The Startup Registration Process in India is quite a simple one. The upload of a basic documentation and details of the business is all that is required. The whole idea of a startup depends upon its idea and how that idea creates a difference in the existing system. Startup India has played a vital role to the aid of aspiring entrepreneurs by providing them with varied benefits.

An immense upsurge in the number of startups can be seen in India since the Prime Minister, Mr. Narendra Damodar Das Modi launched Startup India for the promotion and better recognition of startups. This initiative has opened doors wide for the young and creative minds of India who earlier did not have much support in the form of tax exemptions and benefits provided by the government, which they now have. Thus, with all their heart and soul, young founders and owners across the country have been coming up with incredibly fascinating ideas.

A mere idea or an initiative is not enough unless the route to accomplish the same is accessible. Many aspiring founders remain in a dilemma of whether to focus on the idea of the startup or look up for the processes that entail its registration and incorporation. Moreover, to begin with, it is really important whether the entity one is planning to launch comes under the purview of a startup or not. What all documentations and formalities are necessary, and whether the entity is eligible to be called as a startup are some of the must- to- know aspects of beginning with a venture like that of a startup. Thus, from the concept of a startup to the follow up steps, everything must be clear in the mind of the prospective founder(s).

What is a startup?

A startup is everything like any other new business but a lot different at the same time. It is usually a small entity with one or more individuals as its founders. The differentiator between any other business entity to that of a startup is innovation. Such products or services that are provided nowhere else in the same way as by such startups, differentiates them from any other form of business organization. Any development of a new product or a service or a redevelopment of an existing good or service is offered by startups. Such innovative ideas emerge from the unsettling nature of the entrepreneurs who constantly seek to improve and work on the negatives of the quality of the existing system they’ve been either working in or witnessing from a distance. In a country with a vast and varied population like ours, we have  a lot of potential and scope for new and creative ideas to reform and refine our current working setups and methodologies.

What is Startup India?

Looking at the rising need of promoting small businesses and attracting talented entrepreneurs, an initiative called the Startup India was launched by the Government of India on 16th January,2016, under the leadership of Prime Minister Narendra Modi. This program aims at supporting entrepreneurs with innovative ideas and thus, building a robust startup ecosystem. This initiative has so far helped in moving a step ahead in the direction of the country becoming one with the job creators instead of job seekers.

Eligibility criteria for a startup

In order to have a clear understanding about the whole procedure of registering a startup, it is important to know about the eligibility criteria of the same.

  • First of all, it has to be made sure that the firm to be incorporated as a startup is a private limited company or an LLP i.e., a limited liability partnership.
  • For the first ten years of the registration of a startup, the status of the firm remains that of a startup. This term was initially for seven years which was increased to ten years by the government of India in order to provide for the tax exemptions for the companies for a longer period.
  • One thing that has to be kept in mind in order for the company to remain as a startup is an annual turnover of not more than Rs. 100 crores in any of the ten years. Earlier, this turnover mark was Rs. 25 crores which has been improved by the government of India to Rs. 100 crores in the recent years.
  • Approval from the Department of Industrial Policy and Promotion (DIPP) is mandatory for the firm.
  • Funding from either an Angel Fund, an Incubation Fund or Private Equity Fund is necessary. A recommendation letter by an incubation is required as well.
  • There has to be a patron guarantee from the Trademark and Indian Patent office.
  • Registration of all the details in regard to the funding must be done with SEBI.

Online Company Registration in India

  • Incorporation

The incorporation of the business as a Private Limited Company or a Limited Liability Partnership or even a Partnership firm must be duly done. Basic registration procedure for any business can be followed for the same.

  • Registration with Startup India

A simple and easy online procedure is prescribed for registering the firm with Startup India. All one needs is to login to the Startup India website and fill in all the necessary details of the firm in a form provided there and upload a few documents.

  • Documents Required (PDF Format)
  • Letter of Recommendation: along with the registration form, a Letter of recommendation must be submitted as well in order to support the cause of the startup. There are a variety of recommendation letters that can be held valid. They are:
  • To assure the innovative nature of the business, a letter of recommendation from an incubator known at a post graduate college in India is valid. The format of such a recommendation letter must be approved by the DIPP.
  • An incubator that India’s government funds as a part of a specified scheme can provide a letter of recommendation.
  • A recommendation letter from any of the incubators recognized ny the government of India.
  • The Central or State government can provide with a letter of recommendation as well.
  • A patent that has been filed and published with the Journal of Indian Patent office in areas in which the nature of business is affiliated with can also be considered as a letter of recommendation.
  • Certificate of Registration or Incorporation: The certificate of incorporation of the company or LLP is required and in the case of a partnership firm, Registration Certificate is required.
  • A brief description of the nature of products or services provided has to be mentioned.
  • Requirement of tax benefits

Whether or not the firm requires tax benefits from the government has to be mentioned beforehand. Income tax for the first three years for startups is exempted but such benefits can be availed only if the firm has a certificate by the Inter- Ministerial Board (IMB) for the same. However, if the company is registered with DIPP, mere registration is enough to fetch the benefits.

  • Self- certification for the following aspects:
  • The firm is a Private Limited Company or an LLP or a Partnership firm.
  • The incorporation or registration of the business must be done in India not before a period of five years.
  • The turnover of the company must not be over Rs 100 crores per year.
  • Innovation or redevelopment from time to time of the existing system is a pre- requisite for the continuance of the business.
  • It must be made sure that the idea of the business is completely new and not just a reconstruction of any existing business.
  • Recognition Number

After all the examination of the documents has been done, a recognition number for the startup is provided and a certificate for the same is given too. A very important thing to note here is that all the documents must be accurately uploaded as if any of the document is found to be forged or missing, the owners shall be liable to a fine of around 50% of their paid- up capital of the startup along with a minimum fine of Rs 25,000.

Other aspects

  1. Patents/ Trademarks/ Design Registration

A list of facilitators is provided by the government of India regarding any patent or trademark for the business to protect their rights over the innovation of their business idea, which can be approached easily. Only the statutory fees is to be borne by the entrepreneur making it an 80% concession in fees.

  • Funding

The government of India participates in the capital of Venture Funds registered with SEBI in order to provide funding support to the startups. With an initial corpus fund of Rs 25,000 crores and a total corpus of Rs 10,000 crores over four years’ time period, the fund acts as a Fund of Funds which makes it in an indirect contact with the startups.

Bio of the Author

A 4th year law student from Vivekananda Institute of Professional Studies. Keen interest in corporate law. Dedication and enthusiasm for working towards bringing a change to the societal purviews for a better environment in all aspects. Experience in research on social and legal issues.

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