Bengaluru is deemed to be the startup capital of India. But why is Bengaluru the startup capital? Due to the immense opportunities it offers, the city attracts various budding startups. Starting a business in Bengaluru offers opportunities for innovation and growth.
Apart from the excitement of starting a startup, there are a few things that should be kept in mind regarding the legal and regulatory requirements. Starting up a new startup would also require documentation and well as paperwork. Let’s take a look at them one by one.
Startup Registration in Karnataka has specific eligibility criteria to grant the certificate of recognition. Things like the period of existence of that specific startup, the type of entity it runs on, the amount it makes at every year’s turnover, and what its innovation entity is required at the time of documentation.
What is a DPIIT Certificate?
The government of India has set up a cell to help startups gain recognition and carry out business. Department for Promotion of Industry and Internal Trade Certificate is an acknowledgement provided by the Government of India to recognize a business as a startup.
The DPIIT Certificate is crucial in Karnataka as it offers various benefits.
Eligibility:
- The business should be incorporated as a private limited company, partnership firm, or limited liability partnership.
- It should be less than ten years old from the date of incorporation.
- The annual turnover should be at most a specific stated limit.
- The startup should work towards innovation, development, deployment or commercialization of new products.
Application Process:
- Visit the website of Startup India run by the government.
- Incorporation/ Registration Certificate of the business entity.
- Brief description of the innovative nature of the product or services it dwells in.
- A brief explanation of how the startup’s activities align with the definition of a startup according to the Government of India’s criteria.
Benefits of DPIIT Certificate:
- Eligible startups may avail of income tax benefits for three consecutive financial years out of the ten years since incorporation.
- These startups may enjoy easier compliance with various labour and environmental laws.
- These startups may get access to various funding schemes, incubation centres, mentorship and networking opportunities.
- These startups get preference in government procurement processes.
Registration for your startup
The first step to setting up any startup is to get your company registered. There are a few steps that are required to get the registration done. The Karnataka government has a dedicated portal for startups. You can visit this website where you can get your company registered.
Picture source- Startup Karnataka
Step 1: Fill in some details like your Company’s name, date of incorporation of the startup, the incorporation of the registration number. You will also be required to enter the URL of your company.
Step 2: Click “Next” after all the details have been filled.
Step 3: Fill in all the personal details that have been asked for.
Step 4: You will be required to provide information regarding Self Certification.
Once all the details are filled successfully, an activation mail will be sent to the user’s mail id. You can click on the link to activate the account and then log in using the registered mail-id. Once this process is completed, you will be required to Register for Digi-Locker. Fill in all the other details and add an e-sign in your application. You will then be required to pay the fees for the registration process.
The fee amount varies according to the type of startup.
Picture source- Karnataka government
Startup taxation in Bangalore
- The corporate tax rate for domestic companies, including startups, is determined based on turnover and certain conditions.
- Startups in Bangalore with an annual turnover above the prescribed threshold must register for GST.
- Startups that employ a certain number of employees need to register themselves for Provident Fund (PF) which will contribute a percentage of the employees’ salaries towards these funds.
- Under Section 80-IAC and Angel tax Exemption, the startups can enjoy tax benefits as they will be exempted from paying a certain tax amount.
What are some challenges that are faced while registering a startup and how to solve those problems?
Dealing with the complex registration process involving multiple steps and documentation requirements can be daunting for new entrepreneurs.
Instead of ripping the hair from your head, you can seek guidance from professional consultants or legal experts specializing in startup registrations. The complex guidelines and instructions can be very confusing, these professionals provide leverage by simplifying them.
Choosing the right legal structure and understanding and understanding the compliance requirements under various laws and regulations can be overwhelming for the budding entrepreneurs.
Consulting a legal advisor or expert who specializes in business registrations can help you with this problem. They can help you choose the appropriate legal structure based on the nature of the business.
Gathering And organizing the required documentation for registration can be time-consuming as well as confusing. How to tackle this problem?
Always start by creating a required checklist of required documents and systematically collect and organize them in advance.
Understanding and effectively using government portals for registrations and submission might be challenging. What should be done to overcome this problem?
Always check for tutorials, user guides and online resources to familiarize yourself with the registration portals. Government agencies often offer help desks or support lines that can assist you with the queries.
The registration process may encounter delays due to unavoidable reasons, messing up the startup’s timeline.
Always plan ahead and get started with the process in advance. Regularly follow up with concerned authorities or agencies to ensure the process is progressing smoothly.
Takeaway
Complying with legal and regulatory requirements is the basic aspect of running a startup in Bengaluru. Always seek legal advice from well versed experts in Bangalore. They can offer customized advice on structuring agreements, contracts, and compliance frameworks. Maintaining accurate records and documentation is important for legal purposes and audits.
FAQs
- Can a startup be run smoothly without registration in Karnataka?
No. Any startup cannot be run without registration in Karnataka.
- What are the key regulatory compliance requirements for startup in Bangalore?
Startups in Bangalore need to comply with various regulations, including business registration and licensing laws, tax etc.
- Are there any government initiatives or policies supporting startups in Bangalore?
The Karnataka government has come up with certain sets of policies and initiatives, which is supposed to attract startups.
- Why is Bangalore called the Silicon valley of India?
Bangalore hosts numerous startups and is a hub for the IT sector. From prestigious colleges to MNCs, Bangalore hosts all of them, thus getting its name.
- What are the different legal structures available for registering a startup in Bangalore?
Startups in Bangalore can opt for legal structures such as Private limited company, limited liability partnership, partnership firm etc based on their business requirements and future plans.
- What role do consultants or legal advisors play for startups in Bangalore?
They prove guidance on regulatory adherence, offering legal advice, helping with documentation and mitigating legal risks.
