A startup is a newly established business, usually small, started by 1 or a group of individuals. What differentiates it from other new businesses is that a startup offers a new product or service that is not being given elsewhere in the same way. The keyword is innovation. The business either develops a new product/ service or redevelops a current product/service into something better.
Startups are becoming very popular in India. In order to develop Indian economy and attract talented entrepreneurs, the Government of India, under the leadership of PM Narendra Modi, has started and promoted Startup India initiative to recognize and promote startups.
You must first incorporate your business as a Private Limited Company or a Partnership firm or a Limited Liability Partnership You have to follow all the normal procedures for registration of any business like obtaining the certificate of Incorporation/Partnership registration, PAN, and other required compliances.
Then the business must be registered as a startup. The entire process is simple and online. All you need to do is log on to the Startup India website and fill up the form with details of your business and upload certain documents.
Startups are exempted from income tax for 3 years. But to avail 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.
Government of India has launched a mobile app and a website for easy registration for startups. Anyone interested in setting up a startup can fill up a simple form on the website and upload certain documents. The entire process is completely online.
The government also provides lists of facilitators of patents and trademarks. They will provide high quality Intellectual Property Right Services including fast examination of patents at lower fees. The government will bear all facilitator fees and the startup will bear only the statutory fees. They will enjoy 80% reduction in cost of filing patents.
A 10,000 crore rupees fund is set-up by government to provide funds to the startups as venture capital. The government is also giving guarantee to the lenders to encourage banks and other financial institutions for providing venture capital.
Startups will be exempted from income tax for 3 years provided they get a certification from Inter-Ministerial Board (IMB).
Startups can apply for government tenders. They are exempted from the “prior experience/turnover” criteria applicable for normal companies answering to government tenders.
Seven new Research Parks will be set up to provide facilities to startups in the R&D sector
Various compliances have been simplified for startups to save time and money. Startups shall be allowed to self-certify compliance (through the Startup mobile app) with 9 labour and 3 environment laws (for list of white industries which are eligible under self-compliance – click here” )
People investing their capital gains in the venture funds setup by government will get exemption from capital gains. This will help startups to attract more investors.
After this plan, the startups will have an option to choose between the VCs, giving them the liberty to choose their investors.
In case of exit – A startup can close its business within 90 days from the date of application of winding up
Start it as an S corporation, unless you have to issue both common stock and preferred stock; in that case start it as a C corporation. And an S corporation can easily be converted later into a C corporation. LLCs are popular but can get overly complicated. Partnerships and sole proprietorships are to be avoided because of the potential personal liability to the owners of the business.
The standard answer to this is Delaware because of its well-developed corporate law. However, my answer is that it should be the state where the business is located, as this will save you some fees and complexities. You can always reincorporate later in Delaware.
As much as you can reasonably afford, and in an amount to at least carry you for 6-9 months with no income. What you will find is that it always takes you longer to get revenues, and that you will experience more expenses than you anticipated.
Whatever amount gets you funded. Don’t try to over-optimize on ownership. Get cash to grow your business and make your investors happy as well.
15-20%. Standard vesting for options is 4 years, with a one-year “cliff vesting” and monthly vesting after that. “Cliff vesting” in this context means the employee must be employed by the company for a minimum of one year before the employee earns any of the options.
This is difficult. First brainstorm with a bunch of different names. Then do a Google search to see what is already taken, and that will eliminate 95% of your choices. Make it easy to spell. Make it interesting. Don’t pick a nonsensical name where people won’t have a clue as to what you do (with all due respect to names like Google and Yahoo). Do a trademark/tradename search on the name, then make sure you can get the domain name.
Ideas are a dime a dozen. It’s the actual implementation of an idea that is more important. If it’s truly unique, get a patent for it (see www.uspto.gov). You may get some protection through copyright, trade secret programs, or NDAs, but not a lot.