The most successful startups are those that are led by enthusiastic entrepreneurs that are dedicated to create one-of-a-kind solutions that attract and benefit customers. While having a strong focus on clients and the market it is crucial to have awareness of the basic laws, rules, and regulations that apply to the company’s operations running smoothly.Entrepreneurs must be informed of and up to date with the newest regulations governing their firm and market, from formalizing a founders' agreement to securing intellectual property to enforcing commercial contracts. Eligibility of a business to be termed as a startup in India is as follows:
- For a business to become a startup it should either be a private limited company or a limited liability partnership,
- The company stays a startup for the first ten years after it is registered. The Indian government increased this from seven to 10 years in order to provide businesses greater opportunities and tax savings in the long run.
- A company is still deemed a startup if its annual turnover does not reach Rs 100 crore in any of the ten years. The Indian government raised the limit to Rs 100 crorefrom Rs 25 crore.
- An incubator must provide you with a letter of recommendation.
- The firm must be approved by the Department of Industrial Policy and Promotion (DIPP). • The firm should be funded by an Incubation Support, etc.
- The business must offer completely new themes and ideas.
- All funding-related information must be reported with the Securities and Exchange Board of India.
Procedure for registering a startup in India
Step 1:Incorporation of Business-
The first step in the is to get your business incorporated as a private limited company or a limited liability partnership while registering for a startup. All the normal procedures have to be followed in order to obtain a certificate of incorporation PAN or other compliances.
Step 2: Register with Startup India-
After that, the business has to be registered as a startup. The entire process is performed entirely online. Simply go to the website of STARTUP INDIA and fill in a form with the description about your business. Next, enter the One Time Password that has been sent to your e-mail address, as well as other details such as the startup as the kind of user, the company's name and phase, and so on.The Startup India profile is then created. After creating a profile on the Startup India website, startups may apply for various acceleration, incubator/mentorship programs etc.
Step 3: Required Documents–
- Registration form along with the LOR i.e., Letter of Recommendation. One can get any of the following LOR:
- Letter of Recommendation from the state or the central government, or Patent filled and published in the patent journal in areas affiliated with the nature of the business being promoted, ORIn a format recognized by the DIPP, a recommendation letter from an Incubator recognized at a post-graduate college in India. This is about the business's innovation; or a letter of recommendation letter from an incubator that the Government of India finances as part of any specific program to foster innovation; OR a letter in DIPP format from any of the Government of India's authorized incubators, or a letter of funding from an Incubation Fund, Private Equity Fund, Angel Fund, Accelerator, or Private Equity Fund that is registered with SEBI and supports the creativity of the firm.
- Anin-brief description of the business.
- Certificate of Incorporation the company or the Registration certificate of the partnership company or Certificate of Incorporation of the LLP.
Step 4 : Mention the tax exemption if needed –
Startups in India are exempted from paying tax for the first three years for their business but can only avail these benefits if the company is certified by the IBM i.e Inter-Ministerial Board. Companies that have registered with DIPP are exempted from this requirement because registration is sufficient to get the advantages.
Step 5: Self-certification of the following conditions–
Startups can lower their compliance expenses by self-certifying under labor and environmental laws. Self-certification is available to help companies minimize regulatory load and focus on their primary business. Following are the condition for self -certification:
- You are a limited liability company (LLC), a limited liability partnership (LLP), or a partnership business.
- Not earlier than 5 years, your company must be formed or registered in India.
- Your company's annual revenue must not exceed Rs 100 crore.
- The firm must continue to come up with new ideas or improve the old system in its own unique way.
- Your company must be a new concept, not a division or reconstruction of an existing company.
Step 6: Recognition Number:
You will receive a recognition number for your startup as soon as you apply. The certificate of recognition will be granted when all of your documents have been examined, which normally takes two days after you submit your information online. However, use caution when submitting documents. If it is discovered after further verification that the needed document was not submitted, the incorrect document was uploaded, or a fake document was uploaded, you will be fined 50% of the startup's paid-up capital, with a minimum punishment of Rs. 25,000.