyog Aadhar
• MSME Certificate
• GST Certificate

The Fund of Funds’ Key Characteristics

• The Small Industries Development Bank of India (SIDBI) will administer the Fund of Funds. Life Insurance Corporation (LIC) would be a co-investor in the Fund of Funds.
• The Fund of Funds may contribute up to 50% of the SEBI registered company Venture Funds (“daughter funds”). To be eligible for the donation, the daughter fund must have already raised 50% of the amount. Based on the contribution made, the Fund of Funds will have members on the board of the venture fund.
• The Fund will assist with various industries, including manufacturing, agriculture, health, and education.

Because of several government programs, it is fairly simple to register as a startup. However, you may concentrate on your core competencies as we at ClearTax assist you from start to finish, from the company’s incorporation to startup recognition. Please visit our website to learn more about our starting services.

Startup Registration in India: Frequently Asked Questions

Who is eligible to register with Startup India?

The Startup India initiative is open to entities formed as a Private Limited Company, Partnership Firm, or Limited Liability Partnership. Such an entity should be engaged in product or service innovation, development, or enhancement. These commercial organizations’ annual revenue should not exceed Rs.100 crores. They should have been operating for at least ten years from the date of incorporation/registration (micro finance company registration).

What are the advantages of registering with Startup India?

The Startup India Initiative provides a variety of advantages to startups. However, to take advantage of these benefits, the DPI must recognize an organization as a startup.

Startups can self-certify their adherence to six labor standards and three environmental rules. This is permitted for a total of five years from the date of the entity’s incorporation/registration. Entrepreneurs are granted a three-year tax exemption and the greatest intellectual property services and resources designed specifically to assist startups in protecting and commercializing their IPRs.

What type of business structure should I choose for my new venture?

Private Limited corporations and LLPs are the most popular business forms for startups. A Private Limited corporation is lawful and often preferred by investors. However, it has greater compliance requirements and may have higher incorporation of the company cost.

LLPs have cheaper establishment costs and less stringent compliance requirements than Private Limited Companies. Furthermore, LLPs have limited liabilities and are widely accepted by investors and businesses worldwide.

What can I do to entice investors to invest in my Startup?

Not only do you need a great product with a scalable plan to attract investors, but you also need exposure. Make certain that your product obtains a healthy amount of interaction and traction. You must register your business on Startup India and aggressively seek investors. Ensure that you can properly present your company idea to the investor and that your business strategy is sustainable.

Is it possible for a foreign firm to register with the Startup India hub?

Because the location selections are only provided for Indian states, for the time being, any organization with at least one registered company in India can register on the hub. However, the administration intends to begin registrations for global ecosystem players soon.

What exactly is the distinction between an accelerator and an incubator?

Startup incubators are generally institutions that assist entrepreneurs in developing their businesses, particularly in the early stages. Institutions frequently carry out the incubation role with experience in the business and the IT sector.

Startup accelerators help early-stage, growth-oriented businesses. These programs often have a timeline in which individual firms spend anything from a few weeks to a few months working with a group of trained mentors who may also give financial assistance.

How long is a firm considered a startup?

Any company entity that has completed ten years from its incorporation/registration date and exceeded the preceding year’s turnover of Rs.100 crores is no longer considered a startup.

Can an existing entity register as a “Startup” on the Startup India Portal?

According to the legislation, an existing organization can register itself as a startup if it fits the startup conditions. They will also be able to take advantage of different tax and intellectual property (IPR) perks offered to entrepreneurs. The requirements are the same as those stated in the preceding article.

How can I tell whether my registration is complete?

After completing your application, you will obtain a system-generated certificate of recognition, and your Startup will be recognized. This certificate will be available for download on the Startup India webpage.

Is it necessary to register a startup in India?

Yes. To register a firm with the Startup India website and receive startup incentives, it must have at least one registered office in India, as the location options are currently only available for Indian states. However, the administration intends to begin registrations for global ecosystem players soon.

What should I do if my password is deemed incorrect while establishing my firm on the Startup India portal?

Please remember that the password you submit for enrolling on the startup portal must have at least one lowercase letter, one uppercase letter, one numeric number, and one special character. The portal will only accept passwords that meet all of these criteria.

How should the startup activities part of the recognition form be written to achieve acceptance?

A startup is formed to solve a problem. A startup must be working on developing something new or upgrading current technology to tackle a problem to be registered with the Startup India initiative. Thus, in the ‘Startup Activities’ section of the ‘Startup Recognition Form,’ you must detail what problem your Startup is solving, what solution your Startup proposes to solve the problem, and the uniqueness of your solution, i.e., the innovative nature of your product or service, and what is your Startup’s revenue-generating model.

Conclusion

Startups India Scheme contributes significantly to the economy by producing many employees in various industries. The scheme is intended to welcome modern and unique company ideas from entrepreneurs who cannot further their ventures owing to a lack of funding. As soon as an entity registers for this plan, it will have access to many government bids and tax exemptions to guarantee smooth corporate growth. Feel free to consult specialists if you want assistance with the Startup India Registration Process.