Why should You Startup

?

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Why should you walk out from your Fortune 500 company and start on your own?

Why should you startup, straight out of college, when you are offered a highly paid job with a leading MNC?

You have a product or service which is unique, not addressed by the industry?

Your Boss refuse to accept & implement your proposal which could have changed the fortune of the company?

Your Dad’s Banker offered you a Loan?

Or your Dad offered to help?

Because

Or inspired by success stories that appeared in Media

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Whatever be the answer, you need to know some basic things about starting up.

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Sources of Inspiration in 1999 preceding the Boom

Sabeer Bhatia who sold Hotmail for 400 Mn $ to MSN & other stories which appeared in Media especially Businessworld

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Sources in 2010

• No specific story to point to.

• An epidemic wave called entrepreneurship have struck the new gen who are leaving or dropping college studies to startup Software companies with diverse & uniques solutions to various industries across all verticals.

• Observation & identification of gaps & voids in existing systems is the Key.

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• I too want to start a software company.

• How do I ?

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Different formats for doing businessin India

• Sole Proprietorship

• Partnership

• LLP or Limited Liability Partnership

• Company

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How to start a Prop.

• Select a name for your proprietorship• Make a round seal & letterhead for communication, etc• Open an Current A/C in the firm’s name. (keep one Savings a/c and

transfer your profits to it. You will not mess up, easy to audit & file returns. That’s what Doctors & other practicing professionals do.)

• Office can be your home. (SOHO)• Ideal to have a website.• Trademark the name• Audit by CA not required until your turnover goes

beyond 40 Lakhs.• Pay taxes for your income only – No separate taxes for

the proprietorship & individual Income

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How to start a Partnership?

• Register your Partnership deed with Registrar of firms.

• Open a Current Account

• Website (Optional)

• Register Trademark (Optional)

• Pay taxes for the firms at 30%.

• No AGMs, meetings, minutes, etc

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Limited Liability Partnership (LLP)Registration Authority : LLP Registrar also under Ministry of Company affairs

Acquire DPIN Acquire DSC

Associate DSC with DPIN

Reserve the name. Fill forms online & send

physical copies to Registrar office in New

Delhi

Either fill up File Form 3 or submit document

similar to AoA

Receive incorporation certificate & ready to roll

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Company is of 2 typesHowever it may be divided further, not considering now

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Pvt ltd co

Min 2 shareholders

Exempted

Public

Min 7 shareholders

Commencement cert. req’d to start Business

Incorporation of Company(pvt ltd co. with min 2 shareholders)

• Registration Authority : Registrar of Companies, under Ministry of Company affiars.• Could be done in 10-12 working days • Documents to include: • Form 1A - Name availability

• Prepare Memorandum of Association (states the main, ancillary and other objects of the proposed Co.) & Articles of Association (contains the rules and procedures for the routine conduct of the proposed Co.)

• Form No. 1 – Compliance Letter stating that all the requirements of the incorporation have been met.

• Form No. 18 - Registered office of the proposed company.• Form No. 32 - This is a form stating the fact of appointment of the proposed directors on the board

of directors from the date of incorporation of the proposed company and is signed by one of the proposed directors.

• POA signed by all the subscribers of MOA authorizing one of the subscribers or any other person to act on their behalf for the purpose of incorporation and accepting the certificate of incorporation.

• Applicable fees

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TaxationSERVICE

CATEGORY CODESERVICE NAME DATE OF

INTRODUCTION OF LEVY

CURRENT DUTY RATE (%)

Account Head (Tax Receipts)

Account Head (Others

Receipts)

ISS INFORMATION TECHNOLOGY SOFTWARE SERVICE

16/05/2008 12 440452 440450

Small service providers up to Ten lakhs are exempt.

Docs req’d to register•Rental / lease agreement copy of the premises•Common seal of the firm•Pan copy of the firm

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Import Export CodeApplication to Joint Director General - Foreign Trade for Importer Exporter Code (IEC) Time req’d : 7 working days

Documents to include:

• Application• Profile of the Company • Copy of PAN• Banker's Certificate about the satisfactory account maintenance • Photo of the Applicant• Fees • Declaration from the Company: That the Directors are not associated with

Companies in the Cautioned list of Reserve Bank About the status of Non-Resident Investment in the Company

• Copy of the Memorandum & Articles of association of the Company • Normally this would be valid for a year & you will have to renew every year

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Software Technology Parks of India (STPI)

• Application to Software Technology Parks of India (STPI) to set up a 100% Export Oriented Unit (EOU)

• Time taken to complete the procedure: 22 working days Documents req’d:

• Application Form in the prescribed form

• (2) Memorandum and Article of Association

• (3) Board Resolutions for setting up STP Unit and persons authorized to sign.

• (4) Resume of the CEO

• (5) Detailed project report / Business plan consist of Company profile, Promoters background, Units, Area of Expertise / Services offered Marketing Strategy / Marketing Arrangements, Manpower plans, Future plans.

• Financials statement like : Cost of project & Means of finance. Projected Profit &Loss A/c. Projected Balance Sheet, Projected Cash flow / fund flow statement Export workings

• Other documents like Copy of FIRC's and letter filed with RBI for receipt of Foreign equity Copy of service agreement signed with parent company / clients/ Purchase Order with clients / Master service agreement

• Initial application processing fee of INR 2,500 and Advance service charges of INR 50,000 at the time of executing the legal agreement.

• Service charges to be paid annually as per the slabs given in the application

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Duty concessionsAppn to Customs authorities to avail duty concessions by setting up a Private bonded warehouse.

Time req’d : 7 working days.

Documents req’d:

• Application form - 4 copies

• Approval from STPI to set up 100% Export Oriented Unit

• Copy of PAN

• Copy of Importer Exporter Code (IEC)

• Copy of Application filed with STPI for set up of Export Oriented Unit.

• Banker's Certificate about the satisfactory account maintenance

• Lease Deed of the premises to be Customs bonded Floor plan - 4 copies duly attested by the CEO / authorised signatory

• B-17 bond to be executed by the Company to set up a Private bonded warehouse for an amount of 12.5% of the Capital goods to be imported

• Bank Guarantee to be provided by the Company for a value of 5% of the value as indicated in B- 17bond

• Copy of the Memorandum & Articles of association of the Company

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Industry bodies

• NASSCOM

• The Indus entreprenuers (TIE)

• Etc

• Etc

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Other compliances

• Labour Laws

1. Public Provident Fund,

2. Emplyees State Insurance

• Shop License under the Shop & Establishment Act.

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Intellectual property

• Patent

• Trademark

• Copyright

• Design

• Geographical Indication or GI

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Classified into

Trademark

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• Only the owner of a trademark which has been registered in India can use the symbol ® in India. Using the symbol ® unless your mark has been registered in India is unlawful.

• Using this symbol with your trademark simply implies that you claim to be the proprietor of the trademark. There is no prohibition on the use of the symbol ™ in India.

• Docs req’d to file a Trademark

1. Name, address and nationality of the Applicant;2. Specimen of the trade mark;3. List of the goods and/ services in respect of which the trade mark is being applied or will be applied;4. Date of first use of the mark; &5. Power of Attorney.

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