How to Start Software Company in India?

  • September 25, 2019
  • 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. You too can be the part of that economic rise by establishing your own Software company startup.  

But, what does it take to start a software company? Are the legal requirements easy to follow? Are the costs involved too high? We are going to answer each of those questions and more through this Software company startup guide. So read on and prepare yourself.

What does it take to start a software company?

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.

Steps to start software company startup

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

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 1: 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.

  1. 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.

  1. 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.

  1. 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 2: Decide the 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 of the software company startup. 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 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:
    1. The problem your startup is trying to solve
    2. The solution your startup is providing to tackle the problem
    3. The uniqueness of your solution
    4. Your revenue stream
  4. 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.
  5. Agree to the conditions put forward.

Cost of startup a software company

There are two types of cost involved when starting a software company:

  1. Technical Cost: Your software company startup’s technical cost depends upon your product. It’s  worth remembering that when it comes to software development, the costs are not only involved in coding, but also through various stages like:
    1. Requirement analysis
    2. Design
    3. Development
    4. Testing
    5. Maintenance

So, for your startup, plan things accordingly.

  1. Legal Costs: There are only two legal requirements to start the software and as such, there are only two costs involved:
    1. Cost of Company Registration: INR 7,999/-
    2. Cost of Startup registration: INR 6,999/-

Once you’ve covered all the costs, you’re now ready to be the part of India’s technical renaissance and be the kings of the future.

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