Registrations required by start-ups in India
Definition of Startup
A startup can be defined as a legal body such as a contemporary, well-established business. Generally, these businesses are started by a single or by an assemblage of a few individuals. The main distinguishing feature of a start-up is that an original artifact or service is provided is not obtainable elsewhere Moreover, a start-up business sometimes invests in enhancing an already developed product and/or service. A company can be denoted as a startup when:-
- Any company when successfully completes registration under Companies Act, 2013 will be a startup company.
- As per section 59 of Partnership Act, 1932, when a company is registered as a partnership firm, then that unit is considered a start-up
- When a company is registered under the Limited Liability Partnership Act, 2002, in the same way as a limited liability partnership, then it is a start-up.
Furthermore, a company continues to exist as a startup for the subsequent five years beginning from the period of incorporation. As long as a start-up venture concentrates on originality, improvement, consumption, and marketing of new commodities, it will be perceived legally as a start-up company. Furthermore, its methods of innovation must adapt to technological advancement. Finally, in the past five years, its turnover should not be beyond 25 Crores. However, the unit should be a unique venture and not a part of a business which is already in the continuation and well established.
Indian scenario of Startup
In India, start-ups are gaining rapid popularity. The Government of India is devoted in formulating new plans to advance the economic status in India, and by gaining the trust of capable industrialists. In addition, there are a lot of initiatives taken by the Government of India to sponsor new start-ups and initiate their growth in the country. A recent proposal called Startup India Standup India was initiated by the existing government of India. The Prime Minister of India, Narendra Modi introduced this proposal in the year 2016.The primary target of this operation was to generate more job prospects for young entrepreneurs. Furthermore, the scheme will facilitate the youth of the country in launching their flourishing venture.
Registration of startup with Startup India
- Firstly, it is necessary for a company to incorporate as an establishment whether as a Partnership firm, and a Limited Liability Partnership or a Private Limited Company. Moreover, an Incorporation Certificate and/or a Partnership Registration should be acquired by following the standard procedures for registration.
- In order to register a business under Startup India, the applicant has to log on to the website of Startup India. Thereafter, the details are to be filled in the form along with the particulars of the business venture. All the necessary documents should be uploaded.
- Another benefit of Startup companies is that they are excused for three years from income tax. However, such companies must be licensed by the Inter-Ministerial Board.
- One successful application, a recognition number will be provided instantly. This recognition number is only provided after scrutinizing the documents properly. Whereas, if while authentication of documents, it is discovered that the requisite documents uploaded are an incorrect document or fictitious document, then the applicant is accountable to pay a fine of fifty percent of the paid up investment of the startup.
- When a patent or a trademark is required for a venture, the applicant has the liberty to proceed with the list of facilitators sanctioned by the government. Only the statutory fees have to pay in this case.
- Funding is one of the major hurdles faced by the startup companies. Investors lack the confidence to put their money in start-up companies due to high risk and lack of experience. However, the Government established a funding system where a preliminary amount of Rs 2,500 Crore and an absolute amount of Rs 10,000 Crore will be provided to companies for 4 years.
Thus, in concise four major steps necessary while registering a startup are-
- Firstly, Digital Signature Certificate has to be acquired
- The second step is to receive the Director Identification Number or DIN
- Thirdly, new user registration form has to be filed.
- The company has to be incorporated.
Documents required during Registration
Firstly, a letter of recommendation is mandatory while filing an application. This recommendation can be acquired in the format as mentioned by the DIPP, from an Incubator established in a postgraduate college in India. Moreover, the letter of recommendation by an incubator which is funded by the Government can also be used. A letter of recommendation for a business innovation can be acquired in DIPP specified format from an Incubator acknowledged by the Indian Government of India. A letter of financial support by Indian Government or any State Government can also be requested. In case of LLP, certificate of incorporation of the company needs to be uploaded. However, the Registration Certificate has to be uploaded in case of partnership firm. A patent is required to be filed by the Indian Patent Office and published in the Journal of theirs. This shall be published in areas associated with the business. A document providing a succinct description of the business venture and how it is innovative in nature is necessary.
Advantages of Startup
- It is quite convenient to gain financial support and get loans. Companies incorporated as LLP or Private Limited Company is entitled to raise funds by financial aid from Angel Investors, Venture Capitalists and more.
- It is quite unproblematic to employ people as well encourage them to work in the corporate sectors. Moreover, they can also be trusted with stock options.
- Private Limited start-up companies can be sold easily. Moreover, with limited documentation and minimal cost, it can be sold quite conveniently.
In conclusion, it is clear why “registrations are required by startups in India”. Due to the devotion showed by the government, it is now possible to register for startups with no hassles. The integral part of this operation is that a lot of innovative ideas, skills, and imagination are surfaced in the business world, which ultimately will help India to progress.