When entrepreneurs want to start their online business, they are always confused with the one question i.e “Why i have to register my startup with the government legally in the starting”. So here we give you 10 simplified reasons to register your startup with the government in India before starting.
- Business Current Bank Account – If you are dealing in the starting with your personal saving bank account with the business transaction then just leave the saving bank account and open a business current bank account on the Firm/Company Name which is required always registration of your startup in India with some relevant certification on the Firm/Company name as per the RBI Compliance.
- Invoice and Billing- whether you are running an online business or offline business. You have to always issue the invoice to your clients or customer on the company or firm name. So for that, you have to require a registration number which you can mention on the invoice. For Ex – in the Private Limited Company you can Checkout the CIN Number or In the Sole Proprietorship Firm, you can checkout the TIN Number or Service Tax Number.
- Tie up Agreements – you are a tech startup or ecommerce marketplace or any other type startup. You have to always sign some tie up agreement with the vendors, suppliers or alliance partners or affiliates on company or firm name. So this is required your registered company or startup name.
- Payment Gateway – Internet based service or product business always require business payment gateways for the receiving money instantly from the customer via cards/netbanking/wallets. Payment gateways companies require the registration certificate as per the RBI Compliance on the business name.They also prepare an agreement between the payment gateway company and client’s company name.
- Internship Certification – Bootstrapped online startups always hire the interns instead of the employees due to cost. They are saving the operational cost by paying the stipend and certification to the super interns but for the issue a proper certification, they have to mention their registered company name and details which are not possible without the legal registration of the company.
- Trust – Trust is the most important factors in the online business space because your clients are not known your startups personally. So you have to always the register your startup legally and show them your business details in the government database like MCA(Ministry of Corporate Affairs) Company name search.
- Freelancer Agreements – a Startup have to always hire the best freelancer for the website development or any other small task because they cannot afford the third party companies in the starting. In that case for the smooth flow of the work you have to always create a freelancer agreement where you have to mention about the Non Disclosure of the project,company name and other terms and conditions. So on the later stage for any legal hurdles you have to always create the agreement on the registered company name.
- Startup Competition – These days lot of the startup competition held by the IIT ECells or Incubators or Accelerators or Colleges where the winner won the funding and Organizer required serious startup which is registered a legal entity.
- VC Funding – Startups always looking for the funding and now traditional funding concept is changed from Banks to VC or Angels. Startups have to issue the shares to the investors for the funding which is always required a private limited company.
- Banks Loans – Some Entrepreneurs wants control on their startup and they prefer the traditional bank loans. Banks always required the projection reports & Income tax returns on the registered firm name.
So these are the above 10 possible reasons where you have to always require registering your startup legally with the government of India. Registration means not by just a Private Limited Company in india, you can start with the simple Sole proprietorship Firm or Partnership Firm in the starting.
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