HOW TO HAVE YOUR START-UP
Important steps to get started
1. Check the feasibility of your idea.
2. Have your business plan ready.
3. Choose the right business structure.
4. Look for funds.
5. Register in Government Schemes
6. Intellectual properties such as Trademark and Patents
7. Build a good digital presence. I
8. Get a good workspace.
Right Business Structure
Not for profit organizations
Not for profit organization is an organisation that does not earn profit for self consumption. All the money earned by not for profit organization is used in achieving organization’s objectives.
The purpose of not profit organisation in India is not to earn profit rather it serves to the society for any social cause to help people other than the need of earning.
There are three common forms of NGOs— Trust, Society and Section 8 Company.
Which one should you choose?
Steps for Incorporation
We obtain the DSC for the proposed Directors and then if the proposed Directors do not have DIN the apply by Filling form DIR 3.
To apply for a company name through Form SPICE+ on MCA. There is also an option to check the availability names in the website.
Either one can reserve the name first then do the incorporation or directly go for incorporation.
After the name is sorted we need to file the Form SPICE+ along with all the required documents.
After submitting the form we wait for the department to revert.
If no query is there from the department side then the company is formed and Certificate of incorporation is issued.
As per the Indian Trust Act 1882, a Trust is an arrangement where the owner (trustor) transfers the property to someone else (trustee) for the benefit of a third person (beneficiary).
Such a property is transferred by the trustor to the trustee along with a proclamation that the trustee should hold the property for the beneficiaries of the Trust.
There are two types of trusts in India: private trusts and public trusts.
While private trusts are governed by the Indian trusts Act, 1882, public trusts are divided into charitable and religious trusts.
What are Private Trust ?
A Private trust is constituted for the benefit of 1 or more individuals who are, or within a given time may be, definitely ascertained.
What Documents are Required
Steps for Incorporation
A society is an association of persons united together by mutual consent to deliberate, determine and act jointly for some common purpose.
The Societies Registration Act, 1860 lays down the procedure for society registration and operation in India.
Registration can be done either at the state level (at the office of the Registrar of Societies) or at the district level (at the office of the District Magistrate or the local office of the Registrar of Societies).
However the Societies Registration Act, 1860 has been adopted by most of the State Governments with/without further amendments.
Society Registration Purposes
A Society can be formed for the promotion of literature, science or fine arts or the diffusion of useful knowledge or political education or for charitable purposes like:
> Grant of charitable assistance.
> Creation of Military Orphan funds.
> Promotion of Science.
> Promotion of Literature.
> Promotion of Fine Arts.
> Promotion or Instruction or Diffusion of useful Knowledge.
> Diffusion of Political Education.
>Foundation or maintenance of libraries or reading rooms.
> Foundation or maintenance of Public Museum or Galleries.
In addition to the above purposes a Society can also be registered for other purposes based on the amendment that has been enacted to the Societies Act, 1860 by the concerned State Government.
Society Registration in India
A Society can be formed by a minimum of seven or more persons.
Besides persons from India, foreigners, companies and other registered societies can subscribe to the Memorandum of a society. Like Partnership Firms, Societies can also be registered or unregistered. However, only registered Societies can hold vested properties and/or have a suit filed by or against the Society.
While choosing a name for the society, it is important to remember that similar or identical name of an existing registered society is not permitted. Also the name must also not suggest patronage of the Government of India or any State Government or attract the provisions of Emblem and Names Act, 1950.
Memorandum of a Society
The Memorandum of the Society and the Rules and Regulations of the Society must then be signed by each of the founding members, witnessed by an Oath Commissioner, Notary Public, Gazetted Officer, Advocate, Chartered Accountant or Magistrate 1st Class with their official stamp and complete address.
Steps for Incorporation
The following documents are needed:
> Covering letter signed by all founding members
> Memorandum of Association
> Rules and Regulations of the Society
> Affidavit sworn by the President or Secretary of the Society stating relationship between the subscribers.
> Address proof for the registered office
The signed Memorandum and Rules and Regulations must then be filed with the concerned Registrar of Societies in the State with the prescribed fee.
If the Registrar is satisfied with application for Society Registration, the Registrar would certify to deem the Society to be registered.
After Incorporation what to do?
Apply for Licenses
12A and 80G Registrations
Basic Requirements for 12A and 80G Registrations
Registration can be cancelled in these cases:
What is the Tax Exemption Limit on donation?
There is a limit on how much money can be exempted from the Income Tax:•
If the amount of deduction to a charitable organization or trust is more than 10% of the gross total Income computed under the Act (as reduced by income on which income tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of 10% of Gross Total Income shall not qualify for deduction under section 80G.•
The persons or organizations who donate under section 80G gets a deduction of 50% from their taxable Income.
Benefits of Registration
Foreign Contribution and Regulation Act 2010 (FCRA)
The FCRA was enacted with the primary purpose of regulating the inflow of foreign contributions and ensuring that the received foreign contributions are not utilized for illegal purposes.
All charitable organizations in India receiving foreign contributions come under the purview of this Act.
Over the last few years, the Home Ministry has been scrutinizing the flow of foreign funds to all charitable organizations in India and the Ministry has also cancelled the licenses of over 8000 charitable organizations due to non-compliance with the reporting requirements stipulated under the Act.
An association should be registered either under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or under Section 8 of the Companies Act, 2013;
An association normally be in existence for at least 3 years and has undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilized
An association should have spent at least Rs.10,00,000/- over the last 3 years on its aims and objects, excluding administrative expenditure.
Statements of Income & Expenditure, duly audited by CA, for last 3 years are to be submitted to substantiate that it meets the financial parameter.
Filing of CSR-1 with MCA for CSR funding
The Government of India has come out with a new registration for NGOs who are undertaking or desirous of undertaking CSR activities on behalf of the companies.
Such registration is to be taken by filing Form CSR-1 electronically on the MCA portal. This registration can be taken by NGOs with effect from April 1, 2021.
Form CSR-1 shall be signed and submitted electronically and verified by a practising CA or CS or Cost Accountant.
On application, the MCA portal will automatically generate a unique CSR registration number
CSR funding will be available only to those NGOs that are registered with MCA.
Documents for filing Form CSR-1.
1. Copy of PAN Card of the NGO
2. Mail ID and Mobile Number
3. Details of Governing Body Members
4. Copy of Registration Certificate
5. Digital Signature of the Authorised Person with his PAN Number