Every business has legal aspects and applicability, the compliance of which is necessary for its survival in the Long run. Therefore, if you are a budding entrepreneur, it’s critical for you to have some insight into basic legal aspects of running a business. Every business, whether it’s a startup or established must comply with legal responsibility associated with the type of business it carries, otherwise sooner or later it will involve itself in legal complications which might entail legal costs, penalties and law suits or even suspension of the business.
Here is some important legal aspect which a new entrepreneur or startup should know before starting a new business.
1. Deciding the type of business
The most important thing before starting a new venture is to decide the kind of organization you want to set up. It can be either a private company or public Company or Limited Liability Partnership or partnership firm. New Companies Act, 2013 also gives recognition to small Companies based on turnover criteria which involves lesser compliances and are easy to manage.
Each type of organization has its own sets of merits and demerits and compliances involved. Its indispensable for a startup to analyse the suitability of the organization keeping in mind its long-term objective and vision.
2. Business Licenses
Depending on the type of business you want to carry, you may need a variety of business registrations and licenses. For instance, if you are manufacturing baby food product then you must register yourself with FSSAI and also comply with Infant Milk Substitute Act, apart from complying with packaging laws. Some ventures are regulated by government, while some are not, therefore It’s very important to get hands on information on this aspect.
3. Compliance of the labour laws
The employment laws like Provident Fund Act, Shops and Establishment Act needs to be complied by a business depending on number of employees on the rolls. Startups have been exempted from inspection by labor department for up to 3 years if they give self-declaration for compliance of 9 labor laws and they can self-certify the compliance of these laws.
4. Selection of a business name
The selection of a business name popularly known as Brand Name shall be done with proper care and diligence, as selected name shall not infringe the rights of an already existing business. You can check with Trademark authorities, if there is an already existing trademark for the name selected by you or whether the name resembles to an existing business, it’s a free and easy services offered by Indian Trademark Authorities. Relevant information can also be obtained from the website of Ministry of Corporate affairs.
5. Apply for Trademark protection
Though, it’s not mandatory to register your brand name as a trademark, but it’s advisable so that other business can be prohibited from using your brand name and take advantage of your goodwill.
6. Compliance with Taxation laws
Compliance with taxation laws is non-negotiable. Every business must pay the taxes its liable to pay and file its Income Tax return on time. Tax laws are tricky and varies across the sectors, regions. Recently the government has introduced “Start Up” India initiative to promote the startups which provides exemptions and tax holidays for startups and new business. Also, give due attention to maintenance of proper accounting records and timely audits.
Contracts are indispensable for entrepreneurs. Having basic knowledge about contract management can help a new entrepreneur in long run. Having a definitive contract with rights and liabilities of all parties defined helps in amicable settlement of disputes. Make sure you have employment contracts with employees, Confidentiality Disclosure agreement with business associates etc. in place for start.
Guest post by – Aashi
Aashi is a Lawyer by Profession. She is also mom blogger who writes about Motherhood, & lifestyle and micro blogs as ‘candyandmumma‘ on Instagram.
Thank you Aashi. WOI wishes you all the best for your future endeavours. Keep writing.
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