Startup Business Registration

As the ease of starting and running a business is increasing, a lot of people are choosing the path of entrepreneurship and making dreams come true. If you want to join this gang, that's amazing. Because the country needs people like you to come up with creative solutions for problems and to improve India's economy. 

That's why the government is also providing various schemes and subsidies to encourage startups. From registering the business to growing into a successful business the government has come up with schemes that will accelerate the growth of startups and MSMEs.  

However, to avail of all these benefits, you first need to register your business under one of the structures available.  

Choosing Right Structure for Your Business 

	One Person Company (OPC)	Pvt Ltd Company	Limited Liability Partnership (LLP)
Best suited for	Solopreneurs who want the protection of limited liability	Businesses expecting to attract investments and make big turnovers	Service-related or small businesses that aren’t looking for big investments
Limited liability	✔️	✔️	✔️
Minimum members required	1	2	2
Ease of registration	Moderate	Moderate	Easy
Compliance needs	Moderate	High	Low
Raising capital	Difficult	Easy	Moderate
Tax rates	Profits are taxed at maximum 30% along with Surcharge as applicable & Education Cess. MAT Provisions are applicable.	Profits are taxed at maximum 30% along with Surcharge as applicable & Education Cess. MAT Provisions are applicable.	Profits are taxed at 30% along with Surcharge as applicable & Education Cess. AMT Provisions are applicable.

Lower Tax Rates can be opted in the case of One Person Company & Private Limited Company subject to certain conditions. However, an LLP can only opt for their profits to be taxed at 30%.  

Types of Startup Business Registration in India 

Among all the business structures available, three structures that are most preferred by startup owners are: 

One Person Company 

If you are a solopreneur who doesn't want to share your business, you can choose to register your company as a one-person company. This comes with all the perks of a private limited company and still gives you control over the business. 

It is best suited for small business structures. Unlike before, the government doesn’t mandate for a compulsory conversion into a private limited company after the OPC crosses a particular threshold. However, as the company and its investment needs grow, you can convert it into a private limited company easily. 

Private limited company 

This is the best option for startup owners as it is considered more trustworthy and venture capitalists and other types of investors prefer to invest in a private limited company. It provides limited liability.  

A private limited company can be started with just two people. It has a separate legal entity and perpetual succession. Most of the tech startups in India prefer this structure over anything else.  

Limited Liability Partnership 

This is a hybrid structure of a private limited company and a partnership firm. Similar to a partnership firm, the functioning of an LLP is governed by the agreement more than the law. But LLPs still enjoy limited liability, separate legal entity status, and perpetual succession like a private limited company. 

You can consider LLP as the middle ground between a partnership firm and a private limited company. You need two people as partners to start an LLP. It is the most common structure obtained by professional service providers like lawyers, doctors etc. However, it is also great for startups who want the flexibility of a partnership and nominal compliances. 

Schemes of Startup Registration 

A number of schemes were announced by the government of India for startups and below are some of the important ones. 

Startup India Initiative 

It is a government-sponsored scheme for startups that provides a number of concessions and tax benefits. The Startup India Initiative was launched in 2016 January and has seen a great number of enrollments until now. The main objective of this scheme is to empower innovative entrepreneurs and to increase wealth and employment in the country.  

They also provide incubation for innovative startups to ensure that they have all the tools required in the technology-powered marketplace to survive and flourish. 

ASPIRE 

This is a scheme that focuses on startups and small businesses in rural areas of India. More than half the population of India lives in rural areas and this scheme aims to promote entrepreneurship spirit in the rural sector.  

The idea is that this will in turn reduce poverty and increase employment in rural areas. ASPIRE provides the knowledge required for entrepreneurs to start and run a successful business, especially in the agro-based industry. 

MSME/Udyam Scheme 

To make it easy for the micro, small and medium enterprises, the government launched a scheme called Udyam (MSME scheme/Udyog Aadhar). Through the scheme, a number of subsidies and concessions are provided for MSMEs like reduction in the fees of IPR protection, loans at lower interest rates, etc. As long as an enterprise falls under the categorisation of MSME, they can register under this scheme and avail all the benefits. 

There are many other schemes that are industry-specific or operation-specific. However, these three are the most commonly availed schemes of the government for startups. Registering under the schemes itself provides a great range of benefits and knowledge on running a startup. 

Now the eligibility criteria to register a startup business is based on the structure that you choose. However, the most basic requirements for you and your co-business owners are: 

• You should be above 18 years of age 

• You should be of sound mind 

• You should not be insolvent 

• You should have identity and address proof 

Basic requirements for registering an OPC: 

• One member who is an Indian citizen and resident 

• One nominee 

• Principal place of business 

• Unique name 

Basic requirements for registering a private limited company: 

• A minimum of two members and two directors 

• At least one of the directors should be a resident of India 

• Business objective 

• A unique name 

Basic requirements for registering an LLP: 

• A minimum of two partners 

• One of the designated partners should be from India 

• Unique name 

Again, the complete list of documents required for starting a business registration depends on the structure that you're choosing. However, you only need to provide the below document as the Wellcorp will be preparing the rest of the documents needed for your registration: 

• Passport size photo, identity proof and address proof of directors/partners 

• PAN card or passport depending on whether the person is a resident Indian citizen or foreign national or an NRI 

• Proof of registered office 

The following details is also required: 

• Proposed name of the company 

• Basic details of the directors/partners like mobile number, email id, qualification, etc 

• Objective of the business 

• Details regarding paid up and authorised share capital 

• Details regarding how the business will be run. 

Do not worry. We will be guiding you through the entire process and assist you in gathering all the documents and details required. 

The startup registration process is very easy with the Wellcorp office.  

Step 1: Figure out your business idea 

This is the first step you need to take to start your business. And when we say a business idea, it is not just the main idea like "I will sell ice cream". You should consider the factors like capital, workforce required, demand and profitability of the business. 

Step 2: Think of a name 

After that, you need to come up with a name for your business. The name should be unique and not similar to any existing company name or trademark. It should not be offensive to any religious or cultural community as well.  

Step 3: Decide on the structure 

The next thing to consider is which structure you want to incorporate your business under. There are different benefits and disadvantages for each of the structures. Take your time and analyse which one will be suitable for you. 

We can help you pick the right one through a consultation call. And you can change the structure in the future if you want.  

Step 4: Sign up with Wellcorp Office 

Once you decide on the structure, you can get your startup firm registration easily by opting for the services of Wellcorp. We will take care of everything from collecting the required details and documents to creating the required documents like an LLP agreement or memorandum of association for your business.  

We ensure that the process is carried out without error, and you receive the registration certificate as soon as possible. 

Tax Exemption 

Tax holiday 

Startups incorporated between 2016 and 31st March 2022 are eligible to get a 3-year tax holiday in a block of 7 years. This means that they can get a 100% tax rebate on profit for these three years provided their annual turnover does not exceed ₹25 crores in any financial year. This can relieve the tax burden in the initial years of startups. 

Tax exemption on investments above the fair market value 

When resident angel investors or families for funds that are not registered as venture capital make investments that are above fair market value, they are given tax exemptions subject to certain conditions.  

Tax exemption on long term capital gains 

According to the Income Tax Act, if a long-term capital gain or a part thereof is invested in a fund notified by the central government within six months from the date of transfer of the asset, they are given a tax exemption. The maximum amount that can be invested is ₹50 lakh and there is a lock-in period of three years. If the investment is withdrawn before the end of 3 years, the tax exemption will be revoked.