START UP INDIA

The national startups have several loopholes. While setting up a business tried clearing many a few still prevail. Due to a scarcity of proper finance affairs knowledge and optimized results with the least cost, startups burdened with extra finance crises that were filled with a great collapse. TaxMetrica worked as a transparent solution to a heavily documented legal system that was previously followed.

Startup Consultancy

What is a startup? An Entity that has as of late began activity is for the most part called startup. Initially, they funded by the promoter, investor, & some government financial organization. They provide products and services that absent from the market or low supply.  So far we can call startup until it is has accomplished a specific objective of income

Legal Issue and Challenges faced by startup

Legal Challenges are one of the most important challenges encountered by startup companies. The startup companies might lend up into trouble when the corporate fails to satisfy all the legal requirements.

For a startup, it is impossible to pool in resources adequate to the deep-rooted corporate house. However, with proper knowledge and support from the proper consultancy, the risk can be prevented or diminished.

1.      Startup Business Structure.

First is that the most vital thing for the startup to settle the right constitution of business Legal Registration and Documentation. The proper type of business selected influences the funding options for the corporate, its tax responsibilities, and the personal liability of the owners. The proper format can help save taxes also as protect the private assets of the proprietors in times of crisis. There are few categories of Legal Business entities for business registration in India- 1. Sole Proprietorship Firm, 2. Partnership Firm as per the Partnership Act, 1932, 3. Private Limited Company as per companies Act 2013, 4. Limited Liability Partnership Firm (LLP) as per LLP Act 2008, 5. One Person Company (OPC) as per companies Act 2013.

2. Co-Founder’s Agreement Documentation:

A co-founder’s agreement lays down all the terms and conditions between the co-founders of a start-up regarding how the business is going to operate be operated. The co-founder’s agreement may be an agreement that provides legal binding just in case there is any disagreement between the co-founders.

A co-founder’s agreement must be drafted on the lines of the business and will state all the provisions concerning factors that the co-founders are liable for. The following provisions are the most important clauses of any co-founder’s agreement;

(i) Ownership Clause

(ii) Responsibilities of each member

(iii) Protection Intellectual Property

(iv) Employment and Financial matter

(v) Incoming and outgoing of member Ownership

(vi) Dispute Resolution and relevant Laws Applicable

(vii) End up of Business

3. Sound knowledge of Employee Stock Option Plan (ESOPS) for startups:

The invention of Startups has also indicated the new age of employee Benefit/compensation structures. Startups are innovative ‘by default’ and their creativity also extends to the sphere of how their employees are compensated. There isn’t  mean startup hire fewer skilled employee due to cash constraints but  have to manage skilled employee within cash constraint by compensation ie ESOP

4.Equity Distribution

Equity is ownership. Equity represents the share of ownership interest during a given company. There are no rights thanks to dividing equity and it depends on the situations of every start-up. For the investors investing during a start-up, Equity means the share of the company’s shares that a start-up is willing to sell to investors for an amount of cash.

5. Lack of SEBI Listing Requirements:

If a start-up wishes to list its securities in a stock exchange, it has to compliance SEBI regulations. These regulations pertain to the conditions that a start-up possesses to fulfill before it can list its securities.

6. Industry-specific Business license.

Starting any type of business license required a proper advisory firm that assists in relying on the character and size of the business, several licenses are applicable in India. Knowing the applicable licenses for your start-up and obtaining them is typically the only because of starting a business. Business licenses are the legal documents that allow a business to figure out. If a license did not obtain promptly which will attract cause costly lawsuits and unwanted legal battles.

7. Customer, Vendor, and employee Contract management:

A Contract is required to ensure the smooth functioning of business and is a great mechanism to ensure recourse in case of non-fulfillment of work.

Employee contracts are one of the foremost crucial aspects to be looked into while starting a venture. Various provisions of the Indian Contract Act, 1872 are required to be looked into at various stages as and when required.

For establishing better business environment organizations need the proper standard operating procedure, so that fulfills the company mission and vision.

8. Protection of Intellectual Property:

The root of a start-up is the protection of the Intellectual Property Rights of a startup. A unique product or an idea, formulas must be protected with a patent with the brand name, logo, etc., and must be secured with trademarks. Copyright laws must be used for obtaining the right to use original works of authorship like software or advertising content. Correctly obtained copyrights and authorship will help the organization safeguard its valuable assets from rivalry firm usage and protect its right to commercially exploit the assets.

9. Compliances under Direct Tax and indirect Taxation

Taxes are a very important part of succeeding in every business/startup. In India, there are two types of taxation, such as Direct Taxation (Income-tax Act, 1961) and Indirect Taxation (GST Act, 1961) even local taxes that may be applicable for certain businesses/startup but after the introduction of the GST Act, 2017, it is almost abolished. Different business and operating sectors attract different taxes and knowing this beforehand is necessary.

Direct Taxation (Income-tax Act, 1961)

Full acquiescence with tax laws is compulsory to avoid punishment and penalties. Startups should ensure that they are aware of the new taxes, their impact on the business model, and their liabilities.

‘Start-up India’ initiative launches the Indian Government to provide a boost to start-ups and introduced many exemptions and tax holidays period for start-ups and new businesses.

Indirect Taxation (GST Act, 1961)

The startup is a creative idea, GST is a bigger reform in India, that helps startup to implement properly and GST will provide a boost to startup in India and archive its potential

For Startup in 31st GST Council provided the greatest help stretched out to startup and small businesses by waving off of late fees on GSTR-1 and GSTR-3B return. The GST Council has declared

10. Various Compliance under Labour Law

As you are aware, without an employee no startup can inaugurate its operation and It must know the very importance of compliances under Indian Labour laws, and how may labor law applies to the startup. Some of the laws being highlighted below
Start-ups registered under the ‘Start-up India’ initiative can complete a self-declaration (for nine labor laws) within one year from the date of incorporation in order and get an exemption from labor inspection. The nine labor laws applicable under this scheme are:

Minimum Wages Act, 1948
Payment of Wages Act, 1936
Payment of Bonus Act, 1965
Employees Provident Funds and Miscellaneous Provisions Act, 1952
Employees’ State Insurance Act, 1948
Payment of Gratuity Act, 1972
Contract Labour (Regulation & Abolition) Act, 1970
The Employee’s Compensation Act, 1923 (formally referred to as “The Workmen Compensation Act, 1923”)
Industrial Employment (Standing Orders) Act, 1946
Weekly Holiday Act, 1942
Equal Remuneration Act, 1976
Maternity Benefit Act, 1961
Sexual Harassment at the Workplace (Prohibition, Prevention and Redressal) Act,

11. Compliances under companies act

Annual Compliance:

As Startup is incorporated as Companies Act, there is a lot of; it is subjected to different statutory and regulatory compliances under the Companies Act. Following are the Annual Compliances that fall under the Ministry of Companies Act

The compulsory annual compliance requirements of a Private Limited Company include the following:

Auditor Appointment

Board of Directors Meeting

Annual Return and Financial Statements

Maintenance of Company’s Registers and Records

KYC of director and Company

Event-Based Annual Compliance of Company

The Event-based compliances of a Private Limited company include:

Loans to other Companies.

Loans to Directors

Appointment of managing or full-time director.

Change in Authorized or Paid-up Capital.

Allotment of new shares or transfer of shares

Opening or closing of a bank account or change in signatories of the bank account.

Appointment or change of the Statutory Auditors.

Charge Registration

12. Documented of Non-Disclosure Agreements:

It is a very important document for the success of any startup company. It creates a confidential relationship between parties and also protects the information and idea of any startup. It assures the theft of ideas or any information being shared between parties that not harmful for the startup.

13. Winding up:

Closer of any start-up, it is a very hard decision for any entrepreneur, it not only the laying off all employees but in advance through proper board meeting  must convey to all stakeholder

There are three ways to wind up a start-up under the companies Act 2013

Fast Track Exit Mode

Court or Tribunal Route

Voluntary Closure

An Entity that has as of late began activity is for the most part called startup. It is viewed as a startup until it has accomplished a specific objective of income.

In India, an element must be perceived as a startup by the department for the promotion of industry and internal Trade (DPIIT) so as to profit some profit a few advantages including charge exception.

The process of and eligible entity to obtain recognition as a Start-up by the following step

1. Incorporate your business. g Private Limited, or Limited Liability Partnership or Partnership firm.
2. Register with DPI.
3. Documents to be uploaded (in PDF format only)

(A) Letter of recommendation/support

A letter of recommendation must be submitted along with the registration form. Any of the following will be valid-

1. A recommendation (regarding innovative nature of business) from an Incubator established in a post-graduate college in India, in a format specified by the Department of Industrial Policy and Promotion (DIPP); OR
2. A letter of support by an incubator, which is funded (in relation to the project) by the Government of India as part of any specified scheme to promote innovation; OR
3. A letter of  recommendation (regarding innovative nature of business), from an Incubator, recognized by the Government of India in DIPP specified format; OR
4. A letter of funding of not less than 20% in equity, by any Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network, duly registered with SEBI that endorses innovative nature of the business; OR
5. A letter of funding by the Government of India or any State Government as part of any specified scheme to promote innovation; OR
6. A patent filed and published in the Journal by the Indian Patent Office in areas affiliated with the nature of the business being promoted.

(B) Incorporation/Registration Certificate

You need to upload the certificate of incorporation of your company/LLP (Registration Certificate in case of a partnership)

(C) Description of your business in brief

A brief description of the innovative nature of your products/services.

1. Answer whether you would like to avail of tax benefits

Startups are exempted from income tax for 3 years. But to avail of these benefits, they must be certified by the Inter-Ministerial Board (IMB). Start-ups recognized by DIPP, Govt. of India can now directly avail IPR related benefits without requiring any additional certification from IMB.

Finally, you must self-certify that you satisfy the following conditions

• You must register your new company as a Private Limited Company, Partnership firm, or a Limited Liability Partnership.
• Your business must be incorporated/registered in India, not before 10 years.
• Turnover must be less than 100 crores per year.
• Innovation is a must– the business must be working towards innovating something new or significantly improving the existing used technology.
• Your business must not be a result of splitting up or reconstruction of an existing business.

2. Immediately get the recognition number

That is it! On applying you will promptly get an acknowledgment number for your startup. The declaration of acknowledgment will be given after the assessment of your records/Documents.

However, be careful while uploading the documents. If on subsequent verification, it is found to be obtained that the required document is not uploaded/the wrong document uploaded or a forged document has been uploaded then you shall be liable to a fine of 50% of your paid-up capital of the startup with a minimum fine of Rs. 25,000.

Startup program

Advisory and consultancy

In the first step, our startup experts will guide you on the type of business entity, Financing, and Capital Structure, applicable business registrations, Legal Compliances with Government bodies, Trademark, and Brand. They will address any query you may have about your business.

Business incorporation

Tax Metrica will quickly track your enlistment through SPICe, record your e-Form, et your digital signature and director identification number, get your PAN and TAN, & GST draft MoA and secure the incorporate certificate for your business.

Tax Metrica will help start your business with our Special package – opening your bank account, Getting your website domain, Making new Manpower/hires, Accepting online payments, going live with email, and business applications.

Regular Business Handing Services

Accounting Services

Get our Experience and Qualified Staff to deal with your receivables and payables, get ready budget summaries and MIS reports for your business

Payroll Services

Get our Experience and Qualified Staff to design compensation, prepare to leave reports, generate payslips, and create Form 16 in one click using our software.

Tax Return (Direct and Indirect)

Our Experience and qualified staff will make periodic payments and file all your tax returns – Income Tax, Service Tax, VAT, Professional Tax, TDS, excise & customs, and GST so that you never miss your tax deadline.

Annual Business Compliances

Our Experience and qualified Staff file your annual returns and financial statements with the Registrar, assist with statutory and tax audits, and manage all event-based compliances (such as the addition of director and shareholder). All legal drafting and secretarial requirements will be managed by us.

Tax Metrica Advantage:

Startups need an expert to manage all compliance and regulatory activities. Tax Metricaoffers a wide scope of administrations for start-up performing redistributing exercises. Notwithstanding giving monetary administrations, for example, bookkeeping and finance, we likewise offer MIS detailing and the executive arrangements. Our modified arrangements empower associations to boost reach and benefit.

Taxmetrica Services:

• Company’s incorporation and its Compliances
• Advisory, registration and its compliances of in income tax and GST
• Business-specific license
• Compliance and registration under Labour Law
• Protection of Intellectual Property:
• Accounting set up and consultancy
• General Payroll Accounting and taxation
• MIS Reports for all levels of management.
• Payroll Audit

• Employee Stock Option Plan (ESOPS) for startups

Tax Metrica has Taxation Expert for Startup Company following question you can ask directly with our expert directly.

1. Taxation analysis for investors to invest in a startup entity.
2. What are the income tax consequences for a startup company issuing shares at face value or at a premium or discount to the face value? What is angel tax and who is the pay?
3. What is angel tax exemption and how to obtain it?
4. What is the income tax consequence for investors at the time of selling their equity share in a startup company? How are the capital gains computed and taxed in India? There any tax benefit on reinvestment of sale proceeds.
5. What are the income tax consequences in India on the transfer of the share of an Indian company by a resident to a non- resident of India?
6. What is the tax impact on the sale or conversion of the compulsorily convertible debenture and convertible preference share to equity share?
7. Do investment in share have any wealth tax impaction in India
8. Does investment in share have any gift tax impaction in India?
9. What is the tax impact on dividend income received by an investor in the share of a startup company

FOREIGN INVESTMENT IN INDIAN START-UP COMPANIES & CONSULTANCY

1. Can a person resident outside India maker an investment in an Indian startup company. ( With Legal Frame Work under FEMA, Act 1999
2. How Indian companies can receive foreign investment.
3. What re the guidelines for the transfer of existing shares of Indian Startup Company to or from a person resident outside Indian under the froing exchange regulations?
4. What are the guidelines for the valuation of shares of an Indian startup company transferred from a person resident in India to a person resident outside India?
5. What is the mode of payment a remittance /credit of sales proceeds in case of transfer of share between residents and nonresidents.
6. What are the reporting requirements for foreign investment in India and the transfer of shares?
7. Can a person resident outside India invest in an Indian startup up the company through an investment vehicle?
8. What are the terms and conditions for investment in an investment vehicle by a person’s resident outside India?
9. What are the terms and conditions for a foreign venture capital investor to invest in an Indian startup company?
10. Is the income earned by non-resident investors in India chargeable to income tax in India?

INVESTMENT FROM INDIA TO OUTSIDE INDIA IN SECURITIES.

1. Can a person Resident in India Invest outside India in securities
2. What are the general permissions available to persons resident in India for purchased/acquisition of securities abroad?
3. Who is an Indian party?
4. Are any prohibitions imposed on a person resident in India for purchase/acquisition of securities abroad
5. What are the assets/financial instruments that resident individuals can invest in foreign countries under the LRS
6. Is there any monetary limit for investment under the LRS
7. Does a resident individual need to obtain any RBI approval for investment under the LRS
8. Can a resident individual invest on behalf of any other person under the LRS. Should money be transferred only form the investor’s bank accounts?
9. Are there any restrictions on the frequency of remittances under the LRS.
10. Should remittances under LRS be made only in US dollars
11. Can a resident individual acquire a share of a foreign company in his capacity as a director
12. Can resident individuals acquire shares of a foreign entity in lieu of the professional services render by them or in lieu of directors’ remuneration under the general permission?
13. Can a resident individual subscribe to the rights issue of share held by him
14. What are direct investments outside India
15. What is the automatic route and approval route
16. What are a joint venture and a wholly-owned subsidiary
17. What are financial commitments
18. What are the limits and conditions for making overseas
19. What are the permissible sources for funding ODI
20. Can an Indian party acquire an existing company either partially wholly under ODI
21. What are the valuation norms for acquiring an existing foreign company or for investing additional ODI by an Indian party in its JV/WOS
22. What is the concept of a designated authorized dealer can thereby more than one designated authorized dealer for the same JV/WOS in case the JV/WOS has more than one Indian promoter what if one Indian promoter has more than one JV in either the same country or in different counties
23. How are compulsorily convertible preference shares CCP treated for the propose of ODI
24. How are preference share other the CCPS treated for the purpose of ODI
25. Can Indian corporates invest overseas other than the by way of direct investment
26. Can an alternative investment fund invest in securities of companies incorporated outside India
27. What are the permitted activities that partnership firms can undertake through ODI route
28. Can the partners of a partnership firm hold a share of the overseas JV/WOS for and on behalf of the firm
29. Can the proprietorship/ unregistered partnership firm make overseas investments
30. Is there any tax liabilities associates with an investment with investments made outside India

REGULATIONS FOR ISSUE OF SECURITIES BY STARTUPS TO ITS EMPLOYEES, DIRECTORS, AND ADVISORS.

1. Compliances requirements for the issue of employee stock options by startup companies in India and its taxation
2. Compliances requirements of the issue of sweat equity shares
3. Compliances requirements for the issue of shares or other securities