Most often than not, people let their business ideas die because they don’t know how to establish their company or turn their ideas into a business venture. Turning your ideas into reality can be extremely daunting and stressful. Hence, to lessen that stress, this article will help you understand how to register your company as a startup and all the procedures that come along with it.
What Is a Startup?
A “startup” can be defined as a company that is in its initial stages of business and is usually characterized by a high risk of failure. Startups are initially financed by their founders and lack a cohesively developed business model as well as funding to enhance their business venture. Funding can be acquired from venture capitalists, loans, friends and family, and crowdfunding. Location and legal structure are two of the most crucial factors to keep in mind when one is trying to get their startup off the ground and develop it into a successful business venture.
Types of Company Registration Available for Startups/Businesses in India
DPIIT can recognize eligible companies as startups under PM Modi’s “Startup India” initiative. They can access a host of tax-advantaged schemes, easier compliance, IPR fast-tracking, and more.
One needs to know the types of company registration available for startups and businesses in India:
- A private limited company is considered a privately owned and separate legal company from those who founded it.
- A “registered partnership firm” means the partners should register their firm with the Registrar of Firms of the state where the firm is established.
- A limited liability partnership means that each partner has limited personal liability for the partnership’s debts or claims.They are not liable for the acts of their other partners.
Eligibility Criteria for Startup Registration
It is important to know whether your company is eligible for DPIIT startup recognition.
- The period of existence and operations of your company should not exceed 10 years from the date of registration.
- Your company must be incorporated either as a private limited company, a registered partnership firm, or a limited liability partnership.
- Your company is considered a startup if its annual revenue has not exceeded Rs 100 crore since its inception.
- The firm should be an original entity. A company formed by splitting up or reconstructing an already existing business is not seen as credible.
- Your firm should constantly work toward improving your product and service, as well as develop a business model with a high potential for the creation of capital and employment.
- The details regarding the funding of your company should be registered with SEBI (the Securities and Exchange Board of India).
Step by Step Procedure to Register Startups in India
Listed below are the steps that must be taken to complete the Startup India registration process:
Incorporate your company
First and foremost, you must incorporate your business, either as a private limited company, a registered partnership firm, or a limited liability partnership. Just like any business, you have to follow the basic procedures for registration, such as submitting the registration application and acquiring the Certificate of Incorporation or Partnership Registration.
Register with Startup India
Now your firm must be registered as a startup. It is a simple process, and you can do it online by visiting the Startup India website and clicking on “register.” A form will be made available to you where you have to fill out the details of your startup. Once it’s done, you will receive an OTP that you will need to enter on the website, along with other information required. Your Startup India profile will be generated as soon as these details are registered.
DPIIT has recognized you
It is mandatory to apply for the DPIIT after creating a profile on the Startup India website, as DPIIT-recognized startups get access to several privileges, such as fast-tracking of startup patent applications, the central government bearing facilitation costs, easier public procurement norms, access to a pool of capital for three years, and more.
On the “Startup Recognition Form,” you will be required to fill out the details asked of you. After entering all the sections in the form, click on the “submit” button.
Documents Required for Registration
- Your startup’s incorporation or registration certificate
- PAN number
- Detailed patents and trademarks
- Funding proof, if any
- a list of certificates of recognition or awards, if any were achieved.
- Proof of concepts like pitch decks, websites, and videos
- Detailed information about the board of directors
After applying, you will be provided with a recognition number for your startup. The certificate of recognition will be given to you after they are done examining all your documents, which should not take more than 2 days. But it is important to remember that during the verification, if it is found that a required document is missing or a false document is submitted, you will be subject to a minimum fine of INR 25,000.
For the first three years, startups do not have to pay income tax in India. But this privilege will only be available to you if your company is certified by the IMB (the Inter-Ministerial
- Patents, designs, and/or trademark registration
If you want a patent or a trademark for your business, you can approach any of the facilitators on the list issued by the government, which is available on the website. You can save money by only paying the statutory charges.
- Compliance with labor and employment laws
With self-certification that states that the startups adhere to labor and environmental laws, the company can save money.
- Documents that are waived off
Startup India has made various modifications to the registration process since its launch and has made the process more precise. These documents are waived off.
- A letter of recommendation
- Letter of funding
- GST certificate
- Udyog Adhar
- MSME Certificate
- Sanction Letters
The first few years are crucial for startups. Hence, entrepreneurs should use this important development period to gather funding resources, make connections, and improve their business model. With various opportunities and schemes provided by the government, it has become relatively easier to register new businesses.
FAQs on Startup Registration in India
The frequently asked questions on how to register your Startup in India are as follows
How do I register my startup company?
To register your startup, visit the Startup India website and click on the “register” button. You will be asked to fill out details regarding your startup. Once you have completed the process, your profile will be generated. For detailed information on this, go through the step-by-step registration process provided in the article.
Which company registration is best for a startup?
It depends on the size of the business you plan to register. Partnership firm registration is the best option for a small business run by two or more people. But if it’s a medium- or large-sized business, then limited liability partnerships (LLP) and private limited companies are most suitable.
What is the cost of startup registration?
Startup India’s registration fee, including professional fees, is 7,499 INR.
Who is eligible for startups?
Any individual applying for the Startup India initiative must be over the age of 18 years. Your company must either be an LLP, a Pvt. Ltd., or a Registered Partnership Company. It should not exceed the 10-year mark since incorporation and should not have an annual turnover of Rs 100 crore for any of the financial years since its registration. For more details, check out the eligible for DPIIT startup recognition section of the article.
Do startups need GST?
Yes, it is mandatory for startups to register for GST.
Do startups have to pay taxes?
Startups are exempt from paying taxes for the first three years of business in India. But to qualify for this benefit, they must be authorized by the IMB.
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