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What is the procedure to register a startup company in India?

October 25, 2021

If you are looking for answers to the below questions:

  1. What is the procedure to register a startup company in India?
  2. What are the documents required for a startup company in India?
  3. How do I register a startup in India?

This article is your perfect guide.

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How do I register a startup in India?

Every established and “billion-dollar” revenue company of today was once a start-up company. It is imperative that the Government of India has been welcoming young and energetic people who have the zeal to start up a company in India. The procedure and process have been simplified – thanks to the internet world.

To register a startup company in India, the online form needs to be filled in MCA (Ministry of Corporate Affairs) website. This is towards getting DSC (Digital Signature Certificate) and DIN (Director Identification Number). The incumbent(s) need to create a user registration on the MCA website.

We are getting to questions such as, ‘What is the procedure to register a startup company in India?’ and ‘What are the documents required for a startup company in India?’

Forms 1.18.32 are required to be submitted by duly filled too in the same website. Form 1 is towards the incorporation of a new company; Form 18 is the proposed address of the new company and Form 32 will detail the Directors and owners of the proposed new company. The Companies Act, 2013 which was passed by parliament will provide a good insight into the laws and procedures to be followed.

What is the procedure to register a startup company in India?

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What is the procedure to register a startup company in India?

Step 1: Business Incorporation

First things first, the category of the business institution needs to be decided; whether it is going to be a Private Limited Company or a Limited Liability Partnership or a Partnership firm. Once this is done, one needs to follow the procedure as per norms.

Step 2: Register under ‘Start-up India’

Step-2 is towards the registration of the start-up company. One needs to fill the form which is available on the Start-up India portal. All the requisite parameters and data need to be filled in and the pre-requisite documents need to be uploaded too.

Step 3: Documents to upload – only pdf format.

One needs to have a letter of recommendation. This letter of recommendation must be uploaded along with the registration application. The recommendation letter can be one of the following:

• A letter from the university or a college where-in the student has the intention to develop his innovative idea towards implementation as a service or a product development. 

• A letter of funding with a minimum of 20% in equity, by an Incubation Fund, or any other venture capitalist.

• A recommendation letter by a Government official on the idea of a start-up company by the promoter.

• If there is any patent of a product/service idea or that was published in the Journal of Indian Patent office associated with the nature of the business being proposed.

The above recommendation letter needs to be uploaded along with the following documents too

• Registration Certificate

• A brief description of a business idea.

Step 4: Tax Exemption

IMB (Inter-Ministerial Board) approves if the proposed start-up company could be exempted from paying income tax for the first three years of inception. To get the approval from IMB, it is required to register and get due approval process done by Department for Promotion of Industry and Internal Trade 

Step 5: Self-certification 

A Limited Company or a Limited Liability Company must be incorporated within 5 years of application.

The sales turnover must not exceed Rs 100 crore and the financial audit statement must be uploaded.

Research and Development is a must and the institution must show innovative ideas or improvised products/ services periodically.

Step 6: Recognition Number

Once all the documents are uploaded as per step – 3 and after proper due diligence is done by concerned authorities one would get the certificate of registration or incorporation.

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What are the documents required for a startup company in India?

A brief outline of Documents that are required to start a new company in India is furnished below.

1. Shareholder Agreement

Shareholders are defined as the pillars of the company. These are the people who have invested their money and mind to build the company. A shareholder agreement is a legal document that is made between these pillars which would describe the proportion of shares as per each person’s initial contribution and this agreement would describe the rights/ powers/ provisions. It is highly recommended that this agreement be drafted by a business lawyer. 

2. Founders’ Agreement

The Shareholder Agreement and the Founders Agreement could be the same in many cases but not necessarily A Founders’ Agreement is another form of contractual obligation document drafted and signed between the co-founders of the company.

This Agreement would describe the roles and responsibilities of the key personnel who join hands to startup the company.

3. CoI (Certificate of Incorporation)

Certificate of Incorporation is like the “birth certificate” of a new-baby-born. A Certificate of Incorporation would contain the name of the company; its business purpose; the registered address as per the Indian Companies Act. As explained initially, acquiring DIN; DSC; Forms 1, 18, and 32 from MCA (Ministry of Corporate Affairs will facilitate towards Company Incorporation Certificate.

4. NoC (No objection certificate)

This is another legal document that is used by businesses during employment, trade, engagement with other partners, etc, and can be used for or against in a court of law. This document describes details of the parties involved and the activities which could be shared/used by other parties.

5. PAN card

PAN (Permanent Account Number) is another must-be document. PAN card can be applied and got using the following documents:

• An identity or address proof

• A copy of the certificate of incorporation

• A copy of a no-objection certificate issued by MCA (Ministry of Corporate Affairs)

Once the PAN card has been got, then the TIN (Tax Identification Number) needs to be applied. It is a unique number assigned to a business by the Commercial Tax Department of the state that has received the application. 

TIN could be got using the submission of the following documents.

• Identity proof

• Address proof

• PAN Card of the owners as per Founders Agreement and Shareholders Agreement

6. NDA (Non-Disclosure Agreement)

An NDA is a contractual obligation document that describes between two or more parties to form a common understanding and endorse by signing an agreement not to disclose any confidential information outside of business entities. This way, the sensitive information of all natures like financial, business, ideas, etc could be protected within the agreed parties; thereby making a legal binding between them. This document also needs to be drafted by a legal consultant.

7. GSTIN. (Goods and Services Taxpayer Identification Number)

The GSTIN is a 15 digit number assigned to the business entity. A GSTIN is mandatory by the government for businesses with an annual turnover exceeding Rs.20 lakh

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