Startup business units have recently achieved huge traction in every region of India during the last decade based on the initiatives by the Indian government to foster economic growth and innovation. However, setting up a startup in India requires a few essential things other than outstanding entrepreneurship and innovative skills. Here, we have explored a few essential aspects and compliance’s, which every startup should consider to establish and grow in India.
What is the Eligibility for Online Startup Registration?
If you are a budding entrepreneur who wants to get funds based on the Start-up India scheme, you must fulfill the below eligibility criteria-
1) Business Vintage – You must be a start-up entrepreneur who possesses a business vintage of about 5 years.
2) Entrepreneur’s Age – Applicants of this start-up scheme should be more than 18 years of age.
3) Company Type – Your company must be a private limited or partnership firm to apply for the Startup scheme.
4) Yearly Turnover – Your company should possess an annual turnover of about Rs 25 crore to be eligible according to the Startup scheme.
5) Should Not be a Reconstructed Company – Startups willing to set up in India should not be the result of reconstruction or splitting a business. If you have set up your company by splitting any organization into multiple businesses, you are not eligible to get loans or any support under the startup scheme.
6) Benefits of Innovation of New Products/Services – Companies should work to develop new products/services to get benefits according to the Start-up India policy. For this, every company or enterprise should fulfill the following conditions-
- Initial Startups should work to deploy, develop, and commercialize their products/services via the latest technology or using their intellectual properties.
- Startups should intend to improve their existing products or create new ones to enhance their workflow and customers’ value.
- Startup companies should not develop or commercialize their products, which are not unique and do not have any scope to enrich the customer value or the workflow.
7) Registrations/Approvals – Every startup must possess the below registrations and approvals to get a loan under Start-up India-
- Approval from the board of the Indian Ministry according to DIPP or the Department of Industrial Policy and Promotion
- Recommendation from incubators by the Indian Central Government from a post-graduation educational institute
- A patent applied and published in the Indian Patent Office Journal in the specific product/service area
- Registration under SEBI i.e. Securities and Exchange Board of India for every startup offering fund and equity service
- Central government or statement government’s funding letter of any scheme that promotes innovation
8) Partnership Share – If you want to set up your partnership firm, 51% of shares must be possessed by a woman or a person who belongs to the SC or ST category. None of these applicants/partners should possess any default credit payment.
What are the Essential Legal Aspects to Start a Startup?
Every entity or company that wants to take advantage of the Startup India Scheme should fulfill the legal aspects to start a startup under the following categories-
1) Type of Business
Before you set up your business, you must select the type to pursue under the following categories-
- Partnership firm
- Liability Limited Partnership
- Private Limited Company
- Proprietorship
Note Pointers:
- Startup India initiative does not recognize a sole proprietorship as a startup company.
- Legal requirements may vary based on the type of business you choose to set and each business type possesses separate pros and cons.
- The initiative has also included certain provisions related to converting a particular type of business entity to another one.
2) Startup Registration
Aspiring entrepreneurs may establish their startups by following the below steps-
a) Startup Incorporation:
You may incorporate your business as a limited liability partnership, partnership, or private company. If you set it as a partnership, you must register it with the state firm’s registrar, where you want to setup your business firm. In contrast, for entrepreneurs willing to set up a private company or LLP, every designated director or partner must get a Director Identification number and a Digital Signature Certificate followed by incorporating it with the registrar.
b) Registration with Startup India Initiative:
Once you incorporate your business, you must complete your registration with the Startup India Initiative online by following a few easy steps. Once you upload your documents and meet the necessary conditions, your startup will gain recognition from the DPIIT or Department for Promotion of Industries and Internal Trade.
c) Founder’s Agreement:
If your startup will have multiple partners, you must create a founder’s agreement. This type of legal document highlights the roles and responsibilities of your company’s founders. It also highlights your business operation details, diverse clauses, and executive compensation.
d) Business License:
Depending on your business size and its nature, you may apply for different categories of licenses in India. Business licenses are mandatory legal documents to perform business operations and business registration is an official procedure to list a business with a registrar.
e) Labor Law Adherence:
Every business needs employees when it grows. Founders must be aware of their responsibilities as employers and ensure strict compliance with the mandatory labor laws. These include employees’ provident fund and their gratuity amount, payment of wages, maternity benefits, and workplace safety and free from sexual harassment. However, if you register your startup with the Indian Government initiative of Startup India, your business founders may sign a self-declaration. Accordingly, your enterprise stays exempted from inspection based on certain industrial or labor laws for the first year from the date of your business registration/incorporation.
f) Employee Agreement:
A startup must create an employee agreement with its employees. This agreement must include the employment terms, probation period, termination terms, service contract, intellectual property protection, and similar others.
g) Non-disclosure Agreement:
A non-disclosure agreement refers to a written contract between the involved parties. The document prohibits the sharing of any confidential information between the contracted parties. Also, the agreement protects the privacy of your company and its partners.
h) Website-related Terms and Conditions
If your startup has its official website, you must place a customized and compulsory privacy policy or terms and conditions page. This legal document of your website must highlight the details of your company’s views and certain procedures for collecting information from your website users.
Documents Required for Online Startup Registration
Every business owner who wants to set up a startup and get Startup India benefits must produce the following mandatory documents-
1) Details of an Unauthorized Individual
An authorized individual is any person who represents the company for its recognition under DPIIT. Such authorized persons may apply on behalf of their entities. Accordingly, the documents required are as follows-
- An Authorization letter to let the person work as the authorized representative
- A copy of the person’s Aadhar card or any other identity proof
- Basic details of the person, like the name, phone number, email ID, and address of the respective representative
2) Documents Required from the Business Entity for Startup India Registration
Every authorized person should submit the necessary documents to complete their startup India registration with their details. These include-
a) Proof of Registration
Every registered legal entity should submit its registration proof or the Certificate of Incorporation by the MCA.
b) Contact Details of Partners/Designated Partners
Whether you apply as an LLP, PLC, or partnership firm for registration, you should submit the details of your business directors/partners. These include the name, physical address, email ID, DIN, phone number, and the company’s CIN or LLPIN.
c) Details on Activities of Your Company
You should share a brief description related to your entity’s business plan. The brief must contain the following-
- The type of improvement or innovation planned by your company
- Methods you adopt to accomplish your business plan
- Details on your company’s USP
d) Intellectual Property Details
Whether it is a patent or trademark, you should provide the details of your Intellectual Property Rights owned or applied by your startup.
e) Steps to Do Online Startup Registration
Once you arrange the mandatory documents and fulfill your eligibility criteria, you should follow the below steps to complete your online startup registration-
- Visit the official website of Shram Suvidha organized under the Labor and Employment Ministry in India
- Enter details to register yourself and log in to the portal.
- Once you complete the login process successfully, click on the link that selects your startup/business establishment.
- Now, you only need to follow the instructions to complete your registration process.
How to Get a Startup Business Loan with No Money or Revenue?
Startups registering under the Startup India Scheme should follow the below steps to apply for a business loan without revenue or money-
1) Understand Your Lender’s Requirements
Lenders consider the following criteria while working with startups-
- Credit score and credit history
- Availability of collaterals
- Repaying capacity from future savings/revenues
- Length of business
2) Analyze Your Assets/Cashflows
You should prepare your company’s or enterprise’s budget to determine the assets and cash flows for the future.
3) Select an Affordable Repay Amount
Loan payments are according to the amount of loan, interest rate for the respective business loan, repayment frequency, and total repaying period of the debt. Make sure you select the most affordable amount that you may repay easily.
Conclusion
The Startup India Scheme launched by the Indian Government has helped several entrepreneurs in India to set up and grow their businesses. Hence, if you are the one with enough business skills, take advantage of the scheme by fulfilling your eligibility criteria and completing your application process carefully. Simultaneously, we recommend you follow the guidelines strictly and submit the mandatory documents for successful registration of your startup followed by waiting for your startup India certificate.
Frequently Asked Questions
i) How can a Beginner Start a Startup?
A beginner may start his/her startup via the latest Startup India Scheme of the Indian Government.
ii) What is the Minimum Amount Required to Start a Startup in India?
Entrepreneurs who want to set up their private limited companies must be ready to pay a minimum of Rs 8,000 to start in India. Besides, you need to arrange the minimum paid-up capital of Rs 5,000.
iii) How can I Start a Startup with no Money in India?
You may start up your enterprise or company in India without money by simply analyzing your lender’s requirements.
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