To establish a software company, one must adhere to a set of
regulations and guidelines. In India, the current constitutional and business
laws stem from those established during the British era. As per the 'New
Companies Act 2013', all businesses in India must be registered.
Define Software company?
A software company refers to a business entity that
specializes in creating and distributing software products through various
activities such as product development, technology innovation, and product
distribution. This type of company serves as a crucial component of the
technology industry, aiding in team collaboration and communication.
What are the categories for registering a Software
Company in India
In India, software companies can be registered under two
main categories:
- Development or product-based software companies
- Consulting or service-based software companies.
These categories reflect the primary focus of the company's operations
and services provided to customers.
Services Offered by an Indian Software Company
Depending on their experience and target market, an Indian
software company may provide a wide range of services. Following are some of
the most typical services offered by software companies in India:
1) Software Development services
2) Cloud computing services
3) IT Consulting services
4) Big Data Analytics services
5) Cybersecurity Services
6) Digital Marketing Services
7) E-commerce solutions
8) Mobile App Development services
9) Software Training and Education
10) Enterprise Resource Planning (ERP)
What is the process for registering a software startup
company in India?
Below are the steps to register a startup software company
in India:
Step 1: Director Identification Number (DIN).
To incorporate the
company, all documents need to be digitally signed by an authorized person. For
Limited Limited Partnership, all designated partners must also have a
Designated Partner Identification Number (DPIN). To obtain a DIN/DPIN, the
customer must submit the e-Form DIR-3. If the customer already has a DIN, it
can be used as the DPIN.
The following documents are required to obtain a DIN:
A. Any one of the following identity proofs:
- PAN Card
- Driving License
- Passport
- Voter ID Card
- Other relevant documents.
B. Any one of the following documents can be used as
proof of residence
- Driving License
- Passport
- Voter ID card
- Telephone bill
- Ration card
- Electricity Bill
- Bank Statement
Step 2: Digital Certificate (DSC)
Digital Certificate (DSC) must be obtained. The DSC serves
as the digital signature certificate for the proposed directors of the company.
To ensure security, the DSC will be in electronic form and used to authenticate
electronically filed documents. All filings must be done using digital
signatures of authorized individuals. It is important to note that the DSC can
only be issued by a Certifying Authority that has been granted a license to
issue DSCs.
Step 3: Registering a company involves reserving a company
name.
Once a Director
Identification Number (DIN) has been obtained, the company can apply for a name
from a list of 5-6 options. If the desired name is not available, the company
may suggest a new name. It is mandatory for the company to choose a name that
includes the name of its first director and the nature of its operations. After
submitting the application along with form 1-A on the official website of the
concerned department, the company can proceed with the incorporation process.
Opening a current account is also required after the successful incorporation
and can be done in any bank. To open the account, the owner must furnish a copy
of the Memorandum of Association and Certificate of Incorporation. It is
important to note that reserving a company name is a crucial step in the
registration process as it provides a unique identity to the company, setting
it apart from other firms.
Factors to Considering Before Starting A Software
Business in India
Here are key considerations you should keep in mind
before setting up a software company in India:
1) Legal structure: Determine the legal structure of your
company, such as a Private Limited Company, Public Limited Company, Partnership
firm, or Limited Liability Partnership (LLP), which would be suitable for your
business.
2) Registration and compliance: Register your company with
the Registrar of Companies (ROC), and obtain necessary business licenses and
permits such as Goods and Services Tax (GST) registration, Import-Export Code
(IEC) registration, and other industry-specific licenses.
3) Capital requirements: Evaluate the financial resources
required for setting up the business, including the initial capital, operating
costs, and salaries for employees. Decide how you will fund the business, such
as self-funding, venture capital, or bank loans.
4) Infrastructure: Decide on the location for your office
and determine the infrastructure requirements, such as office space, furniture,
equipment, and communication facilities.
5) Talent acquisition: India has a large pool of talented
software developers and engineers. However, recruiting skilled employees can be
a challenge. Develop a recruitment strategy to attract and retain the best
talent.
6) Intellectual property rights: Protect your intellectual
property by registering trademarks, patents, and copyrights.
7) Taxation: Understand the tax laws applicable to your
business, such as corporate tax, service tax, and Value Added Tax (VAT).
8) Market competition: Study the market competition,
including the market size, growth potential, and competition from existing
players in the industry. Create a unique selling proposition (USP) to set your
company out from the competition.
9) Technology infrastructure: Ensure that your company has
access to the latest technology infrastructure, such as high-speed internet,
software licenses, and cloud computing services.
10) Risk management: Develop a risk management strategy to
mitigate potential risks, such as data breaches, cyber-attacks, and legal
disputes.
Conclusion
The presence of numerous forms containing technical
information can be overwhelming, leading to confusion and anxiety due to a lack
of expertise in the subject matter. This is why it is imperative to seek the
assistance of a chartered accountant or a company secretary to certify the
final forms of incorporation. They possess extensive training in the procedures
and are familiar with all the rules and regulations. To ensure the proper
incorporation of your company, it is essential to approach a professional with
hands-on experience and knowledge.
