Is my startup eligible for registration?
Eligibility Criteria for Startup Recognition:
The Startup should be incorporated as a private limited company or as a partnership firm or a limited liability partnership.
Turnover should be less than INR 100 Crores in any of financial years since incoporation.
An entity should be incorporated as a startup up to 10 years from the date of its incorporation.
The Startup should be working towards innovation/improvement of existing products, services and processes and should have the potential to generate employment/create wealth.
Note: An entity formed by splitting up or reconsutrction of an existing business shall not be considered a "Startup".
Is it mandatory to register a startup?
Yes, it is important to register a Startup in India.
Below are the steps that you need to follow for registering your startup.
- Step 1: Incorporate your Business
- Step 2: Register with Startup India
- Step 3: Get DPIIT Recognition
- Step 4: Recognition Application
- Step 5: Documents for Registration
- Step 6: Recognition Number
What is the tax exemption that a startup could get?
After registering as s startup, you can apply for Tax exemption under section 80IAC of the Income Tax Act.
The Startup can avail tax holiday for 3 consecutive financial years out of its first ten years since incorporation
Eligibility Criteria for applying to Income Tax exemption (801AC)
The entity should be a recognized Startup. Only Private Limited or a Limited Liability Partnership Firm is eligible for Tax exemption under Section 80IAC. The Startup should have been incorporated after 1st April, 2016.
What are the benefits of registering a startup?
80IAC tax exemption
- Tax Exemption under Section 56 of the Income Tax Act (Angel Tax)
- Self-certification and no inspection for three years.
- Concession in Trademark filings fees
- Preference in Government tenders
- Funding Support by government
Why does your startup need funding?
A startup might require funding for one, a few, or all of the following purposes.
- Prototype creation
- Product development
- Team Hiring
- Working Capital
- Licenses and Certifications
- Marketing and sales
- Legal and consulting activities
What are the available sources of funding?
A startup can either go for equity financing, debt financing or funding in the form of grants.
Equity financing.
Equity financing involves selling a portion of equity in return for funds. It does not have to be repaid. Startups have to give up a portion of their ownership to the investor. Equity Investors prefer to involve in the decision-making process.
Debt Financing
Borrowing money and paying it back with interest is involved in debt financing. The funds are to be repaid within a stipulated time frame with interest. The startup may need to provide a business asset as collateral. Debt Fund has very less involvement in decision-making.
Grants
A grant is an award, usually financial, given by an entity to a startup to facilitate a goal or incentivize performance. There is no component of repayment of the grants. The grant provider has no involvement in decision making.
What are the sources of raising equity financing?
Equity finacing can be raised from angel investors, venture capital firms or incubators/accelerators.
Angel Investors
Angel investors are individuals who invest in exchange of equity stake in the startup.
Venture capital firms
Venture capital firms are a group of investors who invest in businesses they think will grow at a rapid pace. They invest a larger sum of money into businesses and receive a larger stake in the company as compared to angel investors.
Incubator/Accelerators
Incubators/Accelerators are like a parent to a child, who nurture the business by providing necessary tools, training and network to a startup.
What are the various stages of funding?
Pre-Seed Stage
This stage of Funding is for the initial phases of the business when the startup has probably not even begun its operations.
Seed Stage
The owners try to raise seed funds in order to conduct market research so as to know their target users' tastes and preferences.
Series A
At this point, the startup should have a product or service created and a set customer base with a reliable income stream.
Series B
This is the expansion stage of the business, which also involves the expansion of the customer base, employees and management team of the company.
Series C
This round is raised to create new products and reach new markets.
What documents are required to set up a Pvt. Ltd. company in India?
The documents required for a private limited company are: Photographs, PAN Card as ID proof and one address proof(bank statement/electricity bill).
Do you need to have office (commercial) space to start a Company?
No, commercial office space is not required. You can show your own residential or rented home address as the registered office address of the Company. This office address can be changed at any time after incorporation of the company. Once your startup is set up, stable and ready to move on to a nice corporate space you can change the registered office address by filing a form with ROC.
Do I have to physically visit ROC office while setting up company?
No. JJ Tax provides a complete online Company Incorporation process. Legal documentation with ROC and visits are carried out by JJ Tax experts.
Is Private Limited Incorporation to be renewed every year?
No. Once the company is formed, it will be valid till it is officially closed down by the owners. No renewal or fees is required. However, every year companies have to file very basic returns with ROC office
What is capital of the Company?
Capital means investment made by shareholders into the company. Authorised capital is an amount up to which company can issue shares. This capital is mentioned during incorporation of the company based on which ROC registration fees and stamp duty is paid. Paid-up capital is the amount of money a company has received from shareholders in exchange for shares of stock.
Do we have to deposit Share Capital in any Bank at the time of Incorporation?
Post registration the company needs to open a bank account in its name and deposit the capital into that account within two months of incorporation.
How many people are required to incorporate an LLP?
A minimum of two partners are required to incorporate an LLP. However there is no upper limit on maximum number of partners.
How much capital is required to start a Limited Liability Partnership?
There is no minimum requirement of capital for forming an LLP. The partners may decide on the capital contribution mutually.
How long does it take to incorporate an LLP?
The time taken for incorporation depends on the submission of relevant documents by the client as well as the Approval from the Government authorities. JJ Tax can help you Incorporate your LLP in 14-20 days.
Do LLPs allow Foreign Direct Investment (FDI)?
FDI is allowed under automated route in an LLP by the Foreign Investments Promotion Board (FIPB), if LLP is operating in sector where 100% FDI is allowed. Note: Foreign Institutional Investors and Foreign Capital Investors are not allowed to invest in LLPs.
Is it possible for an LLP to raise funds?
An LLP cannot raise funds from the public in any form. In an LLP only partners can contribute their capital and the liability of the Partners is limited to the extent of their contribution.
Is MSME registration updated to Udyam Registration?
Yes, MSME registration, i.e. Udyog Aadhaar Registration has been replaced with Udyam Registration. If any MSME wants to start any business, they can obtain the MSME/Udyam Registration online. This registration provides the business with a lot of benefits and subsidies.
Is the MSME registration compulsory?
The enterprises that come under the MSME category need not mandatorily apply for MSME registration. However, it is beneficial to obtain MSME/Udyam registration as the government provides a lot of benefits in terms of loan facilities, easy access to credit, low-interest rates, eligibility for other schemes, etc., to the enterprises that have MSME registration.
Is Aadhar card compulsory?
For obtaining Udyam registration, an Aadhaar card is compulsory. In case the applicant is other than the proprietor, the Aadhaar card of the partner and the director will be required.
What is the validity of the MSME registration certificate?
There is no expiry of the Udyam Registration Certificate. As long as the entity is ethical and financially healthy there will be no expiry of the certificate.
Do I need multiple registrations for manufacturing plants in different cities?
The MSME/Udyam Registration Certificate is for a single entity irrespective of multiple branches or plants. However, information about multiple branches or plants must be furnished while obtaining registration.
