Is it mandatory or compulsory to register a Startup in India?

Is it mandatory or compulsory to register a Startup in India?

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Is it mandatory or compulsory to register a Startup in India_
Is it mandatory or compulsory to register a Startup in India_

It is not mandatory to register a startup in India but it is always better to comply with all government and banking regulations and systems. Registration can be done for any type of legal entity from Sole Proprietorship firm, Partnership firm, Limited liability partnership, Private limited company,One Person Companyetc. For registration you first need to decide the nature of startup- once the nature has been decided you have to determine what industry it will cater to in the real world such as entertainment, finance, travel, food etc.

If you wish to start your entity as sole proprietorship you don’t need registration for your firm or entity, to set it up, but you will need a license under the Shops and Establishment Act, applicable to your state. You would further require registration for income tax and service tax purposes i.e. PAN and TAN. If you wish to establish a partnership, it is advisable for you to enter into a partnership deed with your partners and get the same registered, in order to avoid future disputes. As a partnership firm, you again require registration for income tax and service tax. In case of LLP, a registration is required under the provisions of Limited Liability Partnership Act. Private limited company is best for startups who want to raise funds from investors and grow the business on global level.

If your budget is less than Rs.5,000 then register under proprietorship or partnership firms, then when there is growth in your business, convert it into LLP or company. If your budget is more than Rs.5, 000 but less than 10,000 then register under LLP then if you wish that you want to choose private limited then go for expansion. And if your budget is more than Rs.15, 000 then choose company as private limited or OPC.

There are four major steps for incorporation:

  1. Acquiring Digital Signature Certificate (DSC) – In order to ensure the security or authencity of documents filed electronically the Information Act demands a valid digital signature on the documents submitted electronically. This should be acquired by only those agencies which are appointed by the controller of certification agencies (CCA).
  2. Acquiring Director Identification Number (DIN) – This is the first process in registration that each director of the company should obtain their identification number. As per the amendment act, 2006 acquiring a DIN is compulsory for every director i.e. as such every existing and intending directors have to obtain their DIN.
  3. Filing an e-form or new user registration
  4. Incorporate the company

Documents required for INC-29:

  • Director Identification Number (DIN)
  • Memorandum of Association (MOA)
  • Articles of Association (AOA)
  • Affidavit and declaration by first subscribers and directors
  • Proof for registered office address- Rental agreement/sale deed.
  • In case of an OPC, Private Limited Company or Public limited Company the registration is done under the provisions of the Companies Act, 2013.
  • Company incorporation is streamlined with the introduction of INC-29
  • Obtaining Digital Signature Certificate (DSC)
  • Preparing and submitting INC-29

Documents and details required for incorporation:

  • Self-attested copy of address proof
  • Two photographs of the proposed directors
  • Contact details of the proposed directors
  • Name of the proposed company
  • Form- 18: Address of the proposed company
  • Main objects of the company
  • Latest utility bill of the proposed registered office of the company
  • No objection certificate from the owner of the property.
  • Form -1 : for incorporation of a company
  • Form – 1A: application form for availability or change of a company name.
  • Form-32: for particulars of proposed directors, managers and secretary.

 For a new company, this form is for notice of appointment of new directors, mangers and secretary.

After submitting these forms, once the application has been approved by MCA, you will receive a confirmation email regarding the application for incorporation of a new company and the status of the new form will get changed to Approved.

It is advisable for reasons listed below to register the startup business in India:

  1. Payment Gateway: if you have an online business then you always need payment gateways to accept the online payments via cards and mobile wallets.So for the payments gateways integration on your website, you have to apply from these payment gateways companies.
  2. Business bank account: during the start of business you just have a personal saving bank account but the problem is banks can’t open the current bank account on the firm or company name without the valid registration certificate and legal documents.
  3. Invoices: as per the government rules you have to always issue a proper tax invoice to your customer so now for the issue of invoices you need to register your startup in India.

If you want to apply for Start Up India registration, then kindly contact the professionals of AapkaConsultant.com or Click here.

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