HOW TO REGISTER YOUR START-UP IN INDIA (PART-2)

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SOLE PROPRIETORSHIP

Sole proprietorship is the oldest form of setting up business in India. It is for businesses were one Individual is managing everything from scratch. Sole proprietorship is basically a different you, it acts through you, from you and under your name. They are set-up for providing services like freelance writing, tutoring, baking etc.

You don’t need to register a Sole Proprietorship that is why it is very simple to operate without any complications. It’s good for experimenting, small businesses and in cases where the owner does not have any high future expectations of increased profit.

To start a Sole Proprietorship, all you need is your PAN card and a bank account in the name of your Sole Proprietorship business.

AND SOME BUSINESS LICENSES-

–          Business license for a physical shop

–          For an online import-export business you will need it for online payment option

–          TAN- Tax collection and deduction account number, if you are going to collect taxes

–          Professional tax, if you decide to have employee or employees in your business

–          IEC-Importer exporter code, for import-export business

And if you start doing really well in your business-

–          Service tax, when your turnover crosses 9 Lacs

–          CST/ VAT, If you are going to be selling goods, when turnover crosses 5 lacs.

 

PARTNERSHIP FIRM

Partnership firms can exist with or without registration. They are very simple to register.

Section 4 of The Indian Partnership act, 1932 describes partnership-

“Partnership” is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually, “partners” and collectively “a firm”, and the name under which their business is carried on is called the “firm-name”.

 

All the required forms of registration are available on business.gov.in

Section 58 of the act says a firm may get registered anytime.

STEP-1 FILE AN APPLICATION

Partnership firm can get registered any time by filing an application with Registrar of firms of the area where the partnership firm is situated.

According to section 58 the application must contain:-

–          name of the firm

–          place or principal place of business

–          names of any other places where the firm carries on business.

–          date on which each partner joined the firm

–          name in full and permanent address of partners.

–          duration of the firm

It should be signed and verified by all the partners or by agents authorized for this purpose.

STEP-2 DOCUMENTS AND FORM

–          Application shall be accompanied by prescribed fee.

–          Prescribed Registration Form for Incorporation of a Company.

 

Form1-

http://business.gov.in/outerwin.php?id=http://industries.delhigovt.nic.in/Download/IN-F1A.pdf

 

Specimen of Affidavit-

http://business.gov.in/outerwin.php?id=http://industries.delhigovt.nic.in/Download/IN-AFF.pdf

 

–          True copy of the Partnership deed entered into.

–          Proof of ownership/right to use the office of the principal place of business

STEP-3 REGISTRATION

–          When the Registrar is satisfied that the provisions of section 58 have been duly complied with, he shall record an entry of the statement in a register called the Register of Firms, and shall file the statement. On the date such entry is recorded and such statement is filed, the firm shall be deemed to be registered.

–          The firm, which is registered, shall use the brackets and word (Registered) immediately after its name.

LIMITED LIABILITY PARTNERSHIP (LLP)

Easy to establish and easy to run, this world famous business model was introduced in India by Limited Liability Partnership Act in 2008 which came into effect in 2009. An LLP is best of both worlds. It takes best features of a company and a partnership firm to create LLP where each partner has direct power to run business and no partner will be liable for other partner’s unauthorized action.

To set up an LLP no minimum capital is required.

All the steps of Incorporation and Registration can be done through- www.mca.gov.in

Steps of Incorporating an LLP are almost the same as a company’s. Forms available at http://bit.ly/IUxb3S

With each step in this article we will provide the Name of the Form that needs to be filled, download the form and follow the instructions. The instructions on the form will tell you the documents required, payment that needs to be done, attestation requirement, time limit etc.

STEP-1 SKETCH IT OUT

Decide who all are going to be partners and designated partners. Minimum nuber of two partners is needed.

Individuals who can become partners under LLP-

–          LLP incorporated inside and outside India

–          Residents in and outside India

–          Company incorporated in and outside India

STEP-2 OF INCORPORATION/REGISTRATION

Get a DIN and DPIN.

–          Director’s Identification Number (DIN)-It is a unique Identification number provided by MCA to the directors of the soon-to-be incorporated company or the existing director. Form to b filled- DIN 1

–          Designated Partner’s identification Number(DPIN)-DIN can be used as DPIN

STEP-3 GET A DSC

–          Digital Signature Certificate(DSC)-DSC like the software version of a physical certificate/identity proof. It helps in proving your identity officially to the MCA in online form.

–          All the documents and form that will be filed for incorporation of LLP will require DSC

–          Acquire a DSC here http://www.mca.gov.in/MCA21/Rolecheck.html

STEP-4 NEW USER REGISTRATION

To file an eForm or to avail any paid service on LLP portal register as a user in proper category http://bit.ly/J4wEvN

STEP-5 DECIDE A NAME

File Form 1 to register name for your LLP

STEP-6 SUBMIT INCORPORATION DOCUMENT

–          File Form 2-file required incorporation document and subscriber’s statement.

–          Submit Proof of ownership/right to use the registered office of soon-to-be-LLP with Registrar of LLP.

After the Incorporation,

STEP-5 FILING LLP AGREEMENT

File Form 3 with the agreement.

It needs to be filed within 30 days of incorporation or else rights and duties of LLP will be governed by Schedule I of the LLP act, 2008.

The agreement is made between the partners and between LLP and its partners for forming LLP. It lays down the basic structure on which future LLP will grow. It contains-

–          Name of LLP.

–          Name and address of all the partners and designated partners.

–          Form of contribution from partners and designated partners.

–          Profit Sharing ratio.

–          Rights and Liabilities of Partners and Designated partners in LLP.

This article is written by Prachi Shah, Student at National Law Institute University and Associate at Grayscale Legal

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Mohit Bansal(23) is B.Tech in Electronics and Communication Engineering from Indian School of Mines, Dhanbad, India. He has interest in business and entrepreneurship and has published couple of research articles. He is also associated with various NGOs. He is with Techaloo when it was just in concept stage. The Techaloo site was not existing even then. Currently Mohit is working with Mu Sigma as a Business Analyst Profile.

One Comment

  1. Ritesh Udsaria says:

    Hello Sir,
    I have a doubt that which type of startup is ours? We are going for a eCommerce startup like flipkart, tastykhana, zomato and 4 founders. Is it LLP?

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