how to start up a business (focus on software)

8/9/2019 How to start up a business (Focus on Software)

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Why should You Startup

?

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Why should you walk out from your Fortune 500 company and start onyour 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 aboutstarting up.

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Sources of Inspiration in 1999

preceding the Boom

Sabeer Bhatia who sold Hotmail for 400 Mn $ to MSN & other storieswhich 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 ordropping 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. Fillforms online & send

physical copies toRegistrar office in New

Delhi

Either fill up File Form 3or submit document

similar to AoA

Receive incorporationcertificate & 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 2shareholders

Exempted

Public

Min 7shareholders

Commencementcert. req’d tostart 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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Taxation

SERVICE

CATEGORY CODE

SERVICE 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 Code

Application 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 withCompanies in the Cautioned list of Reserve Bank About the status of Non-ResidentInvestment 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 serviceagreement 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 anamount 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 inIndia 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 thetrade mark is being applied or will be applied;

4. Date of first use of the mark; &

5. Power of Attorney.



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