India has witnessed an expansion in the establishment of new software companies. Due the tech-movement throughout the world, there are more and more software firms in the market today. Setting up a software company may be very interesting but also could be challenging in some respects, because of the legal procedures and complexities. You could be in a hurry to build a path breaking software product, to get customers for it, to design out-of-the-box workstations, etc.
However, it’s always advised to first understand that the regulating statute applicable for the software companies under the New Companies Act, 2013. In this article we will be talking about how to register a private limited company in software field in India? We will also discuss the legal formalities to start a software company and do a company formation in India.
Basic steps for registering a software company in India
The first step to register your own software company is to identify a unique and descriptive name for your firm and then get it registered with the Registrar of Companies. After the name is registered, the next step is to get a Company Identification Number or CIN. Then the next step is to submit all the needed legal forms and documents before the Registrar of Companies (RoC). Please remember to be as descriptive in the submissions as possible. Make sure to include the name of all the shareholders, funds, the total amount of share capital and all the other important information. Post the verification and approval of your submitted documents, you would be legally owning your software company. The last step is to apply for a certificate of registration.
The legal procedures to set up a software company in India
The legal formalities for setting up a software company or company formation in Delhi requires two broad steps – one, the pre-registration procedure and the second is the post-registration process.
The pre-registration procedure includes the following steps:
- Get your Directors Identification Number or DIN: The first step for starting your software firm in India is identifying the directors. In an ideal situation, the number of directors have to be between two and eight, not more not less. It is mandatory for all the directors to have a separate DIN. The directors can get their DIN by giving their documents of identity proof such as Passport, PAN card, Voter’s ID and residence proof documents such as Ration card, EB bill, etc.
- Reserve and register a Company Name with the Registrar of Companies:For registering the intended company name for your new software firm, you are required to find a good and suitable company name to check if the name you prefer is available or not. In case it is not available, you might have to look for alternative names while keeping in mind the relevant MCA guidelines for the naming process.
- Apply for the Certificate of Incorporation: Next, you must apply for getting the Certificate of Incorporation. At this juncture, you have to draft a Memorandum of Association (MoU) while also including the firm’s first directions and operations thereof. For applying, you need to submit the duly-filled application along with the form 1A and upload it on the official website of the relevant department.
- Get your Digital Signature Certificate (DSC): According to the provisions of the Information Technology Act, 2000, a software company must mandatorily have a valid Digital Signatureon the documents that are submitted electronically. This also ensures the authenticity and also the security of the documents which are filed electronically.
Steps for setting up a software company
- The first step is to provide a brief description of your business; for example, the type of product, sector, target customers and the type of technology you would be using. You need to mention all details related to that particular software like how it is going to be developed and what is the supply to the market, etc.
- Then, you need to select the form of your company; for example, whether it is a sole proprietorship or private firm or a partnership. The main factor that determines the form of your company is the size of it, the range of company’s risk, the target market and the budget. You must plan as per your goal and decide if you would operate nationally or globally.
- Now, select your region and get relevant knowledge to update yourself regarding the business laws applicable in that perspective region.
- Register your software firm under ROC. When registering, it is mandatory to file an application to the same office where the head office is located.
- Select the place where you are thinking of setting up an office. Post getting the certificate from ROC, you can begin hiring employees for your new company.
- It is always recommended to register your company in the state or region Department of Employment for legal hiring and also for offering jobs. If you apply in one state, it would offer you to do the hiring from anywhere in India. But in case you do not register, then there might be problems in your hiring process.
- Lastly, you must register under Software Technology Parks India (STPI). This would help you to reap the entire legal benefits and other advantages like tax breaks, etc.
In case you need professional advice or assistance to carry on the legal procedure to form a software company, please get in touch at bc@intuitconsutlancy.com with us. We would be happy to help.
