When registering a software company in Tamil Nadu, various laws and regulations must be followed. The constitutional provisions and other commercial legislation we currently follow in India were derived from British-era standards. All firms in our nation must be registered under the 'New Companies Act 2013'.

What is a Software Company?

A software company is a type of company that focuses on product development, technology, & distribution. The initial stage of product creation results in goods that customers will find useful. Similarly to the IT industry, the software industry plays an important part in assisting teams in interacting and communicating.

Different categories for registering a software company

There were two software firm categories in India.

• Consulting or Service-Based Software Company 
• Development or Product-Based Software Company

Services offered by an Indian Software Company

Listed below are the services offered by a software company in India.

• ERP Software
• Application Creation
• Solution for Business
• Services for testing and quality assurance
• Outsourcing
• Services for Database Migration
• Services for Programming

Business Structure for Software Company

The business structure for a software company in Tamil Nadu is as follows:

• Private Limited Company
• One-Person Company
• Public Limited Company
• Limited Liability Partnership
• Sole Proprietorship
• Partnership Firm

Note: If a foreign company wants to register in India, it must register as an Indian subsidiary.

The Basic Process for Registering A Software Company in Tamil Nadu

Moving forward with registering a software company in Tamil Nadu, the first step is to have the name of your company authorised by the ROC (Registrar Of Companies). Then you must obtain a CIN (Company Identification Number). After receiving your CIN, you must submit all of your legal documents and other legal paperwork. During this procedure, you must include all pertinent corporate information.

Mention the shareholders, share capital, finances, and other relevant information that must be included in the legal form. You (the owner) can apply for the certificate of registration after it has been accepted.

Advantages of Software Company Registration in Tamil Nadu

The advantages of software company registration are as follows:

Separate Statutory Body

A corporation is a statutory body that exists in the actual world. It is a legal person whose existence differs from that of its directors and stockholders. It is a legal entity constituted under the Companies Act. The term "juristic person" refers to the legal acknowledgement of a thing as a person. It has the ability to sue & be sued in its own right. An incorporated corporation has its own set of rights, its own set of obligations, and its own legal processes. A company's personality develops after incorporation. It has a broader legal competence since a company can possess property and incur obligations; as a result, individual company members have no debt liability to the business's creditors.

Permanent Succession

Perpetual succession indicates that the firm will continue to exist indefinitely. It describes a corporation's continued existence until it is officially dissolved. Perpetual succession is a crucial consideration. As previously established, it is a separate legal body that is unaffected by the death or leave of any of its members. Whatever changes occur, membership, members, personnel, shareholders, nothing of the type can impact its life; once established, it stays alive per the Companies Act.

Easy Transferability of Shares

The number of shares in a firm is limited by the number of shares acquired. A shareholder can transfer it to another individual. Shares can be transferred to whoever the shareholder wishes. The buyer of shares would be given a signed copy of the share transfer form as well as share certification. There are no technical constraints on the transfer of shares in a public limited corporation. As a result, a shareholder can transfer his shares to anybody he wants. A public limited company's securities or other interests are freely transferable. On the other hand, any contract or agreement relating to the transfer of securities is enforceable as a contract. In the case of private limited businesses, the law authorises them to put limits on the transfer of their shares.

Limited Liability

A limited liability company is legally responsible for a set number of debts. The members' liability for the company's obligations is limited, i.e., to the face value of the share acquired by them. The terms and circumstances may differ when the members have contractually committed to unlimited liability. These are known as infinite corporations.

Can Sue and Can be Sued

The firm has the ability to sue someone or be sued by someone else in its own name. A corporation can be sued or sued in its own name. Still, it must be represented by a natural person, & any complaint that a natural individual does not represent is subject to dismissal in the same manner as an individual complaint is subject to dismissal in the absence of the complainant.

Dual Relationships

Any individual member might get into a contract or an agreement with the firm. It is conceivable for an individual to take over the company's operations while remaining an employee. As a result, an individual might simultaneously be a shareholder, creditor, director, & employee of the firm.

Borrowing Power

Companies have the option of borrowing money. They have the authority to issue and accept public debentures. The company encourages banking or other financial institutions to provide additional financial help.

Raising Capital

A corporation is the only legal organisation that may assist promoters in raising equity capital from Angel Investors, Private Equity Firms, and the Stock Exchange. For raising equity money from Angel Investors and Private Equity Investors, a private limited company will suffice. On the other hand, a Limited Company would be necessary for listing or issuing shares to more than 200 shareholders.

Disadvantages of a Software Company Registration

The disadvantages of a software company registration are as follows:

Double Taxation

Certain forms of companies, such as a C Corporation, may result in "double taxation." When a firm is taxed twice, it is taxed once on earnings and again on dividends distributed to shareholders.

Cost

The initial cost of incorporation includes the charge for submitting your articles of incorporation, prospective legal or accountant costs, or the cost of employing an incorporation service to assist you with the paperwork completion and filing. In addition, there are additional recurring payments for keeping a corporation active.

Personal "Ownership" Loss  

No single person has total authority over the entity if a corporation is a stock corporation. Instead, shareholders choose a board of directors and govern the corporation.

A structure is required 

When you form a company; you must abide by all of the requirements established by the state in which you filed. This comprises the corporation's administration, operating standards, and accounting processes.

Ongoing Documentation 

Most firms are required to produce yearly reports on their financial condition. In addition, tax reports, financial records, meeting minutes, and business licences and permissions are all part of the continuing paperwork.

Dissolving Difficulties

While continuous existence is a benefit of incorporation, it may also be a drawback because it can take a large amount of time and money to execute the requisite dissolution processes.

Legal Process to Start A Software Company in Tamil Nadu

The legal process to start or register a software company in Tamil Nadu involves the following steps:

Digital Signature Certificate

The information act of 2000 requires a valid digital signature on the relevant papers submitted electronically to assure the authenticity or security of documents filed electronically. The digital signature certificate can only be obtained from CCA-approved agencies (Controller of Certification Agencies).
  
Name Approval

The firm must apply a name. There are around 5-6 names from which the corporation can select one. If the intended name is not available, the firm may choose its own name.

Directors’ Identification Number

When forming a software corporation, the directors must first be identified. The number of directors should be between 2 and 8, but it should not be fewer or more than that. Director Identification Numbers are required for all directors (DIN).

Apply for Software Company Incorporation

Following the name approval, the software company must file for incorporation. During this step, the firm must draft a Memorandum of Association that contains the company's first director and activities.

Certificate of Incorporation

After the software company in Tamil Nadu has been properly formed, the owner should open a current account with a well-known bank to do business. Owners must provide their Memorandum of Association & Certificate of Incorporation documents to create a current account.

Steps Need To Be Followed While Starting A Software Company in Tamil Nadu

• First, provide a brief overview of the business, including the type of product, field, target, and technology to be used. Next, you must provide information about how the programme will be produced and distributed to the market, among other things.
• Then, decide whether the firm will be a single proprietorship, a private corporation, or a partnership. The size of the organisation, the range of risk, the target market, and the budget are all important factors in determining the shape of the corporation. Finally, plan your strategy based on whether you want to go national or worldwide.
• Choose a region to learn more about the business laws in effect in that area.
• ROC registration is required for your software firm. When registering, an application must be submitted to the same office where the main office is located.
• Decide where you want to set up the workplace. After receiving the ROC certificate, you must begin employing staff.
• Registering with the state or region's Department of Employment for legal hiring and the job posting is preferable. Applying in one form may result in an offer to recruit from any place in India. However, your employment process may be improved if you register.
• Register with STPI (Software Technology Parks India). This may assist you in obtaining all legal benefits as well as extra perks such as tax reductions, etc.

Endnote

The Indian government's Make in India initiative, business-friendly regulations, and big labour pool have unquestionably opened up the country's long-stagnant domestic manufacturing industry to local and foreign investment. Several sorts of enterprises may be successfully run in India. There has lately been a tendency for companies to run effectively utilising an endless number of digital and internet platforms. The government has supported this movement by digitising the methods of setting up a software company in Tamil Nadu.