How to register startup in India: Here's step-by-step guide for entrepreneurs

In India, the startup ecosystem is rapidly growing, with new businesses emerging in various sectors such as technology, manufacturing, and services. This growth is part of the Startup India initiative by the Indian government, a scheme introduced to foster entrepreneurship, innovation, and ease of doing business. Since its launch in 2016, this initiative has offered several benefits, including financial assistance, tax exemptions, regulatory simplification, and other advantages that help startups thrive in a competitive market.

If you are interested in becoming an entrepreneur on your own, understanding the Startup India initiative and how to register your startup under it is crucial to opening up opportunities that can streamline your entrepreneurial journey. This comprehensive guide will take you step by step through the registration process, the benefits available, and the eligibility criteria to register under this initiative.

What is the Startup India Initiative?

To promote the growth of new businesses across India, Prime Minister Narendra Modi launched the Startup India initiative on January 16, 2016. With a specific focus on innovation, technology, and scalable business models, this scheme is designed to make it easier for entrepreneurs to start and run their businesses.

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The government recognizes that many entrepreneurs face significant challenges in setting up their businesses, including complex regulations, lack of financial availability, and difficulty in scaling their ideas. To address these issues, the Startup India initiative aims to create an environment that fosters innovation and removes barriers that hinder growth.

This initiative offers several benefits, including easier regulatory compliance, financial assistance, tax exemptions, and much more, making it an attractive option for anyone looking to start a business in India.

Eligibility Criteria for Startup India Registration:

Before entering the registration process, it is essential to ensure that your business qualifies as a "startup" under the Startup India definition. The government has set specific eligibility criteria to ensure that only truly innovative and high-potential businesses benefit from this scheme.

Startup Definition:

According to Startup India guidelines, a startup is an entity that meets the following conditions:

Incorporation or Registration: The business must be incorporated or registered in India. It can be a private limited company, a limited liability partnership (LLP), or a partnership firm.

Age of Business: The startup should not be more than 10 years old. This applies to businesses that are older than a decade, no matter how large they have grown during this period.

Annual Turnover:

The annual turnover for any startup should not exceed ₹100 crore in the previous financial years.

Innovation and Scalable Potential: The business must focus on innovation, technology, or scalable models with high growth potential. Startups should aim to create new products, services, or solutions that add significant value to the market.

Not the Result of Reorganization: A business created by splitting or reorganizing an already existing entity cannot be registered as a startup under this initiative.

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What is excluded from the definition?
Although the government has made efforts to include various types of businesses under the Startup India initiative, some exemptions apply:

A business that has been operating for years is not eligible to register under the scheme.
A business that does not involve innovation or technology or cannot be scaled is not eligible to register as a startup.

Main Benefits of Registering Your Startup Under Startup India

Once you meet the eligibility criteria, the next step is to register your startup. This opens up various benefits, including financial assistance, tax exemptions, and networking opportunities. Let's look at some of the key benefits of being part of the Startup India ecosystem.

Regulatory Benefits:

Ease of Compliance: The government allows startups to self-certify compliance with six labor laws and environmental regulations. This reduces the need for constant inspections and allows you to focus on your business operations.

Startup India Hub: By registering your startup, you can access the Startup India Hub, which serves as a one-stop platform providing resources, advice, and opportunities. It connects you with a network of incubators, investors, and accelerators that can help scale your business.

Tax Benefits
Tax Exemption: Startups recognized under this initiative are eligible for income tax exemption for three years in the first seven years of their operation. This allows businesses to reinvest their profits back into the organization for growth.

Angel Tax Exemption: One of the major challenges for startups is the "angel tax," which taxes investments from angel investors. The Startup India initiative provides exemption from this tax, which encourages investors to finance new and innovative businesses.

Tax Holiday: Startups can avail 100% tax exemption on profits for the first three years of their operations. This can be very helpful in the early stages of a business where cash flow is usually tight.

Financial Assistance and Funding

Fund of Funds for Startups (FFS): The government has created a fund of ₹10,000 crore to support startups through venture capital (VC) firms. The government does not invest directly in startups but provides funds to venture capital funds that invest in innovative businesses.

Easy Access to Loans: Startup entities registered under this initiative have access to loans through schemes such as the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which offers loans without collateral. This makes it easier for early-stage startups to get the capital they need to grow.

Incubation and Networking Opportunities
Startup entities can access several incubation centers and accelerators that provide guidance, resources, and infrastructure to help businesses grow. By registering with Startup India, entrepreneurs can apply for these schemes, which also provide networking opportunities with potential investors and partners.

Support for Intellectual Property Rights (IPR)
Intellectual property is a key asset for any business, especially for startups working on innovative solutions. The government offers an 80% rebate on patent and trademark filing fees, which reduces the cost of protecting your intellectual property rights. This incentive helps foster a culture of innovation in Indian startups.

The process of registering a startup under the Startup India initiative
Registering a startup under the Startup India scheme is relatively straightforward. The steps in operation are below:

Step 1: Incorporate Your Business

The first step is to properly incorporate your business. This is a mandatory requirement to qualify for Startup India registration. You can register your startup using one of the following methods:

Private Limited Company (Private Limited): Most startups opt for this structure because of the limited liability and better opportunities to raise venture capital funding.

Limited Liability Partnership (LLP): This business structure is more flexible and suitable for smaller ventures with fewer partners.

Partnership Firm: A partnership firm is another option, although it is less formal than the other two structures.

Once you have decided on a business structure, you must obtain the necessary approvals and registration from the Ministry of Corporate Affairs (MCA). As part of this process, you will need to apply for a Director Identification Number (DIN) and a Digital Signature Certificate (DSC).

Step 2: Register on the Startup India Portal
After incorporating your business, you can proceed with the registration process on the Startup India Portal. Here’s how to do it:

Create an Account: Visit the official Startup India website (https://www.startupindia.gov.in/), register, and create an account.

Fill out the Registration Form: Once logged in, you will need to fill out the registration form with details about your business, such as registration number, business type, and key business ideas. Make sure to provide accurate information.

Upload Required Documents: You will need to upload key documents such as your incorporation certificate, PAN card, and proof of business activity. If applicable, also provide your GST registration number.

Self-Certification: As part of the registration, you must self-certify that your business meets the standards set for the Startup India initiative.

Obtain Certificate of Recognition: After your application is reviewed and approved, you will receive a Startup India Certificate of Recognition. This certificate serves as proof of your eligibility to avail facilities under this initiative.

Step 3: Apply for Additional Facilities (If Needed)

After registering your startup entity, you can apply for additional facilities offered under the scheme, among them:

Income Tax Exemption: Apply for income tax exemption under the Income Tax Act to avail tax benefits. Finance and Loans: If you need funds, you can apply for financial assistance from the Fund of Funds for Startups (FFS).

IPR Support: You can also apply for intellectual property rights and enjoy the benefits of reduced filing fees.

Documents Required to Register:
To ensure a smooth registration process, gather the following documents before you begin:

Certificate of Incorporation: Proof that your business is officially registered with the Ministry of Corporate Affairs (MCA).

PAN Card: A copy of your startup entity’s PAN card.

GST Registration: If applicable, provide a copy of your GST registration certificate.

Aadhaar Card: Aadhaar card of the directors or founders of the startup entity.

Bank Account Details: Bank account number and IFSC code of the startup entity’s registered account.

Business Plan: A detailed business plan outlining your startup entity’s products, services, and goals.

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6. Challenges and Considerations in Registering a Startup Entity:
While there are many benefits, registering a startup entity can come with its own challenges.

Navigating Regulatory Hurdles: While the initiative aims to ease compliance, startup entities may still face some bureaucratic challenges, especially when dealing with government agencies.

Competition for Financial Assistance: While financial assistance is available, competition for venture capital or loans can be intense.

Awareness Issues: Many entrepreneurs are not fully aware of all the benefits available under Startup India. Lack of knowledge about resources and schemes may prevent some startups from fully utilizing this initiative.

Conclusion:

The Startup India initiative provides significant support to new and innovative businesses across the country. By registering your startup entity under this scheme, you can access a wide range of benefits such as tax exemptions, finance, and networking opportunities that can help drive your business to success.

Starting a business can be a difficult task, but the Startup India initiative streamlines the process by providing a supportive and efficient environment for entrepreneurs. Whether you are looking for financial assistance, tax benefits, or access to incubators, registering under the Startup India initiative provides you with the tools you need to grow and succeed in today's competitive market.