Top Legal Necessities For Beginning A Business In India

Summary

• Beginning a business is not an easy task; however, when setting up a business, various factors are needed to be looked at, such as the legal aspects, analyzing the competitors and evaluating the finances etc.
• While setting up a business, capital requirements are needed to be finalized such that taxes and other liabilities are complied with.
• The business owner must also make a strong grip over the rules of starting up of the business and the business laws such that the business owner is well versed with the legalities involved.

Introduction

Beginning a business in India is a journey which includes various hardships, legalities, and rules to be kept in mind while moving ahead. While starting up a business, there are various primacies which must be considered, such as creating a business plan, investing in the business, and fundraising.

Legal requirements to start up a business

There are various laws which govern the market, and businesses and entrepreneurs must be aware of them. The legal requirements for beginning a business in India are as follows:

1. Registration of business entity- It is mandatory to register the business entity, and as such, there are various business entities which an entrepreneur must first decide to proceed with. Some of them are Limited Liability Partnership, Private Limited Company, Sole proprietorship, One person company, etc. It is the first basic step to be taken while beginning a business in India.
2. Creating the founder’s agreement- This condition is a must as the founder’s agreement consists of all the basic and crucial details in relation to it. It is termed to be a document that legally creates the founder’s as well as the company’s rights, obligations, dispute resolution, and other important characteristics.
3. Documents required for registration- Before getting the legal licenses and registration done, there are a plethora of documents that are necessary for fulfilling legal formalities. Documentation such as Certificate of Incorporation, Digital Signature Certificate, Commencement of Business Certificate, registration on MCA Portal including other documents of the company such as ROC Registration, Address, PAN number, etc. The business must make sure that all the important documents for registration are in order.
4. Licensing and Registration- There are various types of licenses that vary according to the type and nature of the business. It is imperative to get the relevant licenses, or else the entrepreneur may face severe legal penalties. The authorization to set up a business is in the form of a legal license. There are different licenses that are required for different kinds of business. The business owner must be aware of the licenses and registrations required for carrying on the business, such as Shop and Establishments License, FSSAI License, GST Registration, etc.
5. Taxation Advisory & Services- Different strategies need to be formed along with tax planning to mitigate the potential tax risks. Ensuring proper adherence to all the compliance and all formalities must be complete for filing the corporate or non-corporate tax returns to the appropriate authorities. Different taxes are applicable in different types of businesses, and the business owner must be aware of all the tax implications in order to avoid any discrepancies. For the purpose of business, proper books of accounts are a must for a company, and regular audits of the same should be done, keeping in mind that all the relevant taxation rules are adhered to.
6. Ensuring protection of intellectual property- There are many findings in the companies, and the business owners need to protect the same as this becomes the intellectual property owned by the company or an organization. The emerging technologies among the start-up company are protected by intellectual property rights under a scheme formed for the said purpose. Numerous facilitators have been empanelled by the Controller General of Patents, Trademarks and Designs for the effective implementation of the scheme.
7. Adhering to Labor laws- The integral part of the organization is to adhere to the labour laws. While beginning a business in India, laws regarding minimum wages, provident fund payment, maternity benefits, holidays, etc., must be complied with. The newly formed business entities registered under Startup India Initiative can complete a declaration with regard to the labour laws within a period of one year from the date of incorporation.
8. Drafting and Finalization of contracts- The contracts are considered as legal recordings in relation to business transactions between the business entities. The contract must comply with the conditions as mentioned under the Indian Contract Act, 1972. The employee contracts and NDA contracts are important to be formed during the launch of a business which protect from any kinds of future risks. Also, the NDA contracts protect the ideas of the company, which is similar to Intellectual Property Rights.

Conclusion

Adhering to the legal necessities is essential for beginning a business in India. Therefore, complete knowledge and compliance of the business laws are necessary, and the company/organization must hire professional legal counsels who can provide timely legal advice so that discrepancies can be avoided.