Start-up Advisory
Start-ups, be it their registration, availing of schemes or any of the other plethora of compliance associated with them, are one of our core strengths.
Categorizing one’s enterprise as a Start-up has been the cool thing to do. But we know that that is just the beginning. It’s what comes later that is hard – being actually recognized as a start-up. Let us understand what these are.
Types of Start-up Registrations
- Registered with Department of Industrial Planning & Promotion [DIPP]: This is the place where on filing Form 1, you can get your business registered as a start-up if it meets certain basic criteria. This is the easiest part.
33,000 such start-ups are registered!
- Recognised by Inter-Ministerial Board [IMB]: Now this is where it gets tough. Multiple ministries are involved in granting sanction to a start-up which registered itself under the DIPP. The Joint Secretary and Under Secretariesof ministries of industry, commerce, finance etc. meet to decide which start-up gets to be “recognised”. Practically, the ball stops with the Income Tax Department under the Ministry of Finance since they are the ones most affected as being recognised by the IMB entails multiple Income tax benefits.
Benefits and Exemptions for Start-ups
For Start-ups
- Tax Benefits:
- Any 3 years’ tax holiday within a 10-year period
- No tax even if shares are issued much above the face value of shares
- Relaxation from Laws:
- 6 different Labour Laws
- 3 different Environmental Laws
are deemed to be complied with only on the basis of self-certification for five years. There will be no inspector visits during this time.
- Legal Assistance:
Filing IPR and Patent applications are made easier under Start-up India by not only providing services for these filings but also subsiding the official prices by as much as 80%.
- Exemptions for Supply:
Public procurements by various government departments are made easier for start-ups by easing the norms of earnest money deposit, minimum turnover and experience.
- Easier Exit:
While for normal businesses a period of 180 days has been mandated under the Insolvency and Bankruptcy Act, for start-ups this period has been reduced to 90 days.
Are you eligible for a Start-up Registration?
These are the basic criteria:
- Date of Registration – Only from April 1, 2016 to avail of all benefits
- Constitution – Only for Private Limited Companies, LLPs and Partnership Firms
- Turnover – Has to be less than Rs. 100 crores
- Purpose – innovation, development or improvement of products or services or processes. Also, having a scalable business model with a high potential of employment generation or wealth creation helps.
Secretarial Compliance’s
| S.No. | Compliance | Nature | Timeline |
Company Compliances |
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| 1. | Apply for PAN & TAN | Mandatory | Within 30 days apply for PAN. It is mandatory to obtain PAN, before applying for TAN |
| 2. | Holding Annual General Meeting | Mandatory | Within the first 9 months of date of closing of first FY post incorporation. |
| 3. | Convening of First Board meeting | Mandatory | Within 30 days from the date of incorporation of the company. Subsequently, at least one in every quarter — the gap between the two meetings should not be more than 120 days. |
| 4. | Disclosure of Interest by Directors | Mandatory | In the first meeting of a board of directors of the company (Within 30 days of incorporation). Thereafter in the first board meeting to be held in every financial year. |
| 5. | Provisioning of Maintenance of Statutory Registers | Mandatory | Throughout since inception |
| 6. | Developing of Accounting System for the Company | Mandatory | |
| 7. | Opening of Bank Account for the Company | Need based | 60 days post incorporation the company must issue the subscribed shares. Hence the bank account must be opened reasonably in advance before the first issue. |
| 8. | Demand and Collection of Paid up Capital from the Shareholder | Mandatory, however to be decided by Director | |
| 9. | Appointment of Auditor | Mandatory, if not done punishable | Within 30 Days of Incorporation |
| 10. | Issue of Share Certificate | Mandatory, if not done punishable | within 60 Days of Incorporation |
| 11. | Payment of Stamp Duty on Issuance of Share Certificate | Mandatory, if not done punishable | Post 60 days of incorporation |
| 12. | Set up Registered office, get the same verified with Registrar | Mandatory | Set up registered office within 15 days of Incorporation. Verification with RoC within 30 days of incorporation. |
| 13. | File Audit Report, Financial Statements And Annual Report Before Due Date | Mandatory, Penalties for non compliance | A Company has to file Balance Sheet and Statement of Profit and Loss within 30 days from the date of Annual General Meeting; and Annual Returns within 60 days from the date Annual General Meeting |
Other Compliance’s |
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| 1. | Need-Based Registration and licences. (Would be based on the business activity and the goods in which the company is dealing Sales Tax Registration, CST Registration, Drug Licence, Food Licence etc.) | Need-based | |
| 2. | Obtain Registration under Shops and Establishment Act | Mandatory, if not done punishable | Within 30 days of incorporation of a company |
LLP Compliances |
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| 1. | Filing LLP Agreement | Mandatory, heavy penalty of Rs.100 per day of default with no ceiling on the maximum fine | LLP Agreement must be filed with the Ministry of Corporate Affairs within 30 days |
| 2. | LLP PAN Application | Mandatory | Preferably within the first 30 days |
| 3. | Audit of Accounts * Note LLPs whose annual turnover exceeds Rs. 40 lakh or whose contribution exceeds Rs. 25 lakh are required to get their accounts audited by a qualified Chartered Accountant mandatorily | Mandatory | For the current FY |
| 4. | LLP Annual Return | Mandatory, non-compliance attracts a penalty of Rs.100 per day of default with no ceiling | Within 60 days from the closure of a financial year. Hence, Annual Return has to be filed on/before 30th May every year |
| 5. | Filing Annual Accounts or Statement of Accounts or P&L and Balance Sheet | Mandatory, non-compliance attracts a penalty of Rs.100 per day of default with no ceiling | Within 30 days from end of six months of close of financial year. Hence Statement of Accounts has to be filed before October 30th of each financial year |