Why is Startup Advisory Needed to Run a New Business?

Unveiling the Importance of Startup Advisory: Navigating the Complexities of New Ventures in India

Embarking on the entrepreneurial journey is akin to setting sail in uncharted waters. While the thrill of innovation and possibility propels entrepreneurs forward, the path to success is laden with challenges and uncertainties. In the dynamic landscape of Indian business, startup advisory serves as a guiding beacon, offering invaluable expertise and support to navigate the complexities of launching and scaling a new business.

In this blog, we delve into the significance of understanding startup advisory in India, shedding light on the pivotal role played by startup advisory services and firms in empowering entrepreneurs to realize their visions.

 

Understanding Startup Advisory in India

Startup advisory encompasses a spectrum of services aimed at assisting entrepreneurs in various facets of business development and growth.

From strategic planning and market analysis to financial management and operational optimization, startup advisory services in India cater to the diverse needs of burgeoning businesses.

By leveraging the insights and experience of seasoned professionals, startup advisory firms in India empower entrepreneurs to make informed decisions and chart a course towards sustainable success.

 

Navigating the Startup Landscape with Expert Guidance

The journey of entrepreneurship is fraught with challenges, particularly in the nascent stages of a startup. Startup advisory services in India provide entrepreneurs with expert guidance and support to navigate the intricacies of launching and running a new business.

Whether it’s devising a robust business plan, securing funding, or developing a go-to-market strategy, startup advisors offer invaluable insights and strategic direction to help startups overcome hurdles and seize opportunities for growth.

 

Leveraging Specialized Expertise for Strategic Advantage

Startup advisory firms in India bring to the table a wealth of specialized expertise and industry knowledge, enabling entrepreneurs to gain a competitive edge in the market.

From understanding regulatory compliance and navigating legal complexities to identifying emerging trends and market opportunities, startup advisors provide invaluable guidance to help startups stay ahead of the curve.

By tapping into the insights and networks of seasoned professionals, entrepreneurs can make well-informed decisions and drive their businesses toward success.

 

Maximizing Resources and Minimizing Risks

Launching and scaling a startup requires judicious allocation of resources and meticulous risk management. Startup advisory services in India assist entrepreneurs in optimizing resource allocation, managing cash flow, and mitigating risks to ensure the long-term viability of their ventures.

Whether it’s advising on financial planning, operational efficiency, or scalability strategies, startup advisors play a crucial role in helping startups maximize their potential and achieve sustainable growth.

 

What it covers

It covers various services to help startups in India, including:

  • Business registration
  • Suggesting Legal Structure
  • License and permit acquisition
  • RBI and FEMA Compliances
  • Business Model
  • Capital Structuring and Share Valuation
  • Issue of SAFE Notes
  • Registration services under Start-up India
  • Accounting and financial reporting
  • Marketing and branding
  • Fundraising and investment
  • Legal and regulatory compliance

 

Key Takeaways

In the vibrant ecosystem of Indian entrepreneurship, startup advisory services and firms play a pivotal role in guiding and supporting aspiring entrepreneurs on their journey towards success.

By understanding the importance of startup advisory in India and leveraging the expertise of seasoned professionals, startups can navigate challenges with confidence and unlock their full potential.

If you’re ready to embark on your entrepreneurial journey or take your startup to new heights, SIGMAC&CO, a leading startup advisory firm in India, is here to help.

 

About the Author: This article is contributed by CA Rajeev Gupta, Partner – SIGMAC & Co, Chartered Accountants, Location- Delhi NCR and Gurgaon.

In case of any query please feel free to contact us at: rajeev@sigmac.co.in

For more information and updates, you can contact CA Rajeev Gupta or visit our website https://www.sigmac.co.in/my-blog/.

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Disclaimer: This content has been prepared for general guidance of the reader on the matters of interest only. It should not be treated as professional advice. You should not act upon the information contained in this article without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information or provisions of the law contained in this article. Author and/ or SIGMAC & Co., Chartered Accountants, its members, employees and agents accept no liability, and disclaim all responsibility for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this article or for any decision based on it.

 

What are the differences between CFO Services and Virtual CFO Services?

CFO Services in India

In the dynamic landscape of business management, financial expertise stands as the cornerstone of success. However, for many startups and growing enterprises in India, accessing top-tier financial guidance can be a challenge. This is where the roles of CFO services and virtual CFO services come into play, each offering unique solutions tailored to the needs of businesses. In this blog, we delve into the key disparities between CFO services and virtual CFO services in India, shedding light on which might be the optimal choice for your venture.

 

Understanding CFO Services

Chief Financial Officer (CFO) services traditionally entail employing a full-time or part-time CFO within the organizational structure. These professionals are typically highly skilled, experienced individuals responsible for overseeing all financial aspects of a company.

Their duties often encompass financial planning, risk management, financial reporting, and strategic decision-making. CFO services in India are integral for established companies looking to optimize financial operations and drive sustainable growth.

 

Exploring Virtual CFO Services

On the other hand, Virtual CFO Services in India offer a flexible alternative, especially suitable for startups and SMEs. A Virtual CFO operates remotely, providing strategic financial guidance without the need for a full-time in-house executive.

This approach offers cost-effectiveness and scalability, allowing businesses to access expert financial advice without committing to the expenses associated with a permanent CFO role. Virtual CFO Services in India for startups, in particular, cater to the unique needs of emerging businesses, offering tailored solutions to navigate financial challenges and capitalize on growth opportunities.

 

Key Differences

  1. Cost Structure: CFO services typically involve fixed or variable salaries, along with benefits and overhead costs. In contrast, Virtual CFO services operate on a retainer or project-based fee structure, offering greater flexibility and cost-effectiveness for startups and small businesses.

 

  1. Availability and Flexibility: While CFO services require a physical presence within the company, Virtual CFO services provide remote accessibility. This flexibility allows businesses to leverage financial expertise as needed, without the constraints of geographical boundaries.

 

  1. Scope of Services: CFO services often entail a broad spectrum of responsibilities, encompassing long-term financial planning and strategic decision-making. Virtual CFO services, while also offering strategic guidance, may focus more on immediate financial needs such as cash flow management, budgeting, and financial reporting.

 

Making the Right Choice

The decision between CFO services and Virtual CFO services in India hinges on several factors, including the stage of your business, financial requirements, and budget constraints.

For established companies with complex financial operations, a dedicated CFO may be indispensable. However, for startups and SMEs seeking agile, cost-effective solutions, Virtual CFO services offer a compelling alternative.

 

Key Takeaways

Whether you opt for traditional CFO services or embrace the flexibility of Virtual CFO services in India, prioritizing financial expertise is paramount for sustainable business growth.

By understanding the difference between these two approaches, you can make an informed decision that aligns with your business goals and aspirations.

 

About the Author: This article is contributed by CA Rajeev Gupta, Partner – SIGMAC & Co, Chartered Accountants, Location- Delhi NCR and Gurgaon.

In case of any query please feel free to contact us at: rajeev@sigmac.co.in

For more information and updates, you can contact CA Rajeev Gupta or visit our website https://www.sigmac.co.in/my-blog/.

 

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Disclaimer: This content has been prepared for general guidance of the reader on the matters of interest only. It should not be treated as professional advice. You should not act upon the information contained in this article without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information or provisions of the law contained in this article. Author and/ or SIGMAC & Co., Chartered Accountants, its members, employees and agents accept no liability, and disclaim all responsibility for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this article or for any decision based on it.

 

START UP COMPANY AND TAX BENEFITS AVAILABLE TO START UP

“Start-Up Company” means a private company incorporated under the Companies Act, 2013 or Companies Act, 1956 and recognized as such in accordance with notification number 16[G.S.R. 127 (E), dated the 19th February, 2019 issued by the Department for Promotion of Industry and Internal Trade]:

G.S.R. 127(E) — This notification is being issued in supersession of the Gazette Notification No. G.S.R. 364(E) dated April 11, 2018 as modified vide Gazette Notification No. G.S.R. 34 (E) dated January 16, 2019.

Definitions

  1. In this notification,-
  • An entity shall be considered as a Startup:
    1. Upto a period of ten years from the date of incorporation/ registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.
    2. Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded one hundred crore rupees.
    3. Entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.

Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’.

Explanation–

An entity shall cease to be a Startup on completion of ten years from the date of its incorporation/ registration or if its turnover for any previous year exceeds one hundred crore rupees.

  • “Act” means the Income-tax Act, 1961;
  • “Board” means the Inter-Ministerial Board of Certification comprising of the following members:
  1. Joint Secretary, Department of Promotion of Industry and Internal Trade, Convener
  2. Representative of Department of Biotechnology, Member
  3. Representative of Department of Science & Technology, Member
  • “CBDT” means Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963);
  • “limited liability partnership” shall have the meaning as assigned to it in clause (n) of subsection(1) of Section 2 of the Limited Liability Partnership Act, 2008;
  • “Partnership firm” means a firm registered under section 59 of the Partnership Act, 1932;
  • “Private limited company” shall have the meaning as assigned to it in clause (68) Section 2 of the Companies Act, 2013;
  • “Turnover” shall have the meaning as assigned to it in clause (91) Section 2 of the Companies Act, 2013;
  • All references to “Forms” in this notification shall be construed as references to the forms set out in Appendix-I hereto;
  • “DPIIT” means Department for Promotion of Industry and Internal Trade.

Recognition

  1. The process of recognition of an eligible entity as startup shall be as under: —
    • A Startup shall make an online application over the mobile app or portal set up by the DPIIT.
    • The application shall be accompanied by—
      • A copy of Certificate of Incorporation or Registration, as the case may be, and
      • A write-up about the nature of business highlighting how it is working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.
    • The DPIIT may, after calling for such documents or information and making such enquiries, as it may deem fit, —
      • Recognize the eligible entity as Startup; or
      • Reject the application by providing reasons.

Certification for the purposes of section 80-IAC of the Act

  1. A Startup being a private limited company or limited liability partnership, which fulfills the conditions specified in sub-clause (i) and sub-clause (ii) of the Explanation to section 80-IAC of the Act, may, for obtaining a certificate for the purposes of section 80-IAC of the Act, make an application in Form-1 along with documents specified therein to the Board and the Board may, after calling for such documents or information and making such enquiries, as it may deem fit, —
    • Grant the certificate referred to in sub-clause (c) of clause (ii) of the Explanation to section 80- IAC of the Act; or
    • Reject the application by providing reasons.

Exemption for the purpose of clause (viib) of sub-section (2) of section 56 of the Act

  1. A Startup shall be eligible for notification under clause (ii) of the proviso to clause (viib) of sub-section (2) of section 56 of the Act and consequent exemption from the provisions of that clause, if it fulfills the following conditions:
    • It has been recognized by DPIIT under para 2(iii)(a) or as per any earlier notification on the subject
    • Aggregate amount of paid up share capital and share premium of the startup after issue or proposed issue of share, if any, does not exceed, twenty five crore rupees:

Provided that in computing the aggregate amount of paid up share capital, the amount of paid up share capital and share premium of twenty five crore rupees in respect of shares issued to any of the following persons shall not be included─

  • A non-resident; or
  • A venture capital company or a venture capital fund;

Provided further that considerations received by such a startup for shares issued or proposed to be issued to a specified company shall also be exempt and shall not be included in computing the aggregate amount of paid up share capital and share premium of twenty five crore rupees.

  • It has not invested in any of the following assets,─
    • Building or land appurtenant thereto, being a residential house, other than that used by the Startup for the purposes of renting or held by it as stock-in-trade, in the ordinary course of business;
    • Land or building, or both, not being a residential house, other than that occupied by the Startup for its business or used by it for purposes of renting or held by it as stock-in trade, in the ordinary course of business;
    • Loans and advances, other than loans or advances extended in the ordinary course of business by the Startup where the lending of money is substantial part of its business;
    • Capital contribution made to any other entity;
    • Shares and securities;
    • A motor vehicle, aircraft, yacht or any other mode of transport, the actual cost of which exceeds ten lakh rupees, other than that held by the Startup for the purpose of plying, hiring, leasing or as stock-in-trade, in the ordinary course of business;
    • Jewelry other than that held by the Startup as stock-in-trade in the ordinary course of business;
    • Any other asset, whether in the nature of capital asset or otherwise, of the nature specified in sub-clauses (iv) to (ix) of clause (d) of Explanation to clause (vii) of sub-section (2) of section 56 of the Act.

Provided the Startup shall not invest in any of the assets specified in sub-clauses (a) to (h) for the period of seven years from the end of the latest financial year in which shares are issued at premium;

Explanation.─ For the purposes of this paragraph,-

(i)“Specified Company” means a company whose shares are frequently traded within the meaning of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and whose net worth on the last date of financial year preceding the year in which shares are issued exceeds one hundred crore rupees or turnover for the financial year preceding the year in which shares are issued exceeds  two hundred
fifty crore rupees.

(ii) The expressions “venture capital company” and “venture capital  fund” shall have the same meanings as                 respectively assigned to them in the explanation to clause (viib) of sub Section( 2) of Section 56 of the Act.

Declaration

  1. A startup fulfilling conditions mentioned in para 4 (i) and para 4 (ii) shall file duly signed declaration in Form 2 to DIPP that it fulfills the conditions mentioned in para 4. On receipt of such declaration, the DPIIT shall forward the same to the CBDT.

Scope

  1. Notification referred in para 4 shall apply irrespective of the dates on which shares are issued by the Start up from the date of its incorporation, except for the shares issued in respect of which an addition under section 56(2) (viib) of the Act has been made in an assessment order made under the Act before the date of issue of the notification.
  2. Notification referred to in para 4 shall be applicable only in respect of applicability of the provisions of section 56(2)(viib) of the Act to the Startup and shall not grant any exemption in respect of applicability of other provisions of the Act.

Revocation

  1. (1)  In case it is found that any certificate referred to para 3 has been obtained on the basis of false information, the Board reserves the right to revoke such certificate or approval.

(2) Where the certificate or approval has been revoked under sub-para (1), such certificate or approval shall be            deemed never to have been issued or granted by the Board.

  1. In case the Startup which has furnished declaration in Form-2 invests in any of the assets specified in para 4(iii) before the end of seven years from the end of the latest financial year in which the shares are issued at premium, the exemption provided under section 56(2)(viib) of the Act shall be revoked with retrospective effect.

Key Takeaways

A start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend to become registered, startups refer to new businesses that intend to grow large beyond the solo founder. At the beginning, startups face high uncertainty and have high rates of failure, but a minority of them do go on to be successful and influential. In this situation the Government appreciates start-ups by giving them deductions in Tax. It reduces the start-ups tax burden at the initial stage of the business.

About the Author: This article is contributed by CA Rajeev Gupta, Partner – SIGMAC & Co, Chartered Accountants, Location- Delhi NCR and Gurgaon.

In case of any query please feel free to contact us at: rajeev@sigmac.co.in

For more information and updates, you can contact CA Rajeev Gupta or visit our website https://www.sigmac.co.in/my-blog/.  

Follow us on :

    

Disclaimer: This content has been prepared for general guidance of the reader on the matters of interest only. It should not be treated as professional advice. You should not act upon the information contained in this article without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information or provisions of the law contained in this article. Author and/ or SIGMAC & Co., Chartered Accountants, its members, employees and agents accept no liability, and disclaim all responsibility for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this article or for any decision based on it.