How to Register a Startup in India

Many individuals in this world have business ideas in their heads, but very few people actually know how to start a business and make it lucrative.

Startups are a rediscovery of the twenty-first century that have recently altered the commercial landscape. Even if there are a tonne of advantages, do we know how to register a startup in India? Small reservoirs of invention and efficiency exist inside startups. They are typically controlled by a single entrepreneur or a group of founders who are prepared to develop their tiny enterprises to new heights.

Startup Eligibility Requirements

The Indian government has established a list of requirements before a firm can be referred to be a startup. An organisation must be recognised as a “Startup” by the Department of Industrial Policy and Promotion (“DIPP”) in order to participate in the Startup India Scheme. Only those applicants who satisfy the following eligibility requirements may obtain a DIPP approval:

1. Limited Liability Partnership or Private Limited Company

The registered company must be either a Limited Liability Partnership or a Private Limited Company. The startup must continue to be a startup for 10 years following registration. However, a start-up is a business that continues to be a startup if its annual revenue does not exceed Rs. 100 crores. By offering tax breaks and other benefits, the government has encouraged the ten-year commitment.

2. Promotion and Innovation

An entity must be a new idea and not a reorganised organisation in addition to the aforementioned requirements. The organisation should then try to promote a product or service and innovate new ones. To receive DIPP clearance, the company plan must be able to generate money and jobs.

Benefits of Establishing a Business in India

The programme supports individuals in launching their enterprises and encourages them to generate new company concepts. Start-up businesses in India have the following benefits:

1. Straightforward Process – India has introduced a website and mobile app for startup registration, both of which follow an easy approach. Online forms and document uploads allow those who want to launch a business to get started.
2. Minimum Requirements – Simplifying requirements helps startups save time and money. With the Startup app, startups may independently confirm their adherence to nine labour laws and three environmental regulations.
3. Investor Tax Benefits – Capital gains are deductible for people who invest in venture funds established by the government. More investors will come into startups.
4. Investor Choice – Startups will have the option to select their venture capitalists (VCs) under this structure.
5. R&D Facilities – Seven new Research Parks will accommodate R&D startups.
6. Cost Cutting – Government mentions patent and trademark facilitation as a cost-saving measure. They provide affordable, high-quality IP services, such as quick patent reviews. The startup will only be charged statutory costs, and the government will cover all facilitator fees. They will spend 80% less on filing patents.
7. Simple Financing – The government reserves 10,000 crores of rupees annually for venture financing for business owners. It ensures venture capital investments and encourages banks and other financial institutions to make them.
8. Three-Year Tax Holiday – Startups will enjoy a three-year tax vacation with IMB accreditation, free from paying income taxes for that time period (IMB).

Eligibility for Startup Recognition

• A PLC or LLP must be used to structure the company.
• For the first 10 years following registration, the business is regarded as a startup. The Indian government has increased that time frame from seven to ten years in order to give firms longer-term tax benefits.
• To incubate, you require a letter of recommendation.
• SEBI demands all financing information (Securities and Exchange Board of India).
• New firms must abide by the GST requirements.
• When a company’s annual revenue does not surpass Rs. 100 crore in any of the first ten years of operation, it is deemed to be in its beginning phase. The barrier must be crossed before the business can be regarded as a startup. In recent times, the Indian government increased the sum from 25 billion rupees to 100 billion rupees.
• The Industrial Policy and Promotion Department must approve the firm (DIPP).
• It’s important for supporters to have faith in the Indian Patent and Trademark Office.

Documents Required for Company Registration

Directors Documents

• Directors PAN
• Directors ID Proofs
• Aadhaar Card or Voter ID or Passport or Driver’s License
• Directors Address Proofs:
• Latest one month Savings Bank statement or
• Latest Telephone Bill on his own name or
• Latest Mobile Bill on his name or
• Latest Power Bill on his own name.
• Directors latest passport size photograph
• Directors Email ids
• Directors Mobile Numbers linked with their Aadhaar
• In case of Foreign direcrtors, International Passport is mandatory

Company Documents

• Registered Office Address Proof: Latest Power Bill
• No-objection letter from the Landlord
• Rental Agreement from the landlord if the premises are rented
• Company Email Id

Legal Requirements & Process for Startup Registration in India

In India, the procedure for registering a startup has been streamlined. An organisation must register on the Startup India portal after it is qualified to be recognised as a startup. The organisation must attach a letter of recommendation after completing the registration form. This letter of recommendation may be provided by:

1. An incubator (located at a post-graduate college) attesting to the inventive component of the firm.

2. As an alternative, the letter of recommendation may be provided in the DIPP-approved format by an incubator that has received funding or recognition from the Indian government.

3. Letter of investment from a Private Equity Fund, Incubation Fund, Accelerator, or Angel Fund that attests to the innovation of the firm and is registered with SEBI, which shall be recognised as a letter of recommendation (and which is not less than 20% in equity).

4. A recommendation letter from the federal or state governments.

Startup Registration Process and the Documents Required

Step 1: Incorporation of Business

Creating a limited liability partnership, a private limited company, or a partnership is the initial stage. In order to begin, one must fill out the registration form.

Step 2: Registering with Startup India

Your company must be registered as a startup in order to take part in the Startup India programme. Thank you for completing the Startup India form. The form must be completed, together with any relevant supporting materials.

Step 3: Document uploading (only in PDF format)

A letter of reference is needed for registration. These letters of recommendation are offered.

a reference letter supplied by an incubator in India for post-graduate students, written in a style that the DIPP has authorised. The company’s creative character; a letter of support from a government-funded incubator participating in a programme intended to promote innovation; or a letter from any government-recognized incubator prepared in DIPP.

Step 4: Mention Tax Breaks

The government waives income taxes for the first three years of an Indian startup’s existence provided it gets certification from the Inter-Ministerial Board (IMB). Businesses who register with DIPP are instantly qualified for a number of benefits just by doing so.

Step 5: Self-Attestation and Condition Certification

• A limited liability partnership or a public limited corporation is what you are.
• Either establish or register your company in India during the next five years.
• There is a 100 crore rupee limit on your organization’s annual revenue.
• The organisation must continuously strive to build and improve its system.
• It cannot be a spin-off or reorganisation; your business must be an original idea.

Step 6: Getting a Recognition Number

After establishing an account with us, you will soon be given a number. The authorities go through the files you’ve uploaded to their system before issuing the registration or incorporation certificate. You might lose 50% of your paid-up capital or INR 25,000 if there is a data error.

Enroll your company in Startup India now that you are aware of the eligibility criteria and registration procedure so you may benefit from government incentives.

The registration process includes the following steps after the reference letter has been attached:

1. If the business’s operations are patentable, a patent application must be made and published in the Indian Patent Office Journal.

2. Possessing a current PAN ID is advised for the entity.

3. A registration or incorporation certificate establishing the entity’s status as a private company or limited liability partnership

4. Whether the firm is a private limited company or a limited liability partnership must be mentioned briefly together with the company’s other characteristics. The registration must be completed no earlier than five years ago in India. It is important to note the company’s revenue and innovativeness. The description must also make clear that the business concept is original and not a revamping of an existing enterprise. All of these elements should be self-certified.

5. It should be made clear if the organisation needs a tax exemption. If they have received certification from an Inter-Ministerial Board, startups are exempt from paying income tax for the first three years. Additionally, a firm will gain a lot of advantages just by being associated with the DIPP.

6. A recognition number is produced upon the submission of the registration form and the necessary documents. A certificate of incorporation is only provided once a comprehensive investigation by the authorities has been completed and approved. A punishment of up to Rs. 25,000 or 50% of the paid-up capital may be imposed if there is any inconsistency with the documents or data submitted.

Conclusion:

These facts are supported by the incentives and recognition that the Indian government has given to startups. Once a startup is registered, it receives rewards for adhering to labour and environmental rules. Startups benefit from tax breaks and exemptions on capital gains and investments. Additionally, registering startups makes it easier to close down companies within a ninety-day deadline. Startups can get an 80% discount on patent filing fees and a tonne of funding options.