7 Steps to Register New Business under Start-up India

Posted by Enterslice on February 27th, 2018

What is a startup?

A startup can be explained as a newly established business which is usually small which is started or established by an individual or group of individuals. A start-up can be differentiated from other businesses as they offer a new product or services that are not being offered anywhere else in the same way. The Keyword for start-ups is INNOVATION. These start-ups will either develop a new products/services or will redevelop an existing product/services into something much better than the previous. 

Start-up India in India

Nowadays start-ups are becoming very much popular in India. To develop Indian economy and attract skilled entrepreneurs, the Government of India has started and promoted Start-up India initiative to recognize and promote start-ups. 

Start-up India Registration Procedure Steps-

Step 1: Incorporate your business

The first step is to incorporate your business as a Private Limited Company or as a Partnership Firm or as a Limited Liability Partnership.

You just have to follow all the normal procedure for registration of any other business like obtaining a certificate of Incorporation/Partnership Registration, PAN, and other compliances. 

Step 2: Register with Start-up India

The other step is to register your business as a start-up. The entire procedure of registering your business as a start-up is simple and online. To register your business in start-up India the concerned person has to fill up the form as provided on the Start-Up India website with all the details of their business and required documents.

Step 3: Documents to be uploaded (in PDF format only):

a) A recommendation/support letter.

A recommendation/support letter should be submitted along with the registration form. Any of the following shall be valid:

• A recommendation from an incubator regarding the innovative nature of business, this recommendation should be in a format specified by the Department of Industrial Policy and Promotion (DIPP); OR
• A letter of support (in relation to the project) by an incubator which is funded by Govt. of India as a part of any scheme which is to promote any innovation; OR
• A letter of recommendation from an incubator recognized by the Govt. of India in DIPP specified format that recommendation letter should be regarding the innovative nature of the business; OR
• A letter of funding by Government of India or any State Government as a part of any specified scheme to promote innovation; OR
• A patent filed and published in the Journal by the Indian Patent office in areas affiliated with the nature of the business being promoted. 

b) Incorporation or the Registration Certificate.

Certificate of Incorporation of the Company or the Partnership Registration Certificate in case of Partnership Firm needs to be uploaded.

c) A brief description of your main business activity and the innovative nature of your products/services.

Step 4: Answer whether you would like to avail tax benefits

All the start-ups are exempted under the Income Tax Act from income tax for 3 years. To avail the benefits of Income Tax they must be certified by the Inter-Ministerial Board (IMB).

Those start-ups which are recognized by DIPP, Govt. of India can now directly avail IPR related benefits without requiring any additional certification from IBM.

Step 5: Finally, you must self-certify that you satisfy the following conditions:

You should certify the following points:

a)   That you will be registering your new company as a Private Limited Company, Limited Liability Partnership or a Partnership Firm.

b)   That your set-up business is incorporated or registered in India for not more than 5 years. 

c)   Turnover of your company is less than 25 crores per year.

d)   That your business will work towards innovating something new or will significantly improve the existing used technology.

e)   Your set-up business is not a result of splitting up or reconstruction of an existing business.

Step 6: Immediately get recognition number

As soon as you apply you will get a recognition number for your startup. This certificate of recognition will be issued after all your documents have been examined carefully by the Dept.

However, the documents should be uploaded carefully because if on verification it is found that the documents have not been uploaded or a wrong or forged documents have been uploaded then you shall be liable for a fine which shall be 50 % of the paid-up capital of the company and the minimum fine shall be ₹ 25,000.

Step 7: Other areas

a) Patents, trademarks and/or design registration

If a patent for your innovation or a trademark for your business is required for that an application can be filed with the help of any facilitator. The company needs to bear only the statutory fees thus getting an 80% reduction in fees.  

b) Funding

One of the key challenges faced by the start-ups has been accessing to finance. Due to lack of experience, security or existing cash flows, entrepreneurs fail to attract investors. Besides, the high-risk nature of start-ups, as a significant percentage fails to take- off, puts off many investors. 

In order to provide funding support, Government has set up a Fund with an initial corpus of INR 2,500 crore and a total corpus of INR 10,000 crore over a period 4 years. The Fund is in the nature of Fund of Funds, which means that it will not invest directly into Start-ups, but shall participate in the capital of SEBI registered Venture Funds.

Key features of the Fund of Funds-

• The Fund of Funds shall be managed by a Board with professionals from industry bodies, academia, and successful Start-ups.
• Life Insurance Corporation (LIC) shall be a co-investor in the Fund of Funds.
• The Fund of Funds shall contribute to a maximum of 50% of the SEBI registered Venture Funds (“daughter funds”). In order to be able to receive the contribution, the daughter fund should have already raised the balance 50%. The Fund of Funds shall have representatives on the board of the venture fund based on the contribution made.
• The Fund shall ensure support to a broad mix of sectors such as manufacturing, agriculture, health, education, etc.
• It’s very easy to register as a start-up thanks to the various government initiatives.  However, you can focus on your key area while we at Clear Tax help you from the start to finish right from incorporating your company to getting your start-up recognition.