7-Step Guide To Get Your Startup Registered Under Startup India Scheme
In today’s world, start-ups are not just vital for the economic growth of a nation but also play an important role in our day-to-day life. Mobile Apps like Zomato, Foodpanda, Swiggy, BookMyShow, Uber, etc. have become essential to fulfilling our daily needs. You need a recharge, there is an app for it! You need food, there are several platforms for only delivery! These amazing start-ups have revolutionized the world with their amazing business models and innovative approaches.
However, there are many such great ideas out there which are still struggling to show their magic to the world. This is because of the fact that they are unable to find a platform to execute their idea. This is where start-ups come into the picture as they are initially financed by the founders and have access to easy registration, along with numerous redemption including tax and other areas making it a great platform to start your dream business venture for aspiring entrepreneurs.
What is a startup?
A startup is a newly established business, usually small, started by a single person or a group of individuals. What differentiates it from other new businesses is that a startup offers a new product or service that is not being given elsewhere in the same way.
How to create one?
Due to the growing popularity of startups in India, the government of India, under the leadership of Prime Minister Narendra Modi has launched the Startup India Scheme with the objective to promote entrepreneurs in India while also aiming at increasing the Foreign Direct Investment. The Startup India Scheme has also been established to recognize and promote startups in India. This initiative allows aspiring entrepreneurs to register their startups with a simple and less time consuming online procedure. This procedure and the benefits of recognized startups have been explained in the following seven easy steps:
Step 1: Incorporate your Business
In order to create a start-up, it is important to register your business first as a Private Limited Company or Partnership Firm or a Limited Liability Partnership. This can be done by following all the normal procedures of registration of any business such as obtaining the certificate of incorporation or making a partnership deed along with obtaining a Permanent Account Number for the company or firm and fulfilling other necessary requirements. You may need the help of a lawyer while starting out, depending upon the nature and size of your business.
Step 2: Registering with Startup India Scheme
The second step is to register your business as a startup. The process to register a startup has been made tremendously easy under the Startup India Scheme and you can do it online, sitting at home. All that is required to be done is logging into the Startup India website and fill up the registration form. In the registration form, details of the business are to be provided along with uploading certain relevant documents.
Step 3: Documents to be uploaded
The following documents are required to register your startup on the Startup India website:
(1) Letter of Recommendation: The following documents can be obtained as a letter of recommendation:
- A recommendation regarding the innovative nature of your business from an Incubator established in a post-graduate college in India, in a format specified by the Department of Industrial Policy and Promotion (DIPP); OR
- A letter of support by an incubator, which is funded in relation to the project by the Government of India as part of any specified scheme to promote innovation; OR
- A letter of recommendation regarding the innovative nature of the business, from an Incubator, recognized by the Government of India in DIPP specified format; OR
- A letter of funding of not less than 20% in equity, by any Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network, duly registered with SEBI that endorses innovative nature of the business; OR
- A letter of funding by the Government of India or any State Government as part of any specified scheme to promote innovation; OR
- A patent filed and published in the Journal by the Indian Patent Office in areas affiliated with the nature of the business being promoted.
(2) Incorporation/Registration Certificate: Along with the registration form, you are required to upload the certificate of incorporation of your company/LLP (Registration Certificate in case of a partnership).
(3) Description of your business in brief- A brief description of the innovative nature of your products/services is also needed.
Step 4: Certifying yourself
The final step before you could get a recognition number is to certify that you fulfil the following terms:
- You have registered your new company as a Private Limited Company, Partnership firm or a Limited Liability Partnership.
- Your business has been incorporated/registered in India, not before 5 years.
- Turnover is less than 25 crores per year.
- Innovation is a must – the business must be working towards innovating something new or significantly improving the existing used technology.
- Your business is not a result of splitting up or reconstruction of an existing business.
Step 5: Immediately get recognition number
That’s it! On applying you will immediately get a recognition number for your startup. The certificate of recognition will be issued after the examination of all your documents.
However, be careful while uploading the documents. If on subsequent verification, it is found that the required document is not uploaded or a wrong or a forged document has been uploaded then you shall be liable to a fine of 50% of your paid-up capital of the startup to a minimum of Rs. 25,000.
Step 6: Tax benefits
Startups incorporated after April 2016 are exempted from income tax for 3 years in a block of 7 years provided that their annual turnover does not increase Rs. 25 crores. But to avail these benefits, they must be certified by the Inter-Ministerial Board (IMB). This will also help the start-ups to meet their requirements of working capital in their initial operational years.
Step 7: Patents, trademarks and/or design registration benefits
Start-ups recognized by DIPP, Govt. of India can directly avail IPR related benefits without requiring any additional certification from IMB. Your lawyer can advise you if you need a patent for your innovation, or a copyright, or a trademark for your business, and acquire one by easily approaching any of the facilitators issued by the government. You will need to bear only the statutory fees thus getting an 80% reduction in fees to register your intellectual property.
How to get Funding?
One of the key challenges faced by many startups has been accessing to finance. Due to lack of experience, security or existing cash flows, entrepreneurs fail to attract investors. Besides, the high-risk nature of startups, as a significant percentage fail to take-off, puts off many investors.
In order to provide funding support, Government has set up a fund with an initial corpus of INR 2,500 crore and a total corpus of INR 10,000 crore over a period 4 years (i.e. INR 2,500 crore per year). The Fund is in the nature of ‘Fund of Funds’, which means that it will not invest directly into Startups, but shall participate in the capital of SEBI registered Venture Funds.
We can see that the Government is making efforts in order to support startups in every way, including making the procedure to register these easier and less time-consuming. This way, it is also helping young entrepreneurs by providing them with a platform to showcase their innovative ideas and on the whole aiding to the development of the economy of the country.
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