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An overview:
The “STARTUP” is among the most popular term of these days.Now-a-days, most of the people want to run their own businesses and become entrepreneurs. Startups give you a chance to turn your dream into a reality and build a successful business starting from scratch. But first you should know the meaning of Startup and who can be registered as the startup. It is a unique business model with aim of creating unique product and services. It means innovation is very important for the success of a startup as it helps to gain competitive advantage in the market.Startups helps in economic growth and create employment opportunities. Startups focuses on solving the problems through the inventions of the innovative product and services.
Eligibility Criteria:
The following conditions must be fulfilled in order to be eligible as a Start-up:
⇒ 80IAC Tax Exemption
Once your business gets recognized as the startup by the DPIIT then you can claim the 80IACTax exemption under the Income Tax Act. This exemption will provide you 100% tax rebate on Profits for a period of consecutive three years out of the first 10 years. It means no tax to be paid on the profits earned by the Startups for the period of 3 years which ultimately helps in meeting the capital requirements during the initial years of operation. However, the startups should have been incorporated after 1st April, 2016 to get this exemption.
⇒ Section 56 Tax Exemption
When any company issue shares at a price higher than the Fair Market value of the shares then the excess amount received will be treated as income in the hands of the Company.
However, if your company is registered as startup and you have claimed the exemption under Section 56 of the Income tax Act (also known as Angel Tax Exemption) then there is no need to pay tax on the excess realization. But for get this exemption, the aggregate paid-up capital and share premium of the start-up after issue of shares does not exceed Rs 25 Crore.
⇒ Tax ExemptionLong Term Capital Gain
Eligible Startups can be exempted from tax on Long Term Capital Gains if the amount equal to long term capital gain have been invested within 6 months from the transfer of the asset in the funds notified by the Government. However, the maximum amount that can be invested is Rs 50 lacs.
⇒ Easier Public Procurement Norms
All the startups which are registered and recognized by the DPIIT are eligible to be listed as sellers on the Government E-Marketplace. Government E-Marketplace is the one of the largest E-Procurement Portal. The business registered as Startups can directly apply for the Government tenders without submission of any proof of work.
⇒ Patent and Trademark Application at Lower Cost
If you are working as a startup then you must have the unique patents and trademark which you want to protect and hence apply for the registration under Patent and Trademark Act. Normally the cost involved for filing these patents and trademark are very high but if you are recognized as a startup by the DPIIT then you can get upto 80% rebate in filing the patents and up to 50% rebate in filing the trademarks.
⇒ Faster Process of Patent and Trademark Application
Normally it is a long process to get the filing done of Patents and Trademarks and to get back the certificate. But if your business is recognized as Startup then the application will be tracked must faster than the normal and can be processed within 72 hours.
Startups whichinvolved in technology driven business belongs to this group. They have the vision of scoring more customers and creates a big database. Investors prefer to invest in the technology businesses which lead them to grow in international companies also. Example of such startups are Google, Twitter, Uber, Facebook etc.
As the name suggest, this type of startups is run by regular people. These startups are self-funded means they do not raise capital from the outside and grow at their own pace.Grocery stores are one of the examples of these startups.
This type of startup is for those People want to work on their passion and want to do what they love. Dancers are the best example of such startups who love their passion and teach their passion to others also by opening dance academics or teaching online classes from home. If you do what you love, you will definitely succeed in your life.
As the name suggests,few bigger companies buy the small startups which started their business from the scratch.Such type of start-ups usually associated with the Software and Technology. For example, amazon and Uber buy small startups to develop them over time and receive benefits. However, it is always not necessarily to be Profitable while buying out such startups. It always involves risk for the investors.
Large companies have a finite duration of life. With the passage of time, Preferences of customers and technologies will change and such large companies have to adopt with these new conditions. It will create a huge pressure on these companies to bring new ideas, innovative products to survive in the new market which ultimately bring new products and creative services for the customers.s the name suggests,few bigger companies buy the small startups which started their business from the scratch.Such type of start-ups usually associated with the Software and Technology. For example, amazon and Uber buy small startups to develop them over time and receive benefits. However, it is always not necessarily to be Profitable while buying out such startups. It always involves risk for the investors.
These startups exist with the aim of doing good for others rather than profit motive. Like other startups, this startup operates similarly but they designed to do good for other people. Charities and non-profit organizations are the example of such type of startups.
Access to funding
Business registered and recognized as startup by the DPIIT can easily and quicky get funds in comparison to other businesses. Startups are considered more reliable and banks prefer to give the funds in the form of loans to such startups. Moreover, startups can raise money from the Fund of Funds for Startups (FFS) that are registered with the SEBI and invest in the Startups.
Investments by Multinational Companies
If Business registered as startups are working very well, they attract investors such as multinational companies to invest their resources such as money, manpower in such startups which ultimately creates wealth for the startups and increase the production which further boost the Indian economy.
Easier Public Procurement Norms
All the startups which are registered and recognized by the DPIIT are eligible to be listed as sellers on the Government E-Marketplace. Government E-Marketplace is the one of the largest E-Procurement Portal. The business registered as Startups can directly apply for the Government tenders without submission of any proof of work.
Open New Markets
Startups create new markets by introducing products, services, and ideas that are unique. New technologies and new ideas create new opportunities and it also lower down the cost of doing business. As we have read in the economy also, as the cost decreases the demand for the product will automatically increase and it expands the market of our product and services.
No Age Bars in a Start-up
Anyone can initiate his own business at any age. There is no age limit in Startups which helps the freshers to achieving their goals early and have a successful carrier. They become more passionate about their work which ultimately improves the chances of having a successful business.
Section 56 Tax Exemption
When any company issue shares at a price higher than the Fair Market value of the shares then the excess amount received will be treated as income in the hands of the Company.
However, if your company is registered as startup and you have claimed the exemption under Section 56 of the Income tax Act (also known as Angel Tax Exemption) then there is no need to pay tax on the excess realization. But for get this exemption, the aggregate paid-up capital and share premium of the start-up after issue of shares does not exceed Rs 25 Crore.
Tax Exemption Long Term Capital Gain
Eligible Startups can be exempted from tax on Long Term Capital Gains if the amount equal to long term capital gain have been invested within 6 months from the transfer of the asset in the funds notified by the Government. However, the maximum amount that can be invested is Rs 50 lacs.
Patent and Trademark Application at Lower Cost
If you are working as a startup then you must have the unique patents and trademark which you want to protect and hence apply for the registration under Patent and Trademark Act. Normally the cost involved for filing these patents and trademark are very high but if you are recognized as a startup by the DPIIT then you can get up to 80% rebate in filing the patents and up to 50% rebate in filing the trademarks.
Faster Process of Patent and Trademark Application
Normally it is a long process to get the filing done of Patents and Trademarks and to get back the certificate. But if your business is recognized as Startup then the application will be tracked must faster than the normal and can be processed within 72 hours.
Among all, the first step involved for the process of company incorporation is ascertaining the availability of name. A company is identified through its name it registered on the Ministry of Corporate Affairs. Hence choosing an appropriate name is the important and crucial thing.
For the same, an application will be submitted for the reservation of name to the Ministry of Corporate Affairsby login to the sitehttps://www.mca.gov.in/mcafoportal/login.do and preference wise 2 names along with the business objective can be provided. Once the name gets approved, it’s reserved for 20 days within which applicant needs to complete all the remaining process for the incorporation of the Company.
Stakeholders shall ensure that the proposed name selected does not contain any word as prohibited in Section 4(2) & (3) of the Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014.Points to be considered while suggesting the name:
-Check Trademark for your proposed name on the site https://ipindiaonline.gov.in/tmrpublicsearch/frmmain.aspx
– Check domain for your proposed name on the site https://www.registry.in/index
-Check the availability of Company Name on the site https://www.mca.gov.in/mcafoportal/viewCompanyMasterData.do
Therefore, choosing an appropriate name which does not prohibit any law will be the most important thing.
There is also another way to finalize the name of company and its incorporation in one go i.e., apply name and company incorporation together. However, if the same has been rejected by the MCA, then all the documentation will be done again
Once the name gets approved in PART A, the basic details will be automatically filled in all linked forms of PART B. There will be total 4 linked forms which will be generated such as AGILE-PRO, Spice+ MOA, Spice + AOA and INC-9. These linked forms will be filled up with the necessary details like capital subscription, name of shareholders and directors, percentage of holding among the shareholders, Interest of shareholders in other entities, etc.
For completion of the Part B, many other details and documents will be required which is discussed as below:
For the E-filing of all the forms, Digital Signature is a mandatory requirement. Digital Signature is in form of digital key containing all the information about the registered signatory like name, address, Contact No, Email ID and the authority detail which has provided the certificate. All the forms will signed digitally by the authorized signatory by proving its identity through the Digital Signature Certificates.
Director Identification Number is a unique identification number of 8 digits for the directors of a Registered Company.Every director will be provided a unique number with which he will be identified by the MCA. To become a director, one shall apply for getting the DIN from the MCA.To applying DIN, the applicant has to make an application in e-Form DIR-3 and shall follow the below mentioned process
This form is for GSTIN, Employees Provident Fund Organization registration, Profession Tax Registration, Opening of Bank Accounts, Shops and Establishment registration.
It is mandatory to register for ESIC, EPFO, Professional Tax (for Maharashtra) and bank account opening to obtain AGILE-PRO via e-form, However, GSTIN Registration is optional for the applicants.
MOA is a document which contains all the fundamental information about the company, the objectives of the company in brief, the share capital, type of Shares whether equity or preference and its shareholders details, details of allocation of shares among the shareholders along with their name, address and occupation, etc. Company can perform and undertake only those activities that are mentioned in the objectives of Memorandum of Association beyond which the company cannot undertake any other objective but the Memorandum of Association (MOA) can be amended with the approval of the shareholders.
As per Section 4 of the Companies Act, 2013, Companies shall form MOA as specified in Tables A to E of Schedule -I of the Act. Below is the list of tables with their meaning:
Table A: Company Limited by shares
Table B: Company limited by guarantee and not having a share capital
Table C: Company limited by guarantee and having a share capital
Table D: Unlimited Company and not having share capital
Table E: Unlimited Company and having share capital
Hence Company shall adopt an appropriate table applicable to it as there are various forms of tables for different companies.
AOA defines the rules and regulations that govern the internal management of the company for achieving its objectives.
Various forms in Tables F to J for different companies have been mentioned under Schedule I of the Companies Act 2013 and AOA must be in the respective form.
Table A: Company Limited by shares
Table B: Company limited by guarantee and having a share capital
Table C: Company limited by guarantee and not having a share capital
Table D: Unlimited Company and having share capital
Table E: Unlimited Company and not having share capital
Declaration shall be given by the subscribers and directors in the form INC-9 that:
Once all the above documents and details are ready, then the application for the incorporation of the company can be made via e-form Spice accompanied by Spice MOA and Spice AOA with the registrar under whose jurisdiction the address of the company is located. All these e-forms need to be affixed by the Digital Signatures of the respective persons.
The Registrar of Companies will grant a Certification of Incorporation along with the Copy of PAN, TAN, EPF, ESIC which will be used as for the identity of the company existence.
Once the company gets incorporated then there are many compliances which need to be performed by the company
The Company within thirty days of its incorporation shall furnish to the Registrar of Company regarding verification of its registered office by filing the e-form INC-22.
INC-22 shall be downloaded from the Ministry of Corporate Affairs site and any of the following document will be attached with this form:
Every Company incorporated shall within 180 days of its incorporation shall file the declaration for the Commencement of the Business with the Registrar of Company. It is the declaration regarding that all the subscribers to the MOA have deposited the total value of the shares agreed to be taken by them in the Company Bank Account. Proof for the same shall be attached while filing the form INC-20A. Bank Statement shall be used as the evidence for the same.
COMPLIANCESPRO has a separate team which is expert in completing this complex process very easily and helps you to get the company registered within 3 daysonly in a very reasonable price.
