1) Shop and Establishment Registration:

Every Business Establishments are required to obtain Shop and Establishment Registration under respective State Shop and Establishment Act and Rules within 30 days of registration.

This is a state specific mandatory registration for all the business and establishments. All types of firm has to obtain the Shop and Establishment Registration in every state wherever they have offices and establishments.

2) Professional Tax Registration – Employer & Employee

Every organization is required to obtain Professional Tax – Employer Registration (Enrolment Certificate) within 30 days of incorporation. This again is a state specific labour registration mandatory for all registered business whether you have any employees or not. This registration is subject to renewal every year after payment of prescribed fee. Delay in obtaining the registration will attract penalty to business on yearly basis.

Also, every organization who employs people with more than the specified limit of salary (this limit varies from State to State) has to obtain Professional Tax – Employee Registration (Registration Certificate), when they start employing people. For this purpose, the Partners / Designated Partners shall be treated as employees if they are drawing salary beyond the specified limits. Also, the employer must deduct the Professional Tax from the salary of employee and pay to the State Govt. on monthly basis.

3) Goods and Services Tax (GST) Registration

Every business with annual turnover exceeds Rs. 40 lakhs (Service providers 20 lakhs) is required to GST Registration under Goods and Services Tax (GST) Act and Rules.

It is not mandatory to obtain GST immediately after incorporation of the organization. The organization can obtain this registration as and when required.

4) Importer Exporter Code Registration

Importer Exporter Code (IEC) is a unique 10-digit code issued by the Director General of Foreign Trade (DGFT), Ministry of Commerce, Government of India.

Importer Exporter Code (IEC) is mandatory for export/import from/to India. No person or entity can make any import or export without IEC number. DGFT has recently introduced the facility of issuing Importer Exporter Code in electronic form (e-IEC).

If there is any change in the particulars of a company, changes in directors, change of address, an application has to be made to the Director General of Foreign Trade to effect such changes in the IEC Records/Certificate. Processing of would be done online and a digitally signed e-IEC would normally be issued/ e-mailed to the applicant within 2 working days on submission of all required particulars and documents.

5) MSME Registration

The term MSMEs stands for Micro, Small and Medium Enterprises. MSME Registration is also known Udyog Aadhar Registration.MSME refers to those business entities that are engaged either in manufacturing or services with investments in plant and machinery/equipment being limited to a particular limit.Any business organisation engaged in the manufacture or production of goods or engaged in any service can be registered as a MSME. It can be a Proprietorship, HUF, Association of Persons, Cooperative Society, Partnership Firm, Company, LLP or any other legal entity.

Micro, small and medium enterprises (MSMEs) are the largest contributors to our economic growth. They constitute over 90% of the total enterprises in most economies and are credited with generating the highest employment rates. In terms of value, the MSME sector accounts for about 45% of the manufacturing output and around 40% of the country’s total exports.

To facilitate the promotion, development and enhancement of the competitiveness of MSMEs, the Goverment of India has introduced various stimulus packages like cluster development, market development assistance, credit guarantee, financial assistance, International Cooperation Schemes, etc.

6) Provident Fund Registration

Provident Fund is a method of employee welfare measure to provide employees with lump sum payments at the time of exit from their place of employment. Under Provident Fund employer and employee contribute a defined amount every month and deposit to the employee account with Employers Provident Fund Organization (EPFO). Provident Fund Registration is mandatory for every establishments if the number of employees exceeds 20. The Registration is required to be obtained from Employers Provident Fund Organization (EPFO). In case the number of employees is less than 20, the establishment can obtain Provident Fund Registration voluntarily.

7) ESI Registration

Employee State Insurance or ESI is a scheme commenced by the Government of India to offer medical, monetary, and other advantages to workers. ESI is managed by an autonomous authority – Employee State Insurance Corporation – which lies under the jurisdiction of the Ministry of Labour and Employment. By law, any company that has more than 10 employees mandatorily needs to have ESI. In some states, the number of employees is 20. For employees earning more than ₹21,000 per month, including basic salaries and dearness allowance, the insurance is deducted from their pay. Also, taxpayers with a turnover of less than ₹1.5 crore can opt for the composition scheme to get rid of tedious GST formalities and pay GST at a fixed rate of turnover.

Post incorporation compliance for Pvt Ltd and OPC company:

1) Convening of first meeting of Board of Directors
A private limited company is required to hold a meeting of board of directors within a period of 30 (thirty) days from the date of incorporation of the company wherein certain agenda items like appointment of first statutory auditors, issuance of share certificate etc. are to be taken up by the company.

2) Appointment of Statutory Auditor

Another important compliance for a private limited company is to appoint an individual or a firm (who are eligible to be appointed as an auditor) as a statutory auditor of the company within 30 (thirty) days from the date of incorporation of the company in accordance with the applicable provisions of the Act.

3) Filing of form for Commencement of Business

A company cannot commence its business activities unless a declaration for commencement of business as per the provision of the Act, is filed within a period of 180 (One Hundred and Eighty) days from the date of incorporation of the company.

A private limited company shall not commence any business or exercise any borrowing powers unless such declaration is filed with the Registrar of Companies. In order to comply with this requirement, the company is required to open a bank account and initial subscribers are required to deposit the subscription monies in accordance with the shareholding ratio between the subscribers as mentioned in the memorandum of association of the company.

4) Issuance of share certificate and payment of stamp duty

A private limited company is required to deliver share certificates to the subscribers to the memorandum of association of the company within a period of two months from the date of incorporation.

The stamp duty on the share certificates must be paid within a period of 30 (thirty) days from the date of issuance of share certificates in accordance with the provisions of Indian Stamp Act, 1899, However, the procedure for payment of stamp duty is prescribed by the respective state governments.

Post incorporation compliance for LLP (Limited Liability Partnership):

1) LLP Agreement

Immediately after incorporation of the LLP, the Partners of a Limited Liability Partnership are required to execute an LLP Agreement and a copy has to be filed with the Registrar or Companies in LLP Form 3 with in 30 days of incorporation of LLP. LLP Agreement has to stamped as per Stamp Act of respective state where the LLP is registered.The delay in filing LLP agreement shall attract penalty of Rs.100.00 per day till the date of fling Form 3 with ROC

2) Opening Bank Account in LLP Name

After incorporation of the LLP, it is necessary to open a Current Account in the name of the LLP with any  Bank in India. All the transactions in the name of the LLP should be transacted through the LLP Bank Account only

Book Keeping and Legal compliances are very important in running any business efficiently and profitably. Hello Startupz provides services for accounting, HR and secretarial compliances.

Accounting 

a) Setting up of an accounting through Zoho.

b) Bookkeeping, on a regular basis

c) Periodic payments and returns of GST.

d) Periodic payments of Income Tax (TDS)

e) Periodic payment and returns of PT (Professional Tax), PF (Provident Fund) and ESI (Employee State Insurance) if applicable.

(f) Assisting the Statutory Auditors of the company with books of account & information.

 HR

a) Processing of payroll

b) Onboarding and exit management

c) Maintenance of Self Service Payroll portal

d) Leave, Income Tax, Provident Fund,ESI, Professional Tax management

Secretarial activities

a) Annual filing of Company

b) Annual filing of LLP

c) RBI Compliances

d) Share Capital Increase

f) Share purchase increase

g) Add/remove director or designated partner

h) Changing registered address of LLP/Company

i) Company or LLP name or activity change

j) Conversion of LLP to Pvt Ltd or Pvt Ltd to LLP

k) Winding up of LLP/Company.

l) ESOP

Due Diligence

Due diligence is the investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party or an act with a certain standard of care.

It can be a legal obligation, but the term will more commonly apply to voluntary investigations. A common example of due diligence in various industries is the process through which a potential acquirer evaluates a target company or its assets for an acquisition. The theory behind due diligence holds that performing this type of investigation contributes significantly to informed decision making by enhancing the amount and quality of information available to decision makers and by ensuring that this information is systematically used to deliberate on the decision at hand and all its costs, benefits, and risks.

Process:

• Submit your documents to run security, credential and reputation checks.
• We will analyse the projection and do a market opportunity assessment.
• After technical analysis, We will engage with you to assess the risk involved do.
• We will sit with investor expert panel and assess the key opportunities and risk (SWOT and GAP analysis).
• We will continuously evaluate the situation and strategically advice you on next actions.

How does due diligence work?

A company who looks to gain receive the decent return from funding round must conduct proactive and continuous due diligence. Continuous review, planning and correction every step of the way from interest to investment and even the day to day to management of investee company.

Categories of Due Diligence

General Due Diligence

Any individual can follow the process of due diligence. A person in his daily life can also adopt due diligence by planning for the day according to the weather/temperature, and deciding whether the transport will be regular or changed. He will also look and decide on the relevant factors

Due Diligence in investment

It helps an investor in finding out potential risks when investing. Analysing all the factors will make him invest in what is best for him

Due Diligence in business

If an individual/ company is planning to enter a partnership, merger, or purchase another business due diligence should be applied. This will give them a clear picture of the business’s current status, and they can make a correct decision

Due Diligence in negotiation

When entering an agreement all parties must put forward their understanding and expectations to safeguard everyone’s interest. This exercise is also a form of due diligence.

Types

Administrative:This helps an individual to keep track of various facilities/ units functioning under the company. This gives him a clear picture of the operational costs, number of employees, and an idea of the future costs to be incurred to meet and expand the company’s targets in case he purchases it.

Financial : It checks whether the financial details shown in the Confidentiality Information Memorandum are accurate.

Asset : This involves all information related to a fixed asset. The documents related to fixed assets like lease agreements for equipment, real estate deeds, mortgage, title policies, use permits, and all sales and purchases of significant capital equipment too are analysed.

Human Resources : It involves several labour laws and policies. Under this, an analysis is made of the total number of employees, current salaries, bonuses paid during the past 3 years, and years of service. HR policies regarding employee leaves, employee problems and grievances like wrongful termination, sexual harassment, discrimination, legal cases against current or former employees, any financial impact of such labour cases, employee health benefits, and insurance policies are also taken into account

Environmental : A company is expected to follow all major environment-related laws, so environmental audits are carried out on the properties owned or leased by the companies. Environmental due diligence is a major assessment issue. The following documents are required for this evaluation a)All environmental permits, licenses, and validations

b) Copies of notices and orders set by environmental protection agency (state) and local regulatory agencies.

It is also checked whether the company is precisely following the current rules and regulations regarding environmental protection.

TAX

Under this, the documents of tax liability, payment of taxes by the company, and their proper calculations are looked into. The status of any tax-related pending cases too is confirmed with the tax authorities, and documents of tax compliance and verification too are included.

Intellectual Property

Intellectual property (IP) is one of the company’s most valuable assets since they can use it to monetise their business. Under this due diligence, forms and documents related to copyright, trademark and brand names, patents and patent applications, any pending documents required to be cleared, and any pending cases regarding violation of intellectual property by or against the company have reviewed the findings documented.

Legal

It is a must. Under this, the following are examined and reviewed

• Copy of Memorandum and Article of Association
• Minutes of shareholder meetings (past 3 years)
• Minutes of Board meetings with an attendance sheet and notices (past 3 years)
• Copy of share certificates
• Copies of guarantees to which the company is a party
• Licensing or franchise agreements
• All the material contracts and loan agreements

Customer’s Due Diligence

This gives a close insight into the target company’s customer base. Under this, a list of top customer companies and of all the customers with their assets, service-related agreements and insurance policies covering assets and capitals, current credit policies, customer satisfaction points, and related reports (past 3 years), a list of customers lost (within 3 to 5 years) are closely examined.

Business Valuation

Business Valuation is the process of determining the “Economic Worth” of a Company based on its Business Model and external environment and supported with reasons and empirical evidence. In business valuation, variety of business valuation methods typically categorized into three core Valuation approaches are considered and Premium & Discounts applied based on standard & premise of valuation to arrive at the Business Valuation for different purposes.

Generally acceptable methodologies of valuation

There are broadly three approaches to valuation which need to be considered in any business valuation exercise. A number of business valuation models can thus be constructed that utilize various methods under the broad business valuation approaches. Most treatises and court decisions encourage the valuer to consider more than one method, which must be reconciled with each other to arrive at a value conclusion. Understanding of the internal resources and intellectual capital of the business being valued is as important as the economic, industrial and social environment.

Asset approach (NAV): Generally the Net Asset Value reflected in books do not usually include intangible assets enjoyed by the business and are also impacted by accounting policies which may be discretionary at times. NAV is not perceived as a true indicator of the fair business value. However, it is used to evaluate the entry barrier that exists in a business and is considered viable for companies having reached the mature or declining growth cycle and also for property and investment companies having strong asset base.
o Book value method: It is based on the balance sheet review of assets and liabilities;
o Replacement cost method – It is based on current set up cost of plant of a similar age, size and capacity;
o Liquidation value method – It is based on estimated realizable value of various assets.

o Discounted Cash Flow Method (DCF) – DCF expresses the present value of the business as a function of its future cash earnings capacity. In this method, the appraiser estimates the cash flows of any business after all operating expenses, taxes, and necessary investments in working capital and capital expenditure is being met. Valuing equity using the free cash flow to stockholders requires estimating only free cash flow to equity holders, after debt holders have been paid off.

o Capitalization of earning method – The capitalization method basically divides the business expected earnings by the so-called capitalization rate. The idea is that the business value is defined by the business earnings and the capitalization rate is used to relate the two.

o Market based approach – In this method, value is determined by comparing the subject, company or assets with its peers or Transactions happening in the same industry and preferably of the same size and region. This is also known as relative valuation method.

o Comparable companies multiples method– Market multiples of comparable listed companies are computed and applied to the company being valued to arrive at a multiple based valuation.

o Comparable transaction multiples method – This technique is mostly used for valuing a company for M&A, the transaction that have taken place in the industry which are similar to the transaction under consideration are taken into account.

o Market value method – The Market value method is generally the most preferred method in case of frequently traded Shares of companies listed on stock exchanges having nationwide trading as it is perceived that the market value takes into account the inherent potential of the company.

Other valuations methods:

Contingent claim method – Under this valuation method, option pricing model is applied to estimate the Value. Generally ESOP valuation for accounting purpose is done using the black scholes method. Now even Patent Valuation is also done using black scholes method.

Price of recent investment method – Under this valuation method, the recent investment in the business by an independent party may be taken as the base value for the current appraisal, if no substantial changes have taken place since the date of such last investment. Generally the last investment is seen over a period of last 1 year and suitable adjustments are made to arrive at current value.

Venture Capitalist method – Venture Capitalist Method is majorly used by venture capitalist looking for making investments in start-up companies.

First Chicago Method – First Chicago approach takes into consideration three scenarios: Success, Failure and Survival case and associate probability to each case to find the weighted average price of a start-up business.

Adjusted discounted cash flow method – This method is the scientific tool to judge the value of a start-up on the basis of its potential which is translated in the form of cash flow and adjusted with differential discount rates based upon the risk perception of a start-up entity.

Trademark

A trademark is a type of intellectual property consisting of a recognizable sign, design, or expression which identifies products or services of a particular source from those of others, although trademarks used to identify services are usually called service marks. The trademark owner can be an individual, business organization, or any legal entity.  A trademark may be located on a package, a label, a voucher, or on the product itself. For the sake of corporate identity, trademarks are often displayed on company buildings. It is legally recognized as a type of intellectual property.

The Trademark applicant can start using the ™ Symbol with the brand once it is registered. The symbol R can be used only after the registration is complete and the certificate is issued. The Trademark acts as an asset for the Company; to protect the brand, an application for trademark registration is a must. The process for trademark registration in India has various steps and requires follow-up with the Government. Hence, it is necessary to be under the guidance of an expert for obtaining the trademark registration quickly. Trademark is valid for a period of 10 years and we own the responsibility to follow up database with our clients for further renewal processes.

Documents required

• Copy of PAN
• Copy of any govt address proof
• Incorporation certificate, MOA/LLP agreement /Partnership Deed (In case of a Company or LLP)
• Logo in JPEG (if applicable)
• Power of attorney

Process:

• Trademark Search (the search should be done in both for various combination of similar marks on intellectual property website)
• Preparing Form-48 and TM-1
• Filing Application with trademark registry.
• Obating certificate after 10-12 months or in case of objection, an objection reply must be submitted by the applicant within 30 days

Patent

A patent is a title that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of years in exchange for publishing an enabling public disclosure of the invention. Patent filing is the primary step an inventor initiates to protect his or her invention from being misused. Patent filing in India is a tedious process, but it can be done quickly with proper guidance and support

We provide with drafting, filing, documentation, and support more scope for intervention. We extend to prevention of any patent regulation disabilities while in the process of getting patented for your innovation.

Process:

• Patent search (The patentability search is aimed towards finding out the novelty and non-obviousness of the invention, the search identifies the closes possible prior arts (known to the public) relating to your invention, and based on the results obtained an opinion about the patentability of your invention may be provided by a patent attorney)
• Preparing the documents including include drawings, diagrams or sketches explaining the working of the invention
• Drafting patent application
• Filing a patent application in the Patent office

There are different types of patent applications that would be filed in the patent office as briefly explained below:

The provisional Patent application:

Filing the provisional patent application is the optional step. In case you are at very early stage in the research and development for your invention, then you can go for provisional patent application. It gives following benefits:

• Secures filing date
• 12 months of time to file complete specification
• Low cost

After filing provisional patent application, you secure the filing date which is very crucial in patent world.  You get 12 months of time to come up with the complete specification, up on expiry of 12 months your patent application will be abandoned.

Complete patent application: If you have all the required details about your invention (that is implementable details) ready with you; you may proceed with filing complete patent application.

Copyright

Copyright is a type of intellectual property that gives its owner the exclusive right to make copies of a creative work, usually for a limited time. The creative work may be in a literary, artistic, educational, or musical form. Copyright is intended to protect the original expression of an idea in the form of a creative work, but not the idea itself. It is necessary to register for copyright because it makes you communicate to the public, reproduce the rights, adapt and translate the works.

Documents required

• Copy of Pan and any govt address proof of the author
• NOC from the publisher if the publisher and the applicant are two different individuals
• NOC from a person whose photograph appears on the work
• Power of attorney
• 2 Copies of the work (Book / Source code in CD (if Website copyright)

Process

• File an application (Authorized agent file an application either physically in the copyrights office or through speed/registered post or through e-filing facility available on the official website (copyright.gov.in).
• Every application has to be signed by the applicant as well as an Advocate in whose favor a Vakalatnama or a POA has been executed
• The registrar will issue a Dairy No. and then there is a mandatory waiting time for a period of 30 days for any objections to be received
• If there are no objections received within 30 days, the scrutinizer will check the application for any discrepancy and if no discrepancy is there, the registration will be done and an extract will be sent to the registrar for the entry in the Register of Copyright.
• If any objection is received, the examiner will send a letter to both the parties about the objections and will give them both a hearing.
• After the hearing, if the objections are resolved the scrutineer will scrutinize the application and approve or reject the application as the case may be.