Here are some key legal points to note while starting a new business:
- Business entity: Decide on the type of business entity you want to set up, such as a sole proprietorship, partnership, limited liability company (LLC), or corporation.
- Business name: Choose a unique name for your business that is not already taken and register it with the appropriate government agency.
- Business licenses and permits: Obtain all the necessary licenses and permits required for your business at the state, and local levels.
- Taxation: Understand the taxation laws that apply to your business, including income tax, sales tax, and GST taxes.
- Contracts: Ensure that all contracts related to your business, including those between the partners, with employees, vendors, and customers, are legally binding and enforceable.
- Intellectual property: Protect your business’s intellectual property, such as trademarks, patents, and copyrights through proper channel of registration. There is a myth that IPR can be registered only after the invention. An IPR can be protected during the process of the invention and there is a minimum time boundary for it as well, so startups don’t have to worry about the idea or concept being stolen by insiders or investors. Consult with a good IPR lawyer to help you with the process.
- Employment laws: Understand the laws related to hiring and firing employees, as well as other employment-related laws such as minimum wage, overtime pay, and anti-discrimination laws. So that it will help you arrive on the running cost of the business.
- Data protection and privacy laws: Comply with data protection and privacy laws, such as the General Data Protection Regulation (GDPR).
- Insurance: Consider obtaining insurance policies that protect your business against liability, property damage, and other risks that may even affect your employees health.
- Environmental regulations: Be aware of environmental regulations that may apply to your business, such as waste disposal laws, and ensure that you comply with them.
It is always advisable to consult with a good Company Law lawyer in the city or a good lawyer online to arrive on all the checklists that has to be ready before you start a business.
Frequently Asked Questions:
What is the best legal structure for my business?
Answer: There are various legal structures available for a business, such as sole proprietorship, partnership, limited liability partnership (LLP), private limited company, and public limited company. The best legal structure for your business will depend on various factors such as your business goals, tax implications, liability protection, compliance requirements, and the nature of your business. In the upcoming blogs we will elaborate much on these aspects, which will help you narrow down on your decision.
What are the licenses and permits required to start a business?
Answer: Depending on the nature of your business, you may need to obtain various licenses and permits from different government authorities. For example, if you are starting a food business, you may need to obtain a food license from the Food Safety and Standards Authority of India (FSSAI), and if you are starting a manufacturing unit, you may need to obtain an industrial license from the Ministry of Commerce and Industry.
How can I protect my business idea or intellectual property (IP)?
Answer: You can protect your business idea or IP by registering a trademark, patent, copyright, or design with the appropriate authorities. For example, you can register your brand name as a trademark with the Trademark Registry, and register your invention as a patent with the Patent Office.
What are the compliance requirements for my business?
Answer: Every business has certain compliance requirements that it needs to fulfill to avoid legal and financial liabilities. These may include filing of various tax returns, maintaining proper books of accounts, obtaining necessary licenses and permits, complying with labor laws, and following environmental regulations, among others.
How can I raise funds for my business?
Answer: There are various ways to raise funds for your business, such as self-funding, borrowing from family and friends, obtaining a loan from a bank or financial institution, and raising funds from investors through equity or debt. The best option for your business will depend on various factors such as your business plan, financial projections, risk appetite, and the stage of your business.
How can I draft a contract or agreement for my business?
Answer: You can draft a contract or agreement for your business by seeking the help of a lawyer or using online templates. It is important to ensure that the contract or agreement covers all the necessary terms and conditions, and is legally binding and enforceable. Some common types of contracts that businesses may require include employment contracts, vendor contracts, lease agreements, and service agreements.
What are the tax implications of my business?
Answer: Every business has certain tax implications that it needs to comply with. These may include paying income tax, goods and services tax (GST), excise duty, and customs duty, among others. It is important to consult a tax professional or with a compliance lawyer to understand the tax implications of your business and ensure compliance with the applicable tax laws.