Building corpus for your startup on the side? Here’s what you should do before you save for business expenses

You have a job, and you often toy with the idea of forming a startup. Well, starting a business starts with questions about ideas, customers and company registration. But another question deserves attention first: Can you afford a startup?

Rajshree Jhawar, QPFP®️ of ArthaSarathi, advises founders to prepare their finances first. Your business needs money, but your family needs financial security, too. Mixing these needs can bring business worries into your home. Before starting, divide your money into three separate parts.

First, create a family safety fund. Add up expenses, including EMIs, school fees, insurance, medicines and daily needs. Keep a larger reserve if you plan to leave your job. Business income may remain uncertain during the early months.

Second, protect the money meant for family goals. Funds for education, housing commitments or other responsibilities should remain separate. Do not quietly use these savings to finance your business.

Third, build your startup fund. Estimate business expenses for 12-18 months, including technology, salaries, rent, marketing and professional fees. Include product development and the money needed for daily operations. Add a cushion because costs can rise and earnings can take longer.

If your launch is years away, save regularly from salary, bonuses or business surpluses. As the launch approaches, protect the money needed soon from market volatility. Your appetite for business risk may exceed your family’s ability to handle it.

Before spending heavily, check whether customers will pay for your product or service. Jhawar suggests that a small trial can reveal more than an expensive launch. With partners, agree on ownership, investment, duties, intellectual property, decisions and exit terms. Record these in a founders’ agreement.

Startup registration

Company registration is largely online. Obtain Digital Signature Certificates and reserve your name through SPICe+ Part A. Complete incorporation through SPICe+ Part B.

Prepare identity documents, address proofs, office proof, utility bills and applicable owner permissions. Keep the Memorandum and Articles of Association ready, too.

However, not every new company automatically qualifies for DPIIT startup recognition. Generally, it must be within ten years of registration or incorporation. Turnover must never have exceeded ₹200 crore in any financial year since incorporation. This means turnover, not valuation, investment or funds raised.

The business should innovate, improve its offerings, or grow with strong potential for employment or wealth creation. Simply splitting or rebuilding an existing business does not qualify. Recognition also does not guarantee every tax exemption or incentive. Separate benefits may have their own conditions.

Depending on your requirement, you may also go for MSME Registration. It is officially known as Udyam Registration.

Registering your company is only one step. Building enough savings gives your business time without putting family needs under pressure.