Entrepreneurs should ensure they are adhering to all legal requirements associated with operating a small business before launching a new business venture. For new companies and startups, there are a variety of legal requirements, such as financial rules, tax requirements, and employment laws. Make sure your new business abides by all of its legal obligations so you can return to concentrating on expanding your business.
Even if you have a fantastic new business idea, you must first ensure that you meet all the legal requirements associated with opening a business to launch your small business. An easy-to-follow manual is right before you.
1. Keep ready the following documents
Certificate of Incorporation
Licenses and Memorandum of Association (MOU)
Trademark registration and Intellectual Property agreements
Permanent Account Number (PAN), Tax Deduction Account Number (TAN), Digital Signature Certificate (DSC), Director Identification Number (DIN), Tax Identification Number (TIN), Goods and Services Tax Identification Number (GSTIN) and No Objection Certificate (NOC)
Non-disclosure agreement (NDA)
Employment contracts and offer letters
2. Check the availability of the name of your company
After determining which organisational structure that best serves your needs, you must select a company name that accurately captures the philosophy of your venture and ensures that no other entity has already registered it. You will need to select a domain name to give life to your venture online, a trademark to protect your organisation at the national level, and an entity name. In the era of online marketing, it is very crucial to check the availability of a name for your business because the brand name is going to represent you.
3. Decide on the proper business structure
You’ll need to define your business structure to operate a legally recognized business. A business structure refers to how an organization is structured as recognized in a given jurisdiction. It’s the sole determinant of the nature of activities it can legally undertake. The main types of business structures are:
LLC (Limited Liability Company)
4. Obtain all necessary registrations and licences
The next step is to obtain authorization to conduct business after the Founder's Agreement has been written. Legal licences and registrations serve as authorizations. While some of them are universal and necessary for all businesses, others are specialised and necessary only for particular types of businesses.
General registrations are - GST registrations, PAN, TAN, Bank Accounts, Shops and establishment registrations
Specialized registrations like FSSAI License for food, IEC Code for Import exports, Kosher License for Kosher goods etc.
5. Know the applicable tax laws and accounting standards
Every business needs to consider taxes. A variety of taxes, including central tax, state tax, and even local taxes, may apply to businesses in India. Since various business and operating sectors are subject to various taxes, being well aware of the applicable text regime in advance can be very helpful.
There are numerous programmes and initiatives like the Central Government's "Startup India" initiatives that aim to support startups by providing various tax breaks and exemptions. It can be useful to have a thorough knowledge of pro-startup laws and initiatives. A startup is eligible for a three-year income tax exemption as well as tax breaks on capital gains and investments that exceed fair market value. Therefore, comprehensive tax knowledge may prove beneficial for growth and even expansion.
In terms of business accounting, it is best practice for a company to keep accurate books of accounts and periodically audit them to make sure that applicable accounting and tax laws are being followed. Having a reliable invoicing and payment system can help guarantee a transparent accounting system.
6. Become familiar with labour laws
All businesses, regardless of size, must abide by labour laws. Regardless of size, your business is governed by several labour laws if it is recognised as a business that employs people. These laws control important matters including, but not limited to, minimum wages, gratuities, PF payments, weekly holidays, maternity benefits, sexual harassment, and bonus payments.
7. Protect intellectual property
Today's businesses depend heavily on intellectual property, especially tech-focused ones. Codes, algorithms, and even research findings are all examples of intellectual property that is typically owned by an organisation.
Every innovative venture must first create these intellectual properties and then protect them if they are to grow successfully. As a result, legal knowledge of IPR laws can be useful at every stage of a venture's development.
8. Establish a sound business policy
Another action that can lead a venture to success is the development of a sound business strategy. It is something that maintains both management and employee focus. This makes it simple to achieve the desired, targeted growth.
9. Purchase the business insurance you desire
In situations where your personal liability protections are insufficient, business insurance can protect your venture. Insurance can safeguard both your assets and the assets of your company. Some insurances, like those for unemployment and disability, are even required by law.
Having insurance that shields your startup from additional risks is another smart move. General liability insurance, product liability insurance, commercial property insurance, and others are a few of these.
10. Create your founder’s agreement
A founders' agreement is a written document that establishes and regulates the cofounders' relationship. Outlining the rights, obligations, ownership, and roles of the founders is crucial. It is simple to express and align expectations for your shared vision thanks to the contract. A carefully drafted agreement will offer a procedure for handling future decision-making. It ought to be flexible enough to be modified as needed. The entire purpose is to prevent potential business disputes between the founders. It also covers how to handle ambiguous situations like a co-founder's resignation or death. The early stages of a business are the ideal time to draw out a founders' agreement. It might even be covered in your business plan's section on management and company structure.
11. Decide upon winding procedure in advance
Deciding to dissolve a business is challenging. All parties involved in the decision to close a business, including suppliers and investors, must be informed in advance, making the process a task that requires careful planning and execution.
12. Create a privacy code of conduct
Having trouble managing some of these legal procedures? To make sure you have everything covered, it might be worthwhile to get in touch with qualified legal counsel. In this manner, you can devote more of your time to organising, supervising, and ultimately expanding your company.