What is Startup ?

Whether you are reading business news or watching business channels or in Linkedin, you are listening the word “Startup”. You may want to understand what is Startup? In this post we will try to understand Startup in general term and its definition as per Department for Promotion of Industry and Internal Trade (DPIIT) of Government of India .

Any new business idea whether to start a Chai (Tea) Stall or Pani Puri or have a large manufacturing company is a startup. Any new venture from the decades we call it is as a new business. Now with the change of time, it is a new fascinating word i.e. startup. Like Techie. Zomato delivers food using an app and website by listing restaurants and foodie , it is called startup because it has technology and are scalable business solutions. They understood the problem and provided a solution. Same is the case with OLA and Uber. There is a market, buyer and service provider. They have simply created a platform to bring everyone together . Which is a commendable job. This is about customer behaviour and creating a new market and way of life.

Now let us understand that all new businesses will not cover in the definition of startup as defined by DPIIT . Why should I bother about the definition by the government (DPIT)? We should !! because if you want to take any income tax or duty or any other benefits from the central or state government , you need recognition in this regard.

What is Startup as per DPIIT ?

Age of Entity :

Company should not be in existence and operation for more than 10 years from the date of Incorporation.

Type of Entity:

Entity incorporated as Private Limited company , a registered partnership Firm or Limited Liability Partnership are eligible to be recognised as a startup.

Annual Turnover for Startup:

Entity should not have annual turnover exceeding Rs. 100 crore for any financial year from the date of incorporation.

Original Entity:

One cannot create a separate entity like his existing business and apply to DPIIT . Entity should not be formed by splitting up or reconstructing any existing business. It should be a new entity.

Scalable & Innovation :

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.

You can check government notification from this link regarding startup India definition .

Do you have any ideas for Startup ? Please reach out to your professional advisor today to start your business and to get recognition from DPIIT.

Financial Planning is an important aspect in personal finance and corporate finance. Do read our post What is Financial Planning ? for better understanding.