Thinking about to give up your day job which has a time limit, to full fill your dream of starting your own business? Indeed, you want to give a shot to your startup idea?
“Startup” is a buzz word that is popular all over the world. Overwhelming motivation from success stories of startups can fill you with zeal to carry out the services to conquer the market. This excitement of conquering the market can make you forget to ask an important question.
The question is “How to register a startup in India?”
The prior step for carrying out services of any business is to register your startup to avoid future legal copyright issues and many more. Registering a startup protects your rights on your organization, the idea of services, permits and many more.
Now that we have learned why an entrepreneur must register a startup, let us consider few important details before knowing the process.
Types of Companies in India to Register.
There are 5 types of companies you can register in India.
1. Sole Proprietorship Company
2. Partnership Company
3. Private Limited Company
4. Limited Liability Partnership – LLP
5. One Person Company -OPC
According to Ministry of Corporate Affairs (MCA), India has made the registration process very simple and efficient. You can get your startup registered from any part of India without visiting any Government offices, all the documents can be electronically uploaded to the Startup India portal. Your startup can be formed just in the time span of 7 days.
Documents Required for Startup Registration
1. Name and Address of the business entity
2. Registered Number of the business entity
3. Name, Address, Mobile Number and Email Id of the Authorized Representative
4. Name, Address, Mobile Number and Email Id of the Directors/Partners
5. Obtain a Digital Signature Certificate (DSC) from MCA
6. Obtain Director Identification Number(DIN)
i.Identity Proof (anyone of them)
· PAN card
· Driving License
· Voter ID
ii.Residence Proof (anyone of them)
· Driving License
· Voter ID
· Telephone Bill
· Electricity Bill
· Bank Statement
7. Passport size photograph
8. PAN Card copy (mandatory)
9. Directors & Shareholders Documents
10. Registered Office Address Proof Documents
11. Office Property Ownership/Rental documents
12. Address Proof of Registered Office Premises
13. Utility Bill for the registered address
Steps Involved in Registering a Startup
· Arrange basic documents of Directors
· Apply for DSC (Digital Signature) of Directors
· Prepare MOA, AOA & other Legal documents
· File INC 29 or Incorporation Docs with ROC
· Get your Company Incorporation Certificate
With all these requirements in hand, let us see the procedure to register a startup in India.
Sole Proprietorship Company
In Sole Proprietorship Company, the business is owned and managed by a single person.
· Within 15 days the business can start running, as there is no separate registration required.
· Tax and other mandatory registrations like VAT, Service Tax, Professional Tax, Shops & Establishments Registration, etc., will certify the existence of this firm.
· This kind of company can be suitable for small shops and trade owners.
When two or more individuals manage and operate a business in obedience to terms and objectives set out in partnership deed comes under “Partnership Company”.
· The Partnership deed must be printed on a stamp paper and to be notarized.
· Then an application must be made to registrar of firms of the state to get registered and acquire a registration number.
· The equity status is partner based.
· Traditional business for a temporary period can go for partnership company type.
· The advantage of this type of company in India is,
i.The Partner of the registered Partnership firm can file a case against the firm or other partners of the firm.
ii.A case can be filed against Third Party by having the partnership firm as one of the Parties.
One Person Company (OPC)
This type of company is an improvised version of Sole Proprietorship firm. It gives complete control to one founder and gives a benefit of Limited Liability to the founder.
· OPC is registered with Registrar of Companies (RoC) under Ministry of Corporate Affairs (MCA).
· For registration under this type of company, the entrepreneur should have
i.Digital Signature and Director Identification Number
ii.Register name confirming to MCA rules
iii.Define the purpose of the company
iv.File an application with RoC
· It requires 12-15 working days with a cost of Rs. 4,799/- to register.
· This type of business is recommended to those entrepreneurs who want to run a corporate business, with high tax advantages and limited liability protection.
Limited Liability Partnership (LLP)
Limited Liability Partnership is improved version of partnership firms. Here limited liability is given to the partners who are involved and has lesser compliances compared to a Pvt Ltd Company.
It is due to working of an LLP is solely dependent on the Partnership deed that is drafted between the partners and is filed with RoC.
Consulting firms and professional firms go for LLP.
The registration process is,
· Start with acquiring Digital Signature and Director Identification Number
· Registering name confirming to MCA rules
· Drafting partnership deep – which defines the terms and conditions of the partnership.
· File an application with RoC
· It takes 20 days with a cost of Rs. 3,999/- to register
Private Limited Company
These are the most preferred option for any startup that is looking at scaling up by external funding. It is very easy for Private Limited Company to issue fresh equity shares in lieu of funding received.
They have the most tax advantages along with the highest statutory compliances.
The startup registration process is,
· Acquire Digital Signature and Digital Identification Number
· Register name confirming MCA rules
· MoA and AoA
· File an application with RoC
· It takes 15 days with a fee of Rs. 6,299/- to register
To make the process easier, entity can register itself through the Startup India portal and mobile app using a seamless process. Follow the steps to register through the portal .
1. Log in to Startup India Portal
2. Choose your legal entity
3. Input your incorporation/registration number
4. Input your incorporation/registration date
5. Input PAN number (optional)
6. Input your address with postal code & state
7. Input authorized representative details
8. Input director(s)/partner(s) details
9. Choose and upload supporting documents and self-certification
10. Incorporation/registration certificate of company/LLP/Partnership
11. Registration to avail tax and IPR
12. Certify the official notification terms and conditions