{"id":50798,"date":"2022-11-17T11:44:32","date_gmt":"2022-11-17T06:14:32","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=50798"},"modified":"2022-11-17T11:44:33","modified_gmt":"2022-11-17T06:14:33","slug":"how-to-start-a-software-company-in-india-a-complete-analysis","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/how-to-start-a-software-company-in-india-a-complete-analysis\/","title":{"rendered":"How to Start a Software Company in India? &#8211; A Complete Analysis"},"content":{"rendered":"\n<p>India\nhas seen a burgeoning growth in Software Companies in the past decade thanks to\nthe start-up culture. The Indian start-up ecosystem is the third largest in the\nworld and this trend shows no sign of dwindling down, as is clear from the\nnumber of start-ups steadily gaining &#8220;unicorn&#8221; status. Software companies\ngenerated up to $194 Billion in revenue and contributed to 8 % of India\u2019s <strong>GDP<\/strong><sup><a class=\"text-primary\" href=\"https:\/\/en.wikipedia.org\/wiki\/Gross_domestic_product\"><strong>[1]<\/strong><\/a><\/sup> in\nthe financial year 2021.<\/p>\n\n\n\n<p>India\nprovides a conducive environment for creating and establishing a Software\nCompany, with the government providing a plethora of schemes and funding offers\nfor existing or new businesses in the IT sector. However, the same involves\nalso meeting a multitude of legal and regulatory requirements and procedures.\nThis article aims to analyze the process involved in creating a software\ncompany, focusing more on statutory and regulatory compliances, registrations\nand other processes involved.<\/p>\n\n\n\n<p><strong>Types of Software Companies<\/strong><\/p>\n\n\n\n<p>There\nare majorly two types of software companies:<\/p>\n\n\n\n<ol><li>Product or development-based software\ncompanies which specialize in creating software products for customer usage,\nlike Google, Amazon, and Microsoft. <\/li><li>Services or consulting-based software\ncompanies specialize in providing, inter alia, business consulting, outsourcing\nservices, and engineering services like Infosys, TCS, and Wipro.<\/li><\/ol>\n\n\n\n<p><strong>Processes involved in setting up a Software Company\nin India<\/strong><\/p>\n\n\n\n<p>Once\nthe decision is made as to the niche area the software company would be\ncarrying on its business in, it is requisite to follow some basic processes to\nensure the smooth creation and running of the company. <\/p>\n\n\n\n<ul><li><strong>Type of Business<\/strong><\/li><\/ul>\n\n\n\n<p>The\nfirst step involves deciding the type of software products or services, the\ntargeted audience and how the product or service would function. Preparing a\ncomprehensive business plan delineating the objects, guidelines, mode of functioning,\ngrowth plans, funding plans, staffing and marketing strategy, and other\nrequisite information is helpful.<\/p>\n\n\n\n<ul><li><strong>Choosing The Type Of Entity<\/strong><\/li><\/ul>\n\n\n\n<p>Depending\non the requirement and objectives of the company and keeping in mind the legal implications,\nowners of the company ought to decide whether the company would be an LLP,\nprivate limited company or sole proprietorship.<\/p>\n\n\n\n<ul><li><strong>Funding<\/strong><\/li><\/ul>\n\n\n\n<p>Funding\nis a major part of running any business. Entrepreneurs looking to start a\nsoftware company ought to decide how they would generate funds and attract\ninvestors. One can go the traditional route of loans through banks or by\napproaching angel investors or venture capital firms.<\/p>\n\n\n\n<ul><li><strong>Registered Office<\/strong><\/li><\/ul>\n\n\n\n<p>Having\na registered office address is imperative for any company. Companies can choose\nthe location and space according to the size and requirements of the company\nand apply to have the office registered with the RoC.<\/p>\n\n\n\n<ul><li><strong>Registration<\/strong><\/li><\/ul>\n\n\n\n<p>There\nare many processes involved before a company can be registered in India. The\nMinistry of Corporate Affairs (MCA) website provides the medium for getting\nregistered with the Registrar of Companies (RoC).<\/p>\n\n\n\n<ol><li>All the directors and shareholders subscribed to the MOA and AOA are required to apply for digital signature certificates (DSC) to ensure that all required documents are legally attested. DSCs are imperative in ensuring a secure way to submit documents electronically in the registration process and are a prerequisite to filling out forms on the MCA website. Companies can acquire DSCs from agencies approved by the Controller of Certification Agencies (CCA). A DSC is generally valid for a period of two years.<\/li><li>Every proposed director of the company is required to obtain a DIN (Director Identification Number) by filling out the DIR-3 form on the MCA website.<\/li><li>Submission of relevant documents containing the Memorandum of Association (MOA), Articles of Association (AOA), and other relevant details, along with legal forms, are to be made to the RoC. The MOA contains all relevant information regarding the objectives of the company and its relationship with its shareholders. The AOA contains the rules and regulations for the internal management of the company.<\/li><li>The next step lies in finding a distinctive name for the company and having the name registered with the Registrar of Companies (RoC). The company should reserve its name by providing two proposed names in <strong><em>Part-A of the SPICe+ form<\/em><\/strong>.<\/li><li>The next step is applying for a <strong><em>Corporate Identification Number (CIN).<\/em><\/strong> After deciding whether the company is, inter alia, a sole proprietorship, private limited company or LLP, one can apply for the CIN, which is provided after registration and approval of the RoC. This is a unique identification number which can be used to monitor the activities of the company.<\/li><li>The last step involves applying for PAN and TAN for the company.<\/li><li>Once the above submissions are approved after verification, one can apply for a certificate of incorporation, and it is provided along with the PAN and TAN of the company.<\/li><\/ol>\n\n\n\n<ul><li><strong>Licenses<\/strong><\/li><\/ul>\n\n\n\n<p>After\nobtaining the requisite registrations, it is also important to obtain certain\nlicenses. Obtaining Trademarks, Patent Registrations, Software Licenses, STPI\nare advisable. The STPI licenses are for software start-ups which provides them\nwith a plethora of benefits and facilities like, inter alia, tax exemption for\nfive years, exemption on export and import duty for products for a certain\nperiod, and obtaining office space at lower rates.<\/p>\n\n\n\n<ul><li><strong>Register As An Employer<\/strong><\/li><\/ul>\n\n\n\n<p>The\ncompany owners need to register themselves as employers with the particular\nState Employment Department if the company wishes to hire employees.<\/p>\n\n\n\n<ul><li><strong>Register With A Software Technology\nPark<\/strong><\/li><\/ul>\n\n\n\n<p>Companies\ncan opt to register with Software Technology Park to receive tax benefits and\nvarious other incentives from the government.<\/p>\n\n\n\n<ul><li><strong>Strong Team<\/strong><\/li><\/ul>\n\n\n\n<p>To\nrun a software company, it is imperative to have an efficient tech team with\ntalented coders and engineers, a good business team and a good marketing team, design\nprofessionals, and HR who can cater to various aspects of the running of the\ncompany. It is always prudent to have a robust and strong team of lawyers and\nadvisors backing a software company to ensure smooth functioning. <\/p>\n\n\n\n<ul><li><strong>Business Software<\/strong><\/li><\/ul>\n\n\n\n<p>Running\na software company, one requires requisite software which can help track and\nmonitor the functions, sales, HR activities, finances, and major projects and\nautomate various operational functions. Having effective CRM software can help\noptimize business functions and facilitate the smooth functioning of the\nbusiness.<\/p>\n\n\n\n<ul><li><strong>Business Insurance<\/strong><\/li><\/ul>\n\n\n\n<p>Running\na business always comes with its set of risks and liabilities, which can be\ncaused by seen and unforeseen circumstances. It is always prudent to have IT\nbusiness insurance to protect the company from potential loss, litigations, and\nother liabilities. Other insurances which software companies should look into\nare professional liability insurance or commercial property insurance which can\nprotect against loss caused to property or any other similar liability or litigations\nfrom clients. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h2>\n\n\n\n<p>India is steadily becoming the hub of major revenue-generating software companies and the rising of the start-up culture is only fueling the development further. Software Companies are a major source of revenue for the country and create lakhs of jobs everywhere. It is a lucrative <strong><a class=\"text-primary\" href=\"https:\/\/corpbiz.io\/startup-india-registration\">business setup for entrepreneurs<\/a><\/strong> and India provides a conducive environment for both the employers and employees of these companies to flourish. Setting up and running a software company is an interesting but daunting task and entrepreneurs should, amongst other things, should be mindful of the legal and regulatory requirements and various other compliances involved for the smooth running of the company. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read Our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/registration-of-software-as-medical-device-in-india\/\">Registration of Software as Medical Device in India<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>India has seen a burgeoning growth in Software Companies in the past decade thanks to the start-up culture. The Indian start-up ecosystem is the third largest in the world and this trend shows no sign of dwindling down, as is clear from the number of start-ups steadily gaining &#8220;unicorn&#8221; status. Software companies generated up to [&hellip;]<\/p>\n","protected":false},"author":47,"featured_media":50799,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[968],"tags":[2869],"acf":{"service_id":"250"},"authorName":"Sherin Jose","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/11\/MicrosoftTeams-image-4-e1668575330329.jpg","authorDescription":"Sherin has degrees in Law and English Literature from the University of Delhi. She is adept at legal research and writing and enjoys discussing and analysing important legal developments. Her primary interests lie in Corporate, FinTech and IPR Law and she is always on the lookout for exploring new developments in the area. She is an avid reader who loves classics and contemporary fiction. She likes to travel, bake and obsess over cat videos in her free time.","postViews":3089,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/50798"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/47"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=50798"}],"version-history":[{"count":2,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/50798\/revisions"}],"predecessor-version":[{"id":50801,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/50798\/revisions\/50801"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/50799"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=50798"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=50798"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=50798"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}