Updated : May 29, 2024All About Software Company Registration in India
Overview : Wondering how to register software company in India? This comprehensive guide explains it all! From choosing the most suitable type of software company to navigating the legal intricacies of registration, we have discussed every single step at length. Our goal is to help you easily navigate the software company registration process in India and provide expert consultation wherever you need it. Also, the knowledge we share will help you gain valuable insights about India’s booming IT industry and practical tips on how to stay ahead in this competitive market.
India hosts the world’s fastest-growing and most economical IT & software industry. With a significant share of the global market, this industry encompasses both product-based and service-based companies in India. In recent years, most of these companies have witnessed a surge in consumer demand domestically and internationally. Even the exports have soared high, reflecting the sector’s prowess as a key driver of India’s economic growth. In addition to that is the government’s endorsement of a 100% FDI limit in this sector, further catalyzing overseas funding and expansion through the global markets. Owing to this remarkable success, software company registration and establishment has become a popular choice among entrepreneurs. Let’s explore the detailed process of how to register software companies in India.
Types of Software Companies
Based on their primary business activity, software companies can be categorised as product-based or service-based. A product-based company sells software products to end-users, while a service-based company uses or develops such products, to offer services and solutions to customers. The domestic and global markets for both these categories of companies are incredibly robust and dynamic. Before beginning the process of software company registration, it is crucial to choose the type of software company one wants to establish. The table below will help you make an informed decision.
| Product-based Software Companies | Service-based Software Companies |
|---|---|
| Develops software products and sell them to the end-users | Provides IT and Software based services and solutions |
| Popular Products: Application Software, System Software, Operating Software, Multimedia Software, Database Software, Web Browsers, Word Processors, and Customized Software. | Popular Services: Software Engineering, Cloud Computing, Business Process Management, Consultancy, Digital Marketing, E-commerce, and Accounting. |
| Examples: Microsoft, Google, Adobe, Intuit, etc | Examples: TCS, Infosys, Wipro, etc. |
How to Register Software Company in India?
India’s software industry accounts for more than 50% of the global IT market and is known across the world for its innovative and cost-effective software products and services. The value of their exports has already surpassed USD 30 billion in the previous financial years. Since then, the industry has witnessed sharp growth in the emergence of several IT-based start-ups in India. However, considering the huge consumer demand in the sector, we are yet to witness its peak. So, whether you’re an entrepreneur planning to establish a software company or have just established one, the following steps will help you navigate the process of software company registration with ease and confidence.
Step 1: Choosing the Suitable Type of Software Company
The first step of software company registration is to choose a suitable type of software company based on your business goals, target consumers, and resources. Primarily, you either have the option to start a product-based or a service-based software company. If you choose the former, ensure thorough testing of newly developed products, their accuracy, efficiency, fixation of glitches, and so on. However, if you choose the latter option, make sure you buy or develop the right software tools to deliver your services.
Step 2: Choose Your Target Consumer Base
Immediately after you choose the type of business activity for your company, you must determine the customer base you wish to cater to. The choice will probably depend on the utility of the product or service. For example, gaming application software can aptly cater to a younger age group, multimedia software can aptly engage the younger and the elderly alike, BPM and e-commerce services target businesses, online recruitment services are meant for human resources, and online surveys and reports cater to the academia and accounting services have utilities across industries. Software engineering and software development services, which drive the Indian software industry, thrive on the demands of the global IT industry.
Step 3: Choose a legal status for the business
An appropriate corporate structure must be chosen for software company registration in India. Since the markets for software products and services are coherent rather than segmented into small pockets of locations, most businesses operate on a larger scale and cater to a diverse consumer base. Exports of software products and services are also a billion-dollar market for Indian software businesses. So, a suitable legal structure would include a Private Limited or Public Limited company. On the other hand, if the software company is owned by a single entrepreneur a one-person company will be an ideal choice.
Step 4: Reserve & Trademark the Name and Logo of Software Company
The name and logo of your software company are ideal symbols communicating your brand and business activity to consumers. So, they must be chosen wisely and in adherence to the relevant legal guidelines. As far as the name goes, it must be unique and in adherence to the Companies Act. Moreover, to prevent trademark infringement, it must meet the requirements of the Trademark Act as well. After the name and logo are chosen, they must be reserved and trademarked for further use. This will mark the beginning of software company registration process
Step 5: Choose the Registered Address of Your Software Company
The next crucial step in Software Company Registration is to select a registered address. This address will be marked as your official correspondence in government records. Having a registered office address is not just a practical requirement but also a necessary compliance under Section 12 of the Companies Act. Make sure this address has a completely constructed and lockable office premises for housing the company’s books and records. Other parameters to be considered while choosing the registered address is availability, accessibility, and affordability of a skilled workforce. For instance, Bengaluru, the “Silicon Valley of India”, houses most Indian software companies and start-ups due to the abundance of skilled and economical workforce in the IT sector.
Step 6: Apply for Software Company Registration under the Companies Act
After pre-requisites such as name reservation and selection of registered address are met, proceed with the application for software company registration under the Companies Act. The process is completely online on the MCA website. The applicant can log in to the website, access the SPICE Plus (INC-32) form, fill out the details, attach the documents and DSC, pay the requisite fees, and submit. Finally, within a week or two, the Registrar of Companies (ROC) will issue a Registration Certificate to conclude the software company registration process. Here’s the list of documents you need.
- PAN, Aadhar, photographs, and address proofs of all promoters
- Proof of Company’s Registered address
- NOC from Premises owner
- MOA & AOA
- Declaration & Consent of Directors
- Digital Signature (DSC) of Authorised Director
Note: The application for Software Company Registration is an integrated form that also contains applications for PAN, TAN, ESI & EPF Registration, Professional Tax Registration (in Maharashtra), GST Registration, and opening a current account
Step 7: Meet Post-Incorporation Compliances
The journey of establishing a software company does not end with software company registration. The Companies Act prescribes a few post-incorporation compliances that have to be met to continue its existence. These may be one-time or annual. Non-compliance may lead to hefty penalties, and in certain circumstances, even the closure of the software company.
Conclusion
The Software industry in India unveils boundless opportunities for entrepreneurs whether starting a product-based venture or providing innovative software-based services. Hopefully, this comprehensive guide has helped you understand all the essential steps to start and register a software company in detail. However, if you’ve any doubts, post them in the comments section. Our experts will resolve your queries and ensure a seamless software company registration process in India.
