Comprehensive Guide to Incorporating a Start-up in India

Comprehensive Guide to Incorporating a Start-up in India

Comprehensive Guide to Incorporating a Start-up in India

Incorporating a startup in India involves several legal, administrative, and regulatory steps. Here’s a step-by-step guide to help you navigate the process efficiently:

Step 1: Choose the Right Business Structure

Before incorporating your startup, you need to decide the legal structure of your business. The most common options for startups in India are:

• Private Limited Company (Pvt Ltd)

• Limited Liability Partnership (LLP)

• One Person Company (OPC)

• Sole Proprietorship

For most startups, the Private Limited Company (Pvt Ltd) is preferred due to its ability to raise funding and offer equity to employees and investors.

For more information on Pros and Cons of each of the business entity please  See Post on Legal Structures for Startups in India: Private Limited vs. LLP vs. Sole Proprietorship.

Step 2: Obtain Digital Signature Certificate (DSC)

The incorporation process is done online, so every director of the company will need a Digital Signature Certificate (DSC) to sign the documents electronically. Here’s what to do:

1. Apply for a DSC for each director through certified agencies like e-Mudhra, Sify, or NSDL.

2. Documents required: Passport-sized photo, PAN card, and Aadhaar card of each director.

Step 3: Apply for Director Identification Number (DIN)

A Director Identification Number (DIN) is mandatory for anyone who will serve as a director of the company. It can be applied for through the SPICe+ form (explained below).

1. You can apply for DIN during the incorporation process through the MCA (Ministry of Corporate Affairs) portal.

2. For up to three directors, DIN can be obtained through the SPICe+ form at the time of registration.

Step 4: Reserve Your Company Name

Selecting a unique name for your company is crucial. You can check name availability on the Ministry of Corporate Affairs (MCA) portal. The company name should comply with:

1. Companies Act, 2013 guidelines.

2. Trademark rules to ensure it’s not already registered.

The name reservation can be done in two ways:

1. Through the SPICe+ (INC-32) form at the time of registration.

2. By using the RUN (Reserve Unique Name) service on the MCA portal, which allows you to propose two names.

Step 5: Prepare the Documents

The following documents are required to register a Private Limited Company:

1. Memorandum of Association (MOA): Defines the company’s objectives.

2. Articles of Association (AOA): Lays down the rules for internal management.

3. Identity proof of directors: PAN card, Aadhaar card, passport, etc.

4. Proof of registered office address: Rent agreement, utility bill, NOC from the property owner.

5. Directors’ consent: Form DIR-2 to be signed by each director.

6. Affidavit and declaration: Form INC-9 stating that directors have not been convicted of any offense.

Step 6: File for Incorporation via SPICe+ Form

SPICe+ (Simplified Proforma for Incorporating a Company Electronically) is an integrated form that allows you to complete multiple steps in one go. Here’s how:

1. Fill out the SPICe+ form online on the MCA portal. It covers incorporation, DIN application, name reservation, and PAN/TAN application.

2. Upload necessary documents, including MOA and AOA.

3. Pay the requisite fees online.

4. The form includes the provision for obtaining PAN and TAN automatically.

Step 7: Obtain Certificate of Incorporation

Once the documents are verified and approved by the Registrar of Companies (ROC), a Certificate of Incorporation (COI) will be issued. The COI includes:

1. Company Identification Number (CIN)

2. PAN

3. TAN

The company is now officially incorporated and can commence business.

Step 8: Open a Bank Account

With the Certificate of Incorporation in hand, you can open a current bank account in the name of your startup. The necessary documents include:

1. Certificate of Incorporation.

2. PAN of the company.

3. A copy of the Board Resolution authorizing opening of the bank account.

Step 9: Register for Taxes (GST)

Depending on your turnover and type of business, you may need to register for Goods and

Services Tax (GST). If your business exceeds the threshold limit (currently ₹40 lakhs for goods and ₹20 lakhs for services), you need to obtain a GST number.

Step 10: Apply for Startup India Recognition

To avail the benefits of the Startup India initiative, such as tax exemptions and easier compliance, register on the Startup India portal:

1. Go to www.startupindia.gov.in.

2. Provide your company details and upload the Certificate of Incorporation.

3. Once approved, you will get a recognition certificate from the Department for Promotion of Industry and Internal Trade (DPIIT).

Step 11: Register for Other Licenses (As Required)

Depending on your industry and the nature of your startup, you may need additional licenses, such as:

1. Shops & Establishment License.

2. Import Export Code (IEC) for companies involved in import/export.

3. FSSAI License for food-based startups.

4. ESI and PF registration if you have employees.

Step 12: Comply with Annual Filings

After incorporation, your startup will be required to comply with annual filing requirements with the Registrar of Companies (ROC). This includes:

1. Filing of financial statements.

2. Annual returns.

3. Income tax returns.

4. GST returns (if applicable).

Incorporating a startup in India may seem complicated, but following the right steps ensures that your business is legally sound from the start. Engaging legal and accounting experts can also help streamline the process and ensure compliance with all regulatory requirements.

This step-by-step guide will help you ensure that your startup is incorporated efficiently, allowing you to focus on growing your business.

Disclaimer: This article is provided solely for informational purposes and should not be considered as legal advice. For accurate legal guidance, please consult a qualified professional.