Startups play a very crucial role in the economic growth of a country. They facilitate innovation, create new jobs and promote entrepreneurship. Hence, it is imperative that the tax and regulatory framework in a country must support the startups rather than stifle them. Recognizing the importance of developing a healthy startup ecosystem in the country, our Prime Minister Shri Narendra Modi laid down the Startup India initiative on Jan 16, 2016. Under this, eligible companies can get recognized as Startups and avail themselves a host of tax and other benefits. A number of requirements have been waived off and the process has been simplified to establish a system that boosts the startups.
The following are the steps to incorporate a startup in India
1.Incorporate the business
The registering of a startup begins with incorporating it. The startup can be incorporated as a Private Company, Limited Liability Partnership or a Partnership Firm. This involves
- Apply for Designated Partnership Identification Number (DPIN) and Digital Signature Certificate (DSC).
- Apply for the startup’s name with a couple of options on the Ministry of Corporate Affairs website.
- File the form INC-32 along with Memorandum and Articles of Association within 60 days
- Prepare the Partnership Deed in case of a Partnership firm.
- Apply for the company’s PAN, TAN.
2.Register with Startup India to get Startup status
Once the business is incorporated the next step is to register it as a startup. This is an online step which can be done on the Startup Portal. This begins with creating a profile for the startup by entering the following
- Details of the Entity: This includes name and type of the entity, i.e. if it is a Partnership, private company or a LLP.
- Details of Authorized Representatives, Directors, Partners.
- Information like number of employees currently in the startup, stage of development of the product or the service.
The following documents need to be uploaded
- Registration/Incorporation Certificate
- Details of Directors
- A recommendation letter from an incubator that is funded or recognized by the Government of India OR a recommendation letter by the State or Central Government OR an equity funding of not less than 20% by a Private Equity Fund/Angel Fund registered with SEBI OR Patent/Trademark Details
- Brief description of the business
- Proof of Concept in the form of a video link, website
- PAN Details
The entity must also self-certify the following:
- It is incorporated not before 5 years
- Its turnover is not more than Rs. 100 crore
- It is innovating a new product or re-engineering an existing product or service
3.Recognition from DPIIT
The next step is recognition from Department for Promotion of Industry and Internal Trade (DPIIT). With this recognition the startup gets various benefits like tax exemption for 3 consecutive years, tax exemption on any investment above fair market value, access to Fund of Funds (Rs. 10,000 crore as a funding support for the startup).
The “Startup Recognition Form” should be filled and the “Get Recognised” button should be pressed in order to gain recognition from DPIIT. Once all the documents are submitted online a certificate of recognition is issued within 2 days after vetting of the documents.
The entire process described above can be done online on the Startup India Portal on the site https://startupindia.gov.in/registration.php. The following information needs to be filled on the site
- Name of the company
- Incorporation/Registration Number
- Details of Authorised Representatives, Directors
- Address and other details
Adequate care has to be taken while uploading the documents. Uploading a wrong or a forged document or any discrepancy in the data uploaded could lead to a fine of up to Rs. 25,000 or a fine of 50% of the paid-up capital. Hence vetting of the documents is essential before submitting the same.
Still have doubts about registering a company? Looking for trustworthy and quick company registration services in Delhi? Contact us at +91 8527853048 or email us on info@fincomienzo.com
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