A start-up typically means a company that is in the first stage of its operations. A start-up is a young company that is just beginning to develop. Start-ups are generally small and initially financed and operated by a handful of founders or one individual. These companies offer a product or service that is not currently being offered elsewhere in the market, or that the founders believe is being offered in an inferior manner.
Business Registration for the start-up
The first thing that is required to start a new business or start-up is getting the business registered. There are many business structures from which you can choose the best one for you. The various kinds of business structures in India are as follows:
- Private Limited Company
- One Person Company
- Limited Liability Partnership
- Partnership Firm
- Sole Proprietorship
A new business must get incorporated in any of these business structures as per the scale of its operations, capital invested, number of members, and the risk associated with the business. The features, pros, and cons of each business structure are different and the entrepreneur must consult a business expert to know which structure will suit its requirements.
Start-up India Registration
When the business comes under the definition of a start-up as per the DIPP Notification, it can get its Start-up India registration done. A business registered as a Private Limited Company under the Companies Act, 2013, as a Partnership Firm under Section 59 of the Partnership Act, 1932 or as a Limited Liability Partnership under the Limited Liability Partnership Act, 2008 can get Start-up India Registration if it fulfills the following criteria:
- It has not been more than 10 years from the date of business registration.
- The annual turnover of the entity for any financial year since its registration has not exceeded Rs. 100 crores.
- The business is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential for employment generation or wealth creation.
MSME Registration can be obtained by micro, small, and medium enterprises in India to enjoy various subsidies and benefits in terms of loans, taxation, and other schemes. There are multiple benefits laid down by the MSMED Act for micro, small and medium enterprises for their machinery and raw material which can be purchased at a subsidized rate.
All manufacturers, sellers, service providers, exporters, etc. need to get their GST Registration in India. All kinds of business start-ups need to get GST registration in the following cases:
- When the aggregate turnover is more than INR 20 lakhs, or INR 10 lakhs in Special category states.
- If the business supplies goods inter-state.
- When the business sells goods or provides services online.
- When the business held tax registration under the previous tax regime.
In addition to the above criteria, various other criteria have been provided under the GST Act, establishing the criteria for GST registration.
GST registration must be obtained within 30 days of business incorporation, otherwise, the business will be subject to heavy penalties.
Udyog Aadhar Registration
Udyog Aadhaar Registration is the new initiative of the Government to support small-scale businesses. Indeed the process of Udyog Aadhaar Registration has come as a replacement to the SSI Registration or/and MSME Registration. Once, Udyog Aadhaar registration is obtained for a business, it can enjoy various subsidies and schemes specially provided by the Government for helping small businesses in India.
Licenses for Start-up
Apart from the above registrations, there are certain licenses required to be obtained for specific kinds of start-ups such as shops & establishments, food business, Import Export business, Financial institutions, etc. which are as follows:
Shop and Establishment License for start-up Registration
Every state has its own Shop and Establishment Act which provides for the rules to be followed by every shop and establishment running its business in the state. The Act also provides for shop and establishment license or trade license. A business that comes under the definition of shop and establishment must obtain the Shop and Establishment Certificate without fail to avoid penalty and fine.