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Business Formation, Business Registration

This year is seeing the most remarkable changes, be it GST, AADHAR, RoC Filing penalties etc. One thing that we all can agree upon is our nation is shifting towards transparency, which is great. Founders this is the right time to take the right decision by asking the right question, without any due, bring you the Top 15 Business Registration Questions this Year.

 1. How do I start a business in India?

  • The first step to starting a business in India is the registration of a business entity. Any form of the entity can be chosen and registered with the relevant government department.
  • Once the entity is registered, the applicable tax and other registrations need to be done in the name of the entity.
  • Exceptional cases, Sole Proprietorship and Partnership firm do not have business registration.

2. What are the different types of business entities?
For a for-profit business, there are primarily five types of business entities in India:
  • Public Limited Company
  • Private Limited Company
  • Limited Liability Partnership (LLP)
  • Partnership
  • One Person Company (OPC)
  • Proprietorship
  • While the first four types (Public Limited, Private Limited, LLP, and Partnership) require more than one promoter, OPC and Proprietorship are the types of entity applicable when there is only one promoter.
  • Non-Profit Organizations (Sec. 25 Companies)

3. Which entity is best suited for me?

The nature of the entity depends on your future plans, scale, and nature of the business. In the list below, we have shared a general guideline for the types of business the different entities are best suited for.

  • Sole Proprietorship
    1. Small Traders & Merchants where there is only single founder in unorganized sector
    2. Single founder testing the market
  • Partnership Firm
    1. Small Traders & Merchants where there are 2 or more in unorganized sector
    2. Has lost the relevance otherwise after introduction by LLP
  • One Person Company
    1. Single Promoter who wishes to take advantage of Limited Liability
    2. Suitable only for small businesses
  • Limited Liability Partnership
    1. For businesses started by 2 or more founders
    2. If there is no need of equity investment for the company
  • Private Limited Company
    1. Scalable Businesses started by 2 or more founders
    2. If Funds are to be raised in lieu of Equity shares of the company

4. What are the advantages and disadvantages of a Private Limited Company?

Advantages
  • Very easy to issue fresh shares and raise equity funding
  • Easy to offer and manage equity to the new promoters or ESOP to the employees
  • Easy for investors or shareholders to exit the company by selling their shares
  • More Credibility in the market
  • Limited liability of the promoters or shareholders

Disadvantages
  • Compliances are relatively higher than the other entity types
  • Low Tax Benefits
  • In case the business needs to be closed down, a cumbersome process has to be completed

5. What are the advantages and disadvantages of a Limited Liability Partnership (LLP)?

Advantages
  • Lesser compliances since the working is governed by the Partnership deed
  • Tax benefits like no dividend distribution tax and no tax on loans to partners
  • Limited liability for the partners
Disadvantages
  • Very difficult to raise funding on fresh equity
  • Extremely difficult to offer Shares/ ESOPs to employees or other stakeholders
  • Selling of the shares of one of the Partners is not possible

6. What are the advantages and disadvantages of a Partnership?

Advantages
  • Easy to incorporate
  • Legal way for group of individuals to conduct business

Disadvantages

  • Unlimited Liability among partners
  • The firm does not have separate legal existence
  • Extremely unlikely to raise equity capital or offer equity to any other stakeholder

7. What are the advantages and disadvantages of a One-Person Company (OPC)?

Advantages
  • Limited Liability
  • Allows to have only one promoter
  • Name recognized by MCA
Disadvantages
  • Impossible to issue fresh equity and get funding in lieu of Equity
  • Once the transaction crosses INR 2 Crores, it is compulsory to convert the company to Pvt Ltd Company or Public Company
  • Compliance similar to that of a Private Limited Company


8. What are the advantages and disadvantages of a Proprietorship

Advantages
  • Easiest way to start a business
  • No separate registration of the company is required. Only the applicable tax and other registrations, as applicable will be needed to operate the business.
Disadvantages
  • No Legal difference between the Proprietor and the company
  • Unlimited personal liability
  • Impossible to accept equity investment

9. What is a Public Limited Company?

A Public Limited Company is a Company which is limited by shared and has no restrictions on the maximum numbers of shareholders. It can be formed with a minimum of seven members and three Directors. It should be registered with the Registrar of Companies of the particular State under the Companies Act, 1956.

Such type of Company can offer its shares to the Public, accept deposits from it and there is no restriction on the transference of shares.However, minimum share capital requirement for such a Company is Rs.50, 000.


10. I want to start a venture with my friends. Which type of business entity is best suited for me?

In case you are looking to raise equity capital or offer ESOP to your employees in the future, Private Limited Company will be the best-suited entity for you. However, if you do not wish to raise equity capital or offer ESOP to the employees, you can opt for a Limited Liability Partnership or a simple Partnership depending on the financial liability or the nature of the business.


11. I am looking at starting my business. I do not have any cofounders. Which is the best suited entity for me?

In case you want to limit your personal liability and secure the name with the MCA, you should opt for a One Person Company. However, you are more interested in keeping the registration and compliance processes similar; you can opt for Proprietorship firm.


12. Three of us are looking at starting a business. We will be funding it ourselves and not raising any external funding. Which is the best suited entity for us?

You can opt for either a Private Limited Company or a Limited Liability Partnership or a Partnership firm. The choice should depend on the following factors:

  • Exposure to liabilities the shareholders want to take
  • Whether you want to offer ESOP to employees or not
  • Extent of regulatory compliance you want to expose your entity to
  • Whether you want to make the business a going concern or have the existence of entity dependent on the partners. A Private Limited Company is a going concern.

 13. Can I register as one entity and change it to another later?

Presently, following conversions are available by various clauses of Companies Act

  • A Partnership firm registered according to Indian Partnership Act – 1932, can be converted to an LLP
  • A Private Limited Company can be converted to an LLP
  • Please note that the name will now start ending with LLP instead of Pvt Ltd. For e.g., your present ABC Pvt Ltd., should be renamed ABC LLP.
  • OPC has to be compulsorily converted to a Pvt Ltd Company, either if Paid up Capital is increased beyond Rs.50 Lac or if Annual Turnover of immediately preceding three consecutive financial years exceeds two crore Rupees.

14. I am testing waters with an idea right now and am not sure if this is something that will work. What kind of entity suits me the best?

Though this will depend on the nature of your business and the tax and other license registrations that need to be done, you can explore starting with a Partnership or Proprietorship (depending on the number of promoters). Once you have made up your mind and want to raise capital to invest further in the business, you can either convert it or register a new entity.

Please note that in case you decide to start a new entity, you will have to get all the registrations done again and the financial track record cannot be carried from the earlier entity, unless a conversion or acquisition happens.

15. What are the differences between the types of entities – Private Limited, Limited Liability Partnership (LLP), Partnership, One Person Company and Proprietorship?


 

Sole Proprietorship

Partnership Firm

One Person Company

Limited Liability Partnership

Private Limited Company

Limited Liability

No

No

Yes

Yes

Yes

Multiple Partners

No

Yes

No

Yes

Yes

Ease of Incorporation

Very Easy. No separate Registration

Easy. Registered under Indian Firms Act – 1936

Difficult. Registered under Indian Companies Act – 2013

Moderate. Registered under Indian Companies Act – 1956

Difficult. Registered under Indian Companies Act – 1956

Compliance

Very Less Compliance

Very Less Compliance

Moderately Simple Compliance

Moderately Complex Compliance

Complex Compliance

Ease of allotting shares

Not Possible

Not Possible

Not Possible

Very Difficult. Almost impossible

Very Easy.



Wazzeer
is vouched by Entrepreneurs as the most reliable Legal and Accounting Partner. We would be super excited to see your startup kick starts seamlessly. Let’s Connect! 🙂
0

Business Registration, LLP, Partnership Firm, Start up Lessons, Trademark
Every business entity needs to be given some name and the functioning of the business is carried out in that name only. In the case of a company which enjoys the status of the separate legal entity, choosing business name in India is a must. Name approval from the Registrar of Companies is pre-requisite condition before incorporation of the company.

Procedure for Business Name approval in India

Application to concerned Registrar of Companies to ascertain the availability of name in eForm-INC1 need to be made. Maximum 6 suitable business or company names can be submitted in order of preference and name must indicate main objects of the company.

While choosing business name in India, make note of following:

  • The proposed business names must not be similar or resemble the name of any other already registered company, or
  • Proposed business name should not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950), or
  • Proposed business or company name(s) should not constitute an offense under any law.
  • Last word Limited need to be used in the case of a public limited Company, or Private Limited, in the case of a private limited Company and LLP needs to be used for Limited liability Partnerships.
Along with government fee and complete form, the digital signature of the applicant proposing the company needs to be attached. For filling this form Digital Signature of one of the Promoters is mandatory.

The details need to be provided in eForm INC1 are:-
  • Authorized capital for the proposed company
  • Main objectives of the proposed company
  • State (location) of the proposed company
  • Personal details of all Promoter?s
  • Copy of trademark application/certificate (if applicable)
  • In case, there is a logo associated with trademark then image of logo
  • Balance sheet (if applicable) and Income tax returns for last 2 years

If the name is approved by Registrar of Companies, letter of acceptance is issued for the proposed name. If proposed name(s) are not available, fresh names can be applied through the same application.


We will be glad to help you in choosing a business name, let’s connect.

0

Business Registration, Uncategorized
In Limited Liability Partnership or LLP under LLP Act 2008, where all or some of the partners have limited liability as per the shares and offers them protection from misdeeds, negligence, and incompetence of other partners. However, the liability of partners is unlimited in case of fraud committed by LLP. The LLP Agreement regulates the conduct of business. Section 56 of LLP Act 2008 provides that Private Companies convert into LLP. Due to the benefits listed down, Companies are converting themselves into LLP because of:
  1. Tax benefits:
by converting into LLP, the company saves Dividend Distribution Tax, Minimum Alternative Tax, and Income Tax because interest and remuneration are paid to partners as a salary that is payable to directors.
Earlier there was no capital gains tax when existing entity converted into LLP but after the amendment of 2016, a company having assets in excess of Rs 5 crore in any of three preceding years has to pay capital gains tax.
  1. Less Statutory Compliance:
compared to statutory compliance of a private limited company as per Companies Act 2013 an LLP gets relief in the form of
  • No requirement to maintain statutory record registers.
  • No requirement to pass resolutions for addition or deletion of Directors, increasing capital.
  • No such requirement to hold a Compulsory annual meeting.
  • No conditions or cap for loans except what is stated in LLP Agreement.
  • Compulsory Audit only if Turnover is above 40 lakhs.

One of the areas where the company had an upper hand over the LLP was that the LLP was not an eligible entity for claiming tax incentives (100% deduction for 3 years) offered to startups as provided by the draft Finance Bill, 2016. However, the Finance Act, 2016 has eliminated this disparity by extending this benefit to LLPs. Thus, where startups do not intend to raise funds from the public, LLP seems a good start for the initial setup.

Conditions for conversion of Private Companies into Limited Liability Partnership:

A company is converted into LLP by complying with the provision of Schedule 3 of LLP Act 2008 and can do so only if (a) There is no security interest in its assets subsisting or in force at the time of application; and (b) The partners of the limited liability partnership to which it converts comprise all the shareholders of the company and no one else.

The procedure of conversion:
  • In order to get converted into LLP, every designated partner must possess Director Identification Number. A meeting of Board of Directors must pass a resolution for conversion of Company into LLP as well as to authorize a director to apply for the name of LLP. A copy of this resolution is to be attached with e-form LLP-1 with Registrar of Companies (ROC).
  • Once registrar issues name approval Certificate, Incorporation Documents as the address of registered office of LLP, notice of consent of Designated Partners, Details of LLP(s) or companies in which designated partner is a director are filed using E-form 2 with ROC.
  • E- Form 18 is filed with ROC for application of Conversion along with certain attachments as a statement of shareholders, assets and liabilities of the company, NOC from IT authorities and list of all secured creditor along with their consent.
  • Registrar of LLP issues a Certificate of Registration as per the provisions of this act and may refuse if not satisfied with the particulars or other information.
  • After all above formalities are complied with and approved by Ministry, LLP Agreement is to be submitted within 30 days of incorporation using E- form 3
  • Once Registration Certificate is issued, information of conversion is to be intimated to concerned Registrar of Companies with which it was registered under the provisions of Companies Act 2013 within 15 days of such conversion using E-form 14.
Should You Really Go for Conversion?

In case you are a small entrepreneur and want your business to be internally driven, LLP is the best option to run your business. But the company surely provides much better opportunities for large business as evolved laws are there for bringing capital and diluting or liquidating stakes.

Wazzeer is vouched by Entrepreneurs as the most reliable Legal and Accounting Partner. We would be super excited to see your startup kick starts seamlessly. Let’s Connect!
0

Business Registration, Sole Proprietorship
Sole proprietorship is the easiest form of business which some small businesses and startups choose to start with. By doing any one of the registrations that is Service tax registration/VAT or Small Scale Industry registration sole proprietorship is good to kick off. This has some drawbacks like unlimited liability of the proprietor, yet businesses take this as another part of the risk in their entrepreneurship journey.


  As a business, it becomes difficult to manage and control all the business activities individually and sole proprietor chooses to convert it into another form of business structure. This blog is dedicated our beloved fans that have been requesting us to shoot a blog on this topic.  
  1. Partnership firm:Sole proprietorship business can be converted into partnership. The Indian Partnership Act 1932, governs partnerships and it is optional whether to register or not with the registrar of Companies. The Registered firm enjoys additional benefits like protects its partners’ rights. With 2 partners, you should be good to register.
  Documents Required:
  • Duly filled Specimen of Affidavit
  • Certified copy of the Partnership deed
  • Proof of ownership of the place of business or the rental/lease agreement
  • Based on the Partnership deed, to open current bank account PAN card can be obtained based on Partnership deed.
 
  1. One person Company:The sole proprietor can convert his business to One Person Company as there is no need to induct any partner to incorporate One Person Company, it also empowers one person to manage and control all his business and on the other hand gives qualities of a company, like a separate legal entity. The individual will enjoy benefits like access to credits, bank loans, limited liability, legal protection for business, access to the market. One person company enjoys additional benefit like exemption from holding the annual general meeting, the annual return can be signed by director also and limited liability protection to directors and shareholder.
  Documents Required:
  • Digital Signature Certificate [DSC] for the proposed Director
  • Director Identification Number [DIN] for the proposed director.
  • Written consent of nominee which need to be filed with the Registrar of Companies (RoC) during Incorporation.
  • Memorandum of Association and Articles of Association [MOA & AOA]
  • After incorporation of one person company, all assets, liabilities, and goodwill of the Sole proprietorship can be transferred through a transfer agreement to One Person Company.
 
  1. LLP: The sole proprietor can also choose to convert his business into Limited liability partnership. LLP has many features like private limited company. Further, LLP enjoys tax benefits and less annual compliance. This all the assets, liabilities, goodwill and losses will be transferred as it is to limited liability partnership.
 Documents Required:
  • PAN Card of proposed partners
  • Digital Signature of Partners
  • Designated Partner Identification Number(DPIN)
  • Address proof of partners
  • LLP Partnership deed
 
  1. Private limited Company: More like Pvt Ltd company is acquiring the Sole proprietorship firm. Sole proprietorship can be acquired by the private limited company by simply signing an agreement between the sole proprietor and the private limited company (after its incorporation) mentioning that all assets, goodwill, liabilities are transferred to the private limited company.
  Documents Required:
  • DSC of Directors
  • Pan Card and address proof of Directors
  • Director Identification Number of Directors
  • Memorandum of Association (MOA) and Article of Association (AOA)




Wazzeer is vouched by Entrepreneurs as the most reliable Legal and Accounting Partner. We would be super excited to help you. Let’s Connect! 🙂
4

Business Registration, GST, GST, TAXATION

Did you know, VAT or the famous Value Added Tax was originally called as Sales Tax? This is an indirect applicable whenever there is goods and services sold by the company. This Tax is paid by the customer via producer to the state government. Business owner earning an annual turnover of more than Rs.5 lacs by supplying goods and services are liable for VAT registration.

VAT is levied both on local as well as imported goods. Similar goods and services are taxed equally and VAT is applicable at different stages of production. VAT made the game much fairer because now you will be taxed based on the type of goods and service rather than uniform rates. With VAT Registration, you will be saving on revenue which with previous sales tax regulations you possibly wouldn’t have.

Hey, but why should consumer pay for VAT?

VAT is a tax on consumption which is borne by consumers. It is applicable on 554 goods. VAT protects consumer from the cascading effect of the turnover tax which is tax on each sale with no credit for the tax paid at earlier stages.

Will I be taxed on capital input that I invest in my firm?

Look basically you have three tax variants:

1. Consumption variant-(not the capital that you invest is taxed, but the use of capital goods which produce consumer goods is taxed);

2. Income variant (depreciation on the goods is excluded);

3. Gross Product Variant (no exclusion, only goods that are used up currently are subtracted from the firm’s sale) And hence VAT payable = VAT on output (total value of sales) – VAT on input (purchases any paid by firm to produce)

Does the VAT in India differ from one state to another?

  • 0% VAT Rate:
For essential commodities like some of the goods like salt, Sugar etc.,
  • 1% VAT Rate:
For items, which tend to be highly expensive, like Gold, silver precious jewellery fall under this category of goods. Most Indian states have fixed VAT for these items at 1% of the amount.
  • 4-5% VAT Rate:
Most of the FMCG goods come under this category of VAT, like oil, coffee, medicines etc. is around 4-5% for most states in India.
  • General VAT Rate:
General VAT rates apply to goods which cannot be segregated and put under any of the above listed VAT categories. For goods like liquor, cigarettes etc. many governments charge high VAT rates of 12.5% or 14-15%.

When to file VAT Returns?

VAT Returns are filed every month or every quarter depending on the amount of VAT you pay. The normal rule is that if you pay less than Rs 15,000 for VAT every month, a VAT Return is to be filed every quarter. If your Input Tax is greater than your Output Tax you can carry over the difference as a credit to your next VAT Return. In certain circumstances, the VAT Commissioner may pay you any excess if he is satisfied that excess is a regular feature of your business.

What kind of proof do I have to show to the commissioner?

Haven’t you seen situations where, a small notice at billing counter at pizza hut stating that take food for free if no bill given?
Yep! That’s the best example, the seller should always have a copy of the bills to claim. For starting entrepreneurs, a Simplified Tax Invoice would be good enough that must include the following information:
  • Your name, address and TIN
  • Serial number of the invoice
  • Date of the invoice
  • Brief description of the goods and services supplied.
  • Total amount charged to the customer including VAT and
  • A clear statement that the price includes VAT.
To Read about the Process of VAT registration click here

To know the documents required for VAT registration click here

Startup entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly.

For any Legal and Accounting support, Happy to help you, let us talk at Wazzeer.

0

Business Registration, Healthcare Startup, Licenses, Start up Lessons
Economists can just turn the table, don’t they? When reports about Healthcare sector expecting to touch $158.2 billion by 2017 came up, entrepreneurs that always wanted to do something big in this sector felt unstoppable. Yes, you got the point! This blog is for all you fans that has been requesting me to write on the e-healthcare sector. So, let’s get on with the basics of starting healthcare business in India.
  1. Business Registration:
This is a must for startups in this sector and probably the first step for starting healthcare business in India. Since there are multiple players involved, raising funds is another major thing to be concerned about, therefore registering it as a PVT. LTD. Company makes sense for most entrepreneurs.
  1. Rules under the IT Act:
  • Data Protection: The patient must be informed that the data is being collected, purpose behind the same and whether it would be transferred to any third parties, along with the contact details of the agency collecting the information.
  • Follow the international standard IS/ISO/IEC 27001 on Information Technology
  • Appoint a ‘Grievance Officer’, whose contact details are to be published on the website.
  1. Privacy Policy:
It is mandatory for startups ( healthcare business in India ) to have a privacy policy in place and published on its website. Although a ‘privacy policy’ is technically a legal document, great effort should be made to craft a document that is both accurate and easy to understand.  
  1. Not to miss OSP Regulations:
If you are planning on starting healthcare business in India that will have Application based Services which includes telemedicine services, you will be required to be registered as an ‘Other Service Provider’  (OSP) with the Department of Telecommunications.  
  1. Abide by the rules of The Drugs and Cosmetics Act (this one is for e-pharmacies)
  • All drugs must be sold under a license. The Rules under this act clearly lay down which drugs can be sold only on the production of a prescription issued by a registered doctor.
  • Drugs which can be sold only on prescription are stated in Schedules H, H1, and X.
  1. The Drugs and Magic Remedies Act, 1954:
If you are going to send Advertisements (promoting anything) to registered medical practitioners and chemists after starting healthcare business in India, you can do only if your documents bear the words ‘For the use only of registered medical practitioners or a hospital or a laboratory’ at the top of the document.  
  1. Unsolicited Commercial Communications Regulations, 2007 and Telecom Commercial Communication Customer Preference Regulations, 2010:
Sending unsolicited commercial communications over voice or SMS are prohibited. However, there is no legal bar over sending transaction messages after starting healthcare business in India.
  1. The Clinical Establishments Act, 2010 (this one is for startups that have clinics as well): Registration with the relevant authority and conform to the minimum standards as prescribed under the act.
  1. Patent:
  • A computer program ‘per se’ is excluded from patentability under Section 3(k) of the Patent Act, 1970., provided it meets the other requirements of CRI.
  • Patents for software programs have been issued in the past where it involves a hardware component as well. If the technology/software fulfils these requirements, you could file for a patent and receive protection if the same is granted. 
  1. Copyright:
  • Software can be protected as a literary work under copyright law.
  • The idea would have to be expressed in some form of medium before it can be protected.
  • Clinical guidelines and data could be protected under the Copyright Act, only if it is expressed in some form of medium.
A2Z of starting a Healthcare Startup  
  1. Design:
Design protection would be the Graphical User Interface (GUI) of applications and the design of the devices and this can be protected under the Designs Act.  
  1. Trademark:
The ‘mark ‘ an e-Health application or device could be registered as a trade mark under the Trademark Act. 
  1. Trade secrets: You can protect the trade secret by signing a Non-Disclosure Agreements with employees to avoid information going out of your roof.
  1. Indirect Taxes:
  • Service tax is 14% payable by the service provider.
  • Value Added Tax (VAT) is levied on the sale of goods within a state and rates vary widely anywhere from 0%-1% to 4%-12.5%.
  • Central Sales Tax is imposed on the sale of goods during interstate trade or commerce.
  1. Corporate Tax
  • Indian residents are taxed on their worldwide income
  • Non-residents are only taxed on income arising from sources in India. 
  1. Follow the standards of NeHa:
NeHA is a promotional, regulatory and standards setting organization to guide and support India’s journey in e-Health. 
  1. Terms of service:
You are required to have the Terms of services document in place, that has all the required information about services like Age verification and other rules.  
  1. Payment Gateway Compliance:
It is mandatory for every ecommerce startup, on a similar line e-healthcare startups should consider doing the same.  
  1. Abiding International jurisdiction:
Every country has its own set of compliance that businesses outside the country should follow.  
  1. Cofounders Agreement:
Importance of having this conversation (or more likely, conversations) early on, explain why a founders? agreement is a valuable tool to maintain a healthy co-founder relationship. It is like defining your marriage with the fellow co-founder.  
  1. License Agreement:
Licensing agreements cover a wide range of well-known situations. For example, a retailer might reach agreement with a professional sports team to develop, produce, and sell merchandise bearing the sports team’s logo. On a similar note, when you provide license to doctors to use your app, it is important that you have a license agreement to support the same.  
  1. Contracts and Agreements:
To protect your relationship with partners or doctors on a long run. The doctors should be able to present the necessary credentials and certification and all these action items included in the contract or agreement would assure quality.  
Startup entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly.

For any Legal and Accounting support, Happy to help you, let us talk at Wazzeer.

 
0

Business Formation, Business Registration, Contracts and Agreements, Licenses, TAXATION
Bitcoin is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin can be considered to be cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence. While there are or have been at least 110 other digital currencies, Bitcoin accounts for 77% of the market value of all digital currencies and an even higher percentage of digital currency users (credits to Pantera capital). This article will help entrepreneurs who dream to start a Bitcoin Startup in India. Here are the rules and regulations that a Bitcoin Startup must follow:
  1. Business Registration: You can set up such business as a PVT. LTD. Or LLP or OPC company.
  1. KYC Norms: KYC Norms are the norms set by the RBI that require banks to continuously monitor their customers’ transactions.
  1. Abide by the principal laws concerning Bitcoin:
    1. The Constitution of India, 1950
    2. The Foreign Exchange Management Act, 1999 (FEMA)
    3. The Reserve Bank of India Act, 1934 (RBI Act)
    4. The Coinage Act, 1906 (Coinage Act)
    5. The Securities Contracts (Regulation) Act, 1956 (SCRA)
    6. The Sale of Goods Act, 1930 (Sale of Goods Act)
    7. The Payment and Settlement Systems Act, 2007 (Payment Act)
    8. Indian Contract Act, 1872 (Contract Act)
  1. Cross border transfer of Bitcoin: FEMA regulates all inbound and outbound foreign exchange related transactions, in effect regulating the capital flows coming into and moving out of the country. 
  1. Taxation of Bitcoin: In India, taxes are levied either by the central and the state governments. Taxes may be on income or expenditure. When taxation is on income, it may be on Bitcoin representing such income. On expenditure meaning cost of acquiring Bitcoin, such as Central Sales Tax, Value-Added Tax or Service Tax.
  1. Income Tax Taxation of income: In India income is governed by the provisions of the Income Tax Act, 1961 (ITA). Under the ITA, residents are subject to tax in India on their worldwide income, whereas non-residents are taxed only on income sourced in India.
  1. Central Sales Tax / Value Added Tax: For a Bitcoin transaction to be taxed under the CST Act, there should be a sale.
  1. Service Tax: Service tax is levied by the central government at 12.36% on all services provided in India except certain specified services. Service providers can take credit for service tax paid on input services utilized and for excise duty paid on inputs and capital goods (barring certain specified inputs). Services provided outside India are not subject to service tax in India. Typically, services are provided in India if the service recipient is in India. The 2015 Budget proposes to increase the rate of service tax to from 12.36% (inclusive of cesses) to 14%.
  1. Trademark: Trademark protection for the word marks that include the term Bitcoin, and various Bitcoin logos is essential for financial institutions dealing in Bitcoin transactions and online payment systems. Bitcoin platforms / Bitcoin exchanges represent marks with various visually or phonetically similar Bitcoin marks, by doing so you can trademark.
  1. Patent: Under Indian patent law, a mathematical or business method or a computer program per se or algorithms are not inventions and are hence not patentable in India.
  1. Copyright: Bitcoin is protocol and software that are published openly and any developer around the world can review the code or make their own modified version of the Bitcoin software. No exclusivity is generally claimed in open source software. Hence, it cannot be copyrighted.
  1. Privacy Policy: Abide by The IT Act, that protects items of sensitive personal data or information (SPDI).
  1. Terms of service: You are required to have the Terms of services document in place, that has all the required information about services like Age verification and other rules.
  1. FDI Regulations: Companies which only provide online services i.e.., Bitcoin may be categorized either under the automatic category or under the category of a non-banking financial services company.
  1. International criminal law: Due to financial security issues and to avoid cyber attacks, it is important that companies pay due considerations while doing business on international soil.
  For any Legal and Accounting support, Happy to help you, let us talk
0

Business Registration, E-commerce Taxation, Start up Lessons, TAXATION
If you want to do business on Flipkart then you need to register, either yourself or your business, and become a Flipkart Seller by signing on with Flipkart. The process is easy and can be started from Flipkart Seller homepage. You can signup as a Flipkart seller by providing information about business and product that you want to sell on flipkart. This information will be verified by flipkart during the registration process.


Some of the details that must be provided and verified during the Flipkart Seller registration process include:
  • Name
  • Email address
  • Phone number
  • Pickup address / business address
  • Categories of product the business is interested in selling through Flipkart
  • Business registration documents
  • Tax registration documents
Business Registration
Your business must be registered in order for you to become the Flipkart Seller by completing Flipkart seller registration process, because while registering yourself you will need to submit documents related to business registration. These documents depend on the type of business registration you have done. Sole proprietorship is not advisable for becoming Flipkart seller as sole proprietorship business does not offer limited liability protection, is not easily transferable, cannot have investors or partners, not very scalable and has limited capacity to obtain bank loans. Becoming a Flipkart Seller  as a Private Limited Company is one of the most preferable methods of becoming a Flipkart Seller as it provides limited liability protection to promoters, separate legal entity, easy transferability, ability to take on investors or partners and quickly scale-up operations. The following documents must be submitted for a Private Limited Company:

Identity Proof
  • Copy of Certificate of Incorporation of Private Limited Company
  • Copy of Memorandum of Association
  • Company PAN Card
Address Proof
  • Company Telephone bill (Fixed line)
  • Company Electricity bill
  • Lease or rental agreement
Tax Registration Once you have decided and registered your business entity, you need to file for tax registration and also open a bank account in the name of the business.

Registration Required
  • PAN – PAN Card of the individual or private limited company or partnership
  • TIN – TIN Number is also known as VAT Number / Sales Tax Number / CST Number in the name of business
  • TAN – TAN is required for Tax Deduction at Source (TDS) ? in the name of business
  • Bank account name
  • Bank account number
  • Bank IFSC code
  • Business name
Starting to sell on Flipkart
Once you have submitted the information and documents with Flipkart to become the Flipkart seller, and it is verified by them, the business can commence selling of its products on Flipkart.



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Business Formation, Business Registration
Registration Process for Shops is governed by Shops and Establishments Act, enacted by every state in India to regulate conditions of work, and to provide for regulation of the employers and rights of the employees in un-organized sector of employment and other establishments. Procedure to get Shops and Establishments Registration done Firstly you need to apply for trade license by filling application form online/offline, and then you will get an acknowledgement letter which you need to submit back to the Labour department. After submission an inspection will be made at the place of business by Government authority, here the authority decides the Government fees based on the number of employees you have. The process moves forward after the payment of government fees is made, following which you will get your Shops and Establishments registration certificate.   The documents required for Shops and Establishments Registration Certificate

  • Rental Agreement
  • Partnership deed/ certificate of incorporation
  • Latest property tax paid receipt
  • Address proof of directors
  • PAN of the entity
  • Consent letter from the owner of place of business

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Business Formation, Business Registration


This article talks about different entity options to register a business in India, starting from advantages to regulations to costs are detailed out. Majorly, there are 5 types of entities that can be registered while starting up a new business, these are defined in Companies Act, 2013:
  1. Sole Proprietorship
  2. Partnership Firm
  3. One Person Company
  4. Limited Liability Partnership
  5. Private Limited Company
Sole Proprietorship
A sole proprietorship is a business that is owned and managed by a single person. It is very popular among the unorganized sector, particularly small traders and merchants. There is no such thing called registration, Proprietorship recognized by other registration. Liability of the proprietor is unlimited and the firm cannot have continuous existence. It should ideally only be considered by small merchants and traders

Important registrations:
  • Professional Tax Registration
  • GST Registration

Partnership Firm
A simple partnership firm is similar to sole proprietorship for all practical purposes. A partnership firm also requires all the registrations required by sole proprietorship firms. Partnership firms can be either registered with the registrar or remain unregistered. A pan card has to be obtained from the firm and the liability of the partners is unlimited whereas the firm cannot have continuous existence.

Important registrations:
  • Professional Tax Registration
  • GST Registration

One Person Company (OPC)
OPC is a recently introduced improvement on sole proprietorship firm registration. This gives the promoter an invaluable advantage of limited liability & the company can have continuous existence. OPC has to be incorporated through Ministry of Corporate Affairs. Not even an audited annual returns need to be submitted to MCA. The company can nominate any other person as a director without executive powers. The service charge for this service ranges from Rs. 5000/- to Rs 12000/-



Limited Liability Partnership (LLP)
LLP introduced in 2008, which is an improvement over the general partnership. This gives promoters an invaluable advantage of limited liability & the company can have continuous existence. The company has to be incorporated through Ministry of Corporate Affairs. Not even an audited annual returns need to be submitted to MCA. The service charge for this service ranges from Rs. 6000/- to Rs 14000/-



Private Limited Company
It is the most popular legal structure for business and allows outside funding and also employee stock options. More stringent compliance measures to be followed, hence more credibility. The company needs to appoint an auditor and the audited financial statements are to be submitted to MCA annually. The company is eligible to issue debentures and convertible debentures. The service charge ranges from Rs.7000/- to Rs.15500/-



Company incorporation is streamlined with the introduction of INC-29:

From May-2015, company incorporation can be divided into 2 broad steps
  • Obtaining Digital Signature Certificate
  • Preparing and submitting INC-29
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Government Fees for various types of companies
  • One Person Company Rs.6850/-
  • Limited Liability Partnership Rs.3167/-
  • Private Limited Company Rs.7800/-

Documents Required for INC-29
  • Director Identification Number (DIN)
  • Memorandum of Association (MOA)
  • Articles of Association (AOA)
  • Affidavit and declaration by first Subscribers and Directors.
  • Proof for Registered Office Address. Rental Agreement / Sale Deed.
  • Copies of a utility bill of the registered office address that are not older than 2 months.
  • If the proposed company name is a filed or registered trademark, then NOC from the trademark applicant or owner must be attached.


Start-up process entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly. For any Legal and Accounting support, Happy to help you, let us talk!
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