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STARTUP REGISTRATION
Entrepreneurs are the driving force for any company. We are here to help every entrepreneur who requires help in all aspects, from registration of their start-up under the proper legal entity to how to comply with it. One of the tedious tasks for entrepreneurs is to understand under which legal entity processes of the business they fall under. For a start-up, the most likable and adjustable entity is a private limited company because of its various benefits and schemes for raising funds. Even registering yourself as a private limited company will help you claim the benefits of the Startup India Scheme set up by DIPP which has recently been rolled out by the government to promote innovation. However, your startup needs to be either an LLP or private limited company or a registered partnership firm to claim benefits under the DIPP scheme. Moreover, your startup should showcase some form of innovation or updation in current market products or services and should generate employment and wealth.
The Private Limited company acts as a perfect selection for startup since it is a limited liability company and can have 2-200 members and moreover it offers legal protection to all of its shareholders which acts as an added advantage. Hence, a private limited company can be considered as a good option for a long term perspective of your business.
Advantages
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Entities that are registered under the Startup India Scheme can avail for exemption of income tax under section 80 IAC. These entities can avail the benefits of tax exemption for 3 consecutive financial years provided they fall below that category.
(i) An entity shall be a Private Limited Company, LLP or registered partnership firm.
(ii) If the entity is incorporated between April 2016 and April 2021.
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Registering yourself under DIPP scheme would allow you to take part in government tenders. Moreover, you don't have to submit EMD(Earnest Money Deposit) while filing govt tenders.
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Networking is one of the key attributes to excel in the market since the more big the more opportunity the entrepreneur will get. By registering under Start-up DIPP scheme you will get various fests and summits which are organized by the government itself to promote such entrepreneurs.
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Startups can self certify compliance under 6 Labor Laws and 3 Environmental Laws for 5 years from the date of incorporation.
Disadvantages
Most startups fail within their first year of operations, so the risk of failure is high. Working under such high risk can blur a startup’s strategic vision. So they either fail to seize market opportunities or overestimate their sales projections. High risk also hinders a startup’s ability to attract experienced and competent staff.
It takes blood, sweat, and tears to build a company, and long working hours are the norm for startups. The rewards might be low since it takes time to generate revenue and make profits. Some startups give up since it’s demotivating to work without proper compensation.
Some startups are born out of desperation since the founder could not find or hold on to a job. Such founders often struggle to build a team that the business needs to succeed. A successful startup requires founders/co-directors with complementary personalities and competencies. Even then disagreements can creep in when the going gets tough.
Startups are flat organizations that lack defined business processes and operational procedures. This exposes them to poor customer service, legal liability, and financial losses. Startups might thus opt to outsource non-core business processes to external service providers. But the high associated costs could form a barrier.
FAQs Section
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An entity that is registered as a Private Limited Company, LLP, and Registered Partnership Firms can apply for startup India registration.
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An entity is considered to be a startup for a period of 10 years or if the entities turnover crosses 100Cr in any financial year.
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DIPP is an acronym used for the Department of Industrial Policy and Promotion.
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No. Any entity, that is formed after the reconstruction of an already existing business is not eligible for registration under this scheme.
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No. there are no government charges for getting registered under Startup India Scheme.
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