Registration Process to Start a Software Company in India

  • October 11, 2023
  • Registrationwala
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India, with a population of 1.35 billion, has seen a surge of several in-house software companies. Consequently, the IT sector in the country is responsible for generating the most economic growth. In the FY2022, the industry crossed $200 Billion in total revenue. You too can be the part of that economic rise by establishing your own Software company startup.

Although starting a software company can be exciting, it can also be challenging due to the legal complexities and procedures involved. It's essential to understand the legal framework and regulatory procedures for running a software company. The Companies Act, 2013 has laid down the legal framework within which companies operate. Below a guide to start a software company is shared.

What is a Software Company?

A software company is a business that specializes in creating products through product development, technology, and distribution. Its primary focus is to develop items that people will find useful. Much like an IT business, software companies also play a crucial role in facilitating team collaboration and communication.

The services provided by a software businesses in India are as follows:

  1. ERP Solutions
  2. Application Development
  3. Testing and Quality assurance Services
  4. Outsourcing
  5. Business Solution
  6. Database Migration Services
  7. Programming Services

Before going to the process, you should answer the 4 key questions about your startup company

1. What is the problem your startup is trying to solve?

Every startup has to provide a solution to a relevant problem. Think, categorize and then put on paper. Explain in 150 words about the problem your startup is trying to solve.

2. How is your startup solving the problem?

The solution that your startup provides should match exactly with the problem you’ve explained in the previous question. Write 150 words about the solution.

3. How is the solution provided by your startup unique?

Every startup should have a USP. There are many companies, who move forward with startup registration without a single thought about their uniqueness. Don’t be among many, be the one who is unique. You have to assert your solution’s uniqueness in 150 words.

How is your startup going to make revenue? It’s the obvious and the most apparent question that you need to answer in 150 words. Once you’ve answered those questions, keep the sheet aside. They are going to be important later.

Step by Step Process to Start a Software Company 

Once you have an innovative idea for a software business registration, you cannot wait. You have to put it into action and give it structure before someone will implement it.

Step 1: Decide the Product You Want to Market

A software company is not started on a whim. There is a fair bit of business planning involved with it. First, you need to therefore analyze the customer pain points and come up with a software idea that hits those points. Because if it doesn’t, you aren’t particularly creating a product that’s helping customers, but you’re rather making white noise. So, decide the product that people can respond to.

Step 2: Decide a Name of Your Startup

You should be careful when deciding your Software company startup name. It acts as your brand and if it’s tame, no one will remember it. Therefore, make it unique, memorable, and be as wildly creative as possible. Even if it turns out extremely random, it’s acceptable. Then, verify its uniqueness with company name search.

Step 3: Gather the Documents Required for Company Registration

Collect, organize and digitally sign the following software company startup requirements:

  1. ID proof of the directors and members of the company
  2. Photo IDs of the directors and members of the company
  3. Address proofs of the directors and members of the company
  4. PAN card of the directors
  5. Aadhar Card of the Directors
  6. Address proof of the registered office
  7. Digital Signature Certificate to digitally sign the above documents
  8. Director Identification Number

Step 4: Reserve the Name of the Company

Once you’ve decided a good name, you can’t wait for it to be snatched by someone else. Reserve it by filing a Reserve Unique Name application (RUN) to the MCA.

Step 5: Draft a Memorandum of Association

A Memorandum of association is an Info-sheet which details the objective of the company. Alongside objective, it also contains details about the directors, paid-up capital, members, subscriptions, profit sharing percentage, office address and more.

The details all might look a bit bulky, and they are. Therefore, consult with a good company secretary to draft the MOA.

Step 6: Draft an Articles of Association

The Articles of Association (AOA) establishes the policies for the software company registration which thet have to follow. These rules and regulations regulate how each individual associated with the business has to conduct himself/herself.

Step 7: File the Application to Incorporate Your Software Company

 Log on to the MCA website and file the application for Private limited company incorporation using the SPICE form. Upon submission, the Registrar of Companies will process the application. If there are no issues, he/she will issue you a certificate of incorporation.

Step 8: Register Your Software Company as a Startup

Go to the Startup India website. Register your account. You’ll receive a username and a password. Once you’re logged in, the process of startup software company registration begins. For that procedure to be a success, get the following documents:

  1. A recommendation letter from an established incubator.
  2. Certificate of Incorporation
  3. Description of your business. It’s here that you’ll be questions about:
  4. The problem your startup is trying to solve
  5. The solution your startup is providing to tackle the problem
  6. The uniqueness of your solution
  7. Your revenue stream

Decide whether or not you want to avail tax benefits. Our recommendation is that you should. For a startup, tax benefits help the business stay afloat if there are missteps.Agree to the conditions put forward.

Government is Supporting Software Companies

India is a land of several opportunities and we have the drive to capture every one of them. That’s the reason that the government was so inclined to introduce the Startup India initiative. A movement to promote budding entrepreneurs, it has helped many entrepreneurs to easily enter the market without much hassle. As long as your software company idea is “innovative”, startup India will make things easy for you.

So, what does it take to start a software company in India? Nothing more than your own drive to start one. If you have the drive, you can move forward with the legal procedure of startup registration we discuss in the next section.

Legal Formalities to Setup a Software Company

Director Identification Number (DIN): The Directors are in the top management of the company. A Director can not be a shareholder and he/she can be appoint on salaried basis. The minimum Directors should be two and maximum eight. The number of members should not be more than the set numbers. So, apply for DIN and remember each director must have separate identification number.

Digital Signature Certificate: As per the Information Technology Act, 2000, a company must have a valid digital signature on the documents submitted electronically. This make sure the authenticity and security of the documents that are filed digitally.

Application for Certificate of Incorporation: To get the certificate of incorporation, first you have to draft a Memorandum of Association including a company’s first direction and operations. This application must be submit with the form 1A at the official website of the concerned department.

Conclusion

To conclude, incorporating a software company involves filling out many technical forms, which can be confusing and stressful. To ensure that everything is done correctly, it is advisable to take help from a professional. A trained professional knows the rules and regulations inside out. 

Therefore, it is important to approach a professional who has the necessary hands-on experience and expertise. If you are planning to start a company and need guidance or assistance, feel free to get in touch with us. We at Registrationwala, has a team of experts who will ensure that your company is set up seamlessly and without any interruptions.


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