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Business Registration, Healthcare Startup, Licenses, Start up Lessons
Economists can just turn the table, don’t they? When reports about Healthcare sector expecting to touch $158.2 billion by 2017 came up, entrepreneurs that always wanted to do something big in this sector felt unstoppable. Yes, you got the point! This blog is for all you fans that has been requesting me to write on the e-healthcare sector. So, let’s get on with the basics of starting healthcare business in India.
  1. Business Registration:
This is a must for startups in this sector and probably the first step for starting healthcare business in India. Since there are multiple players involved, raising funds is another major thing to be concerned about, therefore registering it as a PVT. LTD. Company makes sense for most entrepreneurs.
  1. Rules under the IT Act:
  • Data Protection: The patient must be informed that the data is being collected, purpose behind the same and whether it would be transferred to any third parties, along with the contact details of the agency collecting the information.
  • Follow the international standard IS/ISO/IEC 27001 on Information Technology
  • Appoint a ‘Grievance Officer’, whose contact details are to be published on the website.
  1. Privacy Policy:
It is mandatory for startups ( healthcare business in India ) to have a privacy policy in place and published on its website. Although a ‘privacy policy’ is technically a legal document, great effort should be made to craft a document that is both accurate and easy to understand.  
  1. Not to miss OSP Regulations:
If you are planning on starting healthcare business in India that will have Application based Services which includes telemedicine services, you will be required to be registered as an ‘Other Service Provider’  (OSP) with the Department of Telecommunications.  
  1. Abide by the rules of The Drugs and Cosmetics Act (this one is for e-pharmacies)
  • All drugs must be sold under a license. The Rules under this act clearly lay down which drugs can be sold only on the production of a prescription issued by a registered doctor.
  • Drugs which can be sold only on prescription are stated in Schedules H, H1, and X.
  1. The Drugs and Magic Remedies Act, 1954:
If you are going to send Advertisements (promoting anything) to registered medical practitioners and chemists after starting healthcare business in India, you can do only if your documents bear the words ‘For the use only of registered medical practitioners or a hospital or a laboratory’ at the top of the document.  
  1. Unsolicited Commercial Communications Regulations, 2007 and Telecom Commercial Communication Customer Preference Regulations, 2010:
Sending unsolicited commercial communications over voice or SMS are prohibited. However, there is no legal bar over sending transaction messages after starting healthcare business in India.
  1. The Clinical Establishments Act, 2010 (this one is for startups that have clinics as well): Registration with the relevant authority and conform to the minimum standards as prescribed under the act.
  1. Patent:
  • A computer program ‘per se’ is excluded from patentability under Section 3(k) of the Patent Act, 1970., provided it meets the other requirements of CRI.
  • Patents for software programs have been issued in the past where it involves a hardware component as well. If the technology/software fulfils these requirements, you could file for a patent and receive protection if the same is granted. 
  1. Copyright:
  • Software can be protected as a literary work under copyright law.
  • The idea would have to be expressed in some form of medium before it can be protected.
  • Clinical guidelines and data could be protected under the Copyright Act, only if it is expressed in some form of medium.
A2Z of starting a Healthcare Startup  
  1. Design:
Design protection would be the Graphical User Interface (GUI) of applications and the design of the devices and this can be protected under the Designs Act.  
  1. Trademark:
The ‘mark ‘ an e-Health application or device could be registered as a trade mark under the Trademark Act. 
  1. Trade secrets: You can protect the trade secret by signing a Non-Disclosure Agreements with employees to avoid information going out of your roof.
  1. Indirect Taxes:
  • Service tax is 14% payable by the service provider.
  • Value Added Tax (VAT) is levied on the sale of goods within a state and rates vary widely anywhere from 0%-1% to 4%-12.5%.
  • Central Sales Tax is imposed on the sale of goods during interstate trade or commerce.
  1. Corporate Tax
  • Indian residents are taxed on their worldwide income
  • Non-residents are only taxed on income arising from sources in India. 
  1. Follow the standards of NeHa:
NeHA is a promotional, regulatory and standards setting organization to guide and support India’s journey in e-Health. 
  1. Terms of service:
You are required to have the Terms of services document in place, that has all the required information about services like Age verification and other rules.  
  1. Payment Gateway Compliance:
It is mandatory for every ecommerce startup, on a similar line e-healthcare startups should consider doing the same.  
  1. Abiding International jurisdiction:
Every country has its own set of compliance that businesses outside the country should follow.  
  1. Cofounders Agreement:
Importance of having this conversation (or more likely, conversations) early on, explain why a founders? agreement is a valuable tool to maintain a healthy co-founder relationship. It is like defining your marriage with the fellow co-founder.  
  1. License Agreement:
Licensing agreements cover a wide range of well-known situations. For example, a retailer might reach agreement with a professional sports team to develop, produce, and sell merchandise bearing the sports team’s logo. On a similar note, when you provide license to doctors to use your app, it is important that you have a license agreement to support the same.  
  1. Contracts and Agreements:
To protect your relationship with partners or doctors on a long run. The doctors should be able to present the necessary credentials and certification and all these action items included in the contract or agreement would assure quality.  
Startup entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly.

For any Legal and Accounting support, Happy to help you, let us talk at Wazzeer.

 
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Legal, Start up Lessons
Setting up your startup involves a lot of work and effort. Many things need attention, including developing a proof of concept, finding product/market fit, and hiring the first set of employees. With these many things to be handled, slips are bound to happen. One of the most common areas where most startups make a wrong choice is establishing a solid legal foundation. Some of the most common legal mistakes made by startups:
  1. Wrong legal entity: Choosing the right legal entity right at the outset is important. Some structures to choose from include a Registered Company (Public/Private Limited), LLP, proprietorship, and partnership. The more widely accepted one is a registered company, especially for any deals with foreign clients.
  2. Not tracking expenses: Many try and gather all receipts only when tax returns have to be filed! What is not documented is not deducted, and therefore, it is like leaving money in the open.
  3. Lack of documentation: Each and every interaction, be it meeting minutes or anything else, must be on the record. It is important to have all documents in order at all times. Legal due diligence can make or break an investment deal.
  4. Missing founders agreement: The founders agreement should contain all essential clauses such as ownership, vesting rights, and the roles and responsibilities of each founder, including salaries and terms of employment.
  5. Mixing capital and revenue expenses: What expenses are considered assets /capital expenditure and which ones are called revenue expenses deductible in the P&L A/c. Higher-value items that will last significantly longer than one year are called Capital Expenditure/Assets/Equipment. Things that are consumed over the course of a year come under revenue expenditure. If the equipment or capital items are by accident deducted as revenue expense, the tax department can determine that the expense has been improperly characterized and a deduction does not apply. Hence, be careful in accounting all such expenses.
  6. Mixing personal and business expenses: This can be a source of confusion when taxes are being filed, and in some cases, can lead to deductions being disallowed on an ad-hoc basis by the revenue authorities and higher tax outgo as a result. The company should therefore have a financial account at the onset and separate records as well.
  7. Not protecting intellectual property: Intellectual property (IP) is a startup’s most valuable asset. Trademarks, patents, and copyrights are the three essential components of IP. It is essential to not let anyone claim a right to your IP. Non-disclosure agreements are a way of ensuring this. Startups often neglect the protection of IP and suffer later.
  8. Non-compliance with securities laws: Startup founders commonly issue stocks to angel investors, family, and friends. However, stocks issued without complying with specific disclosure and filing requirements under securities law can lead to serious legal issues at a later stage.
  9. Missing regular tax payments: Businesses, be it sole proprietors or otherwise, are required to pay taxes in advance. This means they need to determine their taxes for the year in advance and pay as prescribed installments.
  10. Not ensuring professional help for tax-related issues: A startup must appoint a tax consultant to ensure all regulations are being followed. This will also give you more time to focus on building your company, forming strategic relationships, and other things.
    It is a summarization of an article from YourStory. For more information, visit http://yourstory.com/2016/03/legal-mistakes-startups/



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Start up Lessons
Ride hailing service Ola, is going to add a new service to its kitty. Now you can rent Ola cab on an hourly basis, in a marked contrast to its core business of point-to-point travel.

Need a car on a standby to take you around? Now rent a cab on an hourly package with the all new Rentals. Available for local travel in select cities, said an update on Ola’s Google Play page.


Ola, a home-grown unicorn valued at $5 billion, has a strong competition with Uber, the worlds’s most valuable start-up at $68 billion. Recently, Ola had also started piloting an outstation service in Delhi and then expanding to other cities like Mumbai and Bangalore.


The move is expected to boost Ola’s bouquet of offerings and help the company evolve into a one-stop service provider for road transport solutions. The company has been entering categories that are yet to be explored by Uber to gain market share. Presently Ola and Uber offer on-demand service taxi booking.


However, Ola is also providing their customers the privilege of advance booking unlike Uber. Earlier in March, Ola introduced its cheapest offering Micro at Rs.6 per km to take on Uber’s cheapest service UberGo at Rs.7 per km, a move that has helped the company turn the tide in its favour. In response to Micro, Uber has also slashed fares for UberGo to match Micro in Delhi, one of the top three markets along with Mumbai and Bangalore.

  It is a summarization of an article in Live Mint. For more information, visit http://www.livemint.com/Companies/QM9QpMYDUtOzolhFkX6rkM/Ola-pilots-hourly-rental-service-for-cabs.html



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Start up Lessons, TAXATION
Equalisation levy on digital ads were introduced in the Indian ‘fiscal budget’ presented on February 29, 2016. From June 1st, an equalisation levy of 6% will have to be deducted by a business entity in India whose aggregate payment in a financial year exceeds INR 1 lakh for specific services to a non-resident service provider. The specified services covered by the levy include online advertising, provision for digital advertising space and any other service to be notified by government.


How does it impact Indian startups

Online marketing is one of the most used form of marketing and is very important for startups because of its comparatively lower cost and targeted customer reach. As we all know that Google and Facebook ads are the most effective platforms as of now, and this levy will affect the small startups rather than the giant-sized Facebooks and Googles of the world.

The startup, who mostly sustain on digital marketing, will now face the burden of ‘extra cost’ from these giants. The equalisation levy would translate into startups ending up paying six percent over the 14.5 percent service tax. Thus, making digital advertisement more expensive for local Indian advertisers. The final cost depends on the negotiation between the startups and online platforms. But this will further financially rip the fund-deficit startups that will have to eventually cut down on their marketing budgets.

Any cut of digital advertising budgets will affect customer acquisition and growth of the company.   It is a summarization of an article from Your Story. For more information, visit http://yourstory.com/2016/06/digital-ads



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Start up Lessons, TAXATION
Income tax department is planning to tax startups whose valuation has been slashed. Section 56 of the Income Tax Act confers the tax department the ‘power to tax the excess consideration’ (more than the fair value) against issue of shares in the last round of funding.


Fair value is the actual value of the Company. Few startups valuation has been slashed on parameters such as profitability, growth, and intense competition, which was not considered before, thus making the company overvalued in earlier rounds of funding. The income tax department is of the opinion that considering the current slashed down valuations as the fair price of the company, the differential amount of the funds raised in earlier rounds at a higher valuation are taxable.


How it Impacts Startups Raising initial funding is not easy for startups and this extra tax only adds to the problems. Valuation of startups is based on only assumptions as there is no past data for assurance. This tax will cause fear in term of valuation in startup world. In the initial stages, startups struggle with fund requirements at every step and the extra tax burden is going to increase the pressure further. Startups are too vulnerable and the money crunch can lead to hampered operations or even shutting down shops.    

It is a summarization of an article from Your Story. For more information, visit http://yourstory.com/2016/06/startup-tax/



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Start up Lessons
Ravi Gururaj, one of the most well-known faces when it comes to the startup ecosystem in India, has found his latest startup Qikpod in legal mire. Qikpod is a smart locker system that can be used by e-commerce companies for smarter deliveries.


To know more about the fallout, read http://www.wazzeer.com/articles#ravi-gururaj-s-qikpod-faces-legal-trouble-over-equity-issues


Earlier the Bangalore Civil court passed an order retraining Gururaj from launching the product and also from allotting new shares. But Gururaj approached High court and got permission to launch his product. Sources say that the reason for the fallout between Gururaj and Ray was a lack of legal documentation of equity shares, etc, and relying solely on e-mail correspondence. This, experts say, is a trend that is plaguing many start-ups, and causing their downfall. Ravindra MK, co-founder of BHive, said “Often startup founders do not do documentation work early on. They believe they should start work on the product first and look at documentation later. However good a friend the co-founder is, it always makes sense to have share-holder agreements and agreements between the founders done at the very beginning.” However, Bharathi Jacob, co-founder Seedfund, believes that the most important thing between co-founders is trust. Jacob said, “It is very important that the co-founders discuss and decide each and every function of the company: From how to hire, whom to hire, what investments, what equity, etc. Everything needs to discussed and known to the founders. They should jointly take decisions.


However, making a legal document shows that complete trust between the founders is not present. I do not believe that a legal document is important. I feel that an e-mail conversation is more than enough.” It is a summarization of an article from Bangalore Mirror.

For more information, visit http://www.bangaloremirror.com/bangalore/others/Lesson-1-from-Qikpod-scrap-Put-everything-in-black-and-white/articleshow/52719329.cms



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Business Registration, E-commerce Taxation, Start up Lessons, TAXATION
If you want to do business on Flipkart then you need to register, either yourself or your business, and become a Flipkart Seller by signing on with Flipkart. The process is easy and can be started from Flipkart Seller homepage. You can signup as a Flipkart seller by providing information about business and product that you want to sell on flipkart. This information will be verified by flipkart during the registration process.


Some of the details that must be provided and verified during the Flipkart Seller registration process include:
  • Name
  • Email address
  • Phone number
  • Pickup address / business address
  • Categories of product the business is interested in selling through Flipkart
  • Business registration documents
  • Tax registration documents
Business Registration
Your business must be registered in order for you to become the Flipkart Seller by completing Flipkart seller registration process, because while registering yourself you will need to submit documents related to business registration. These documents depend on the type of business registration you have done. Sole proprietorship is not advisable for becoming Flipkart seller as sole proprietorship business does not offer limited liability protection, is not easily transferable, cannot have investors or partners, not very scalable and has limited capacity to obtain bank loans. Becoming a Flipkart Seller  as a Private Limited Company is one of the most preferable methods of becoming a Flipkart Seller as it provides limited liability protection to promoters, separate legal entity, easy transferability, ability to take on investors or partners and quickly scale-up operations. The following documents must be submitted for a Private Limited Company:

Identity Proof
  • Copy of Certificate of Incorporation of Private Limited Company
  • Copy of Memorandum of Association
  • Company PAN Card
Address Proof
  • Company Telephone bill (Fixed line)
  • Company Electricity bill
  • Lease or rental agreement
Tax Registration Once you have decided and registered your business entity, you need to file for tax registration and also open a bank account in the name of the business.

Registration Required
  • PAN – PAN Card of the individual or private limited company or partnership
  • TIN – TIN Number is also known as VAT Number / Sales Tax Number / CST Number in the name of business
  • TAN – TAN is required for Tax Deduction at Source (TDS) ? in the name of business
  • Bank account name
  • Bank account number
  • Bank IFSC code
  • Business name
Starting to sell on Flipkart
Once you have submitted the information and documents with Flipkart to become the Flipkart seller, and it is verified by them, the business can commence selling of its products on Flipkart.



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Start up Lessons, TAXATION
Have you ever faced issues related to your PAN application like the non-allotment of PAN or an error or mismatch in the name on the card?


Did you know that the Income Tax Department has an online grievance management system, which allows investors to submit their complaints pertaining to PAN applications registered with UTITSL or NSDL? If no, then don’t worry here’s how you can go about lodging a PAN related complaint online.


Portal You can file a PAN related complaint by logging on to incometax.sparshindia.com, and going to the PAN section. Complaint menu By clicking on ‘submit link’ you can file a complaint related to PAN submitted either to UTITSL or NSDL. On clicking this link you will get a form where you can choose the nature of your complaint from the drop down menu.


Details You need to fill the mandatory details such as the receipt or coupon number of the PAN application. Your details such as name, address and contact details are also required.


Submission Once all the details have been entered, you can submit the application online.


Status check You can check the status of the complaint by clicking on the ‘status’ link. The complainant can retrieve details and the status of the complaint by entering either his PAN number or the complaint number allotted to him. It is a summarization of an article from Economic Times.

For more information, visit http://economictimes.indiatimes.com/wealth/tax/how-to-lodge-a-pan-related-complaint-online/articleshow/52585754.cms



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Start up Lessons
In today’s time, as soon as an entrepreneur starts his venture, he becomes busy trying to win the race to success. While they are running this race by promoting their product, they tend to forget about the basic payroll of the firm, which can create significant problems in the future.

Here are some basic business accounting steps, which should help you start things off.


Bank Account The first thing that you should do is open a bank account and have different accounts for different expenses like for tax payments, vendor payments, receipts from payment gateways. Once your venture is registered you can open an account with the help of pan card, but before opening you should compare all bank fees and features they give you.


To Know About Your Expenses You need to keep a track of your expenses, in order to build a solid base, by having a proper system of keeping all your bills and other important records. This is the most important step that allows you to monitor your growth and helps in knowing the financial position of the company at any point of time.


Identify Your Vendors The next step is to determine your vendor. You need to make a list to keep record of payments and purchases and also verify your balance in vendor’s account in specific intervals.


Maintain Data About Your Customers You need to verify your product category and according should tag clients with the product purchased by them. This will help you in selling different products to existing clients.


Develop A Book-Keeping System Bookkeeping means recording of your day to day transactions, categorising them in their heads and reconciliation of banks with your accounts. There are three methods you can use:
  • Do It Yourself (DIY) You can do it yourself by using Excel spreadsheet or Tally
  • Outsource the Accounts You have the option of using an outsourced or part-time accountant
  • Hire an inhouse Accountant If your business is big enough, you can opt for an in-house accountant for your company who can do all your work under your roof.

Identify The Method Of Accounting
Next you need to choose method of accounting between:
  1. Cash Method: Only cash transaction (Income and Expenditure) gets recorded.
  2. Accrual Method: In accrual method all the transactions (Income and Expenditure) are recorded irrespective of the fact, whether cash received for the particular transaction or not.

Set Up Payroll/HR System
As you are new to the business, and you are not in numbers that cannot manage but as the time passes and business grows you need to hire employees and for them you need to decide their rosters, salaries and also take care of any tax part that this deducted from their earnings.


Keep A Track Of Your Taxes You need to keep a track of any penalties or any government compliances you need to do. There are taxes that you need to take care of at certain point in your business such as service tax, Sales Tax, and so on. If not taken care of, you may end up paying high penalties and bear punishment from government.


Improvise As You Go Like practice make a man perfect, as you start with simple keep-ups in a spreadsheet, and as you go, you keep on changing your record keeping methods, your transaction booking methods. The more time you give to accounting, the more time you save for your business.


Hire An Expert When Needed If you are not able to maintain your accounts properly or you cannot handle the tax and compliance part then you should be advised to go with an expert. It is a summarization of an article by Agam Gupta. For more details, visit https://inc42.com/resources/10-basic-accounting-lessons-startups/


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Start up Lessons
The Companies Act which is considered to be one of the most important legal reforms in India, aims to bring Indian Company Law in par with global standards, by focusing on governance and ease of doing business in India. The new Act mostly treats a private limited company on par with a public limited company, the differences between the two being almost negligible. In spite of many circulars, there are many grey areas that require immediate attention by the Ministry – especially why small and mid-sized private limited companies are required to comply with the provisions of the Act as if they are large corporations. Questions like these have been discussed threadbare by various stakeholders in various professional fora. However, even then there was lack of clarity, which led to numerous representations being made to the Ministry by the corporations, stakeholders and professional bodies.


On February 01, 2016 the Committee had submitted a detailed report to Jaitley, suggesting amendments in certain definitions, sections, sub-section and the rules made thereunder. Following are some key amendments as suggested by the Committee:
a.Section 2(49) the definition on ‘interested director’ to be omitted.
b.Bringing in more clarity in the definition of ‘holding company’, by including ‘body corporate’ in its definition.
c.Time period for a Company to have its registered office-after incorporation, and notice of every change of the situation of registered office-to the Registrar, be increased to 30 days.
d.An employee, duly authorised by the Board of Directors can authenticate documents, proceedings and contracts.
e.Separate Annual Return format for small companies and OPC’s, with lesser detail and omission of requirement of attaching extract of the Annual Return to the Board’s Report.
f.Allowing unlisted companies to convene Annual General Meeting at any place in India, subject to approval of 100% shareholders.
g.Provision with regard to ratification of appointment of statutory auditors by the members at every annual general meeting to be omitted.
h.Condition of minimum net worth/turnover/net profit for compliance of CSR provision should be considered for the ‘immediate financial year’.
i.For resident director, the period of 182 days shall apply during the financial year.
j.Directorship in a dormant company to be excluded for reckoning the limit of directorships.
k.Resigning director to be given an option for filing his resignation to the Registrar, instead of making it mandatory.


Considering the recommendations and the concept of ‘ease of doing business in India’, the Bill has been introduced in Lok Sabha. There are high expectations on the consideration and approval of the Bill.   It is a summarization of an article by Anup Vijay Kulkarni.

For more information, visit http://www.businesstoday.in/opinion/columns/a-focus-towards-ease-of-doing-business-in-india/story/233289.html



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