With the ease in company Registration process more and more aspiring entrepreneurs are motivated to bring their dream of forming a startup into reality. When a startup is being incorporated, it goes through various phases. There are separate legal requirement for every phase like at an initial stage every startup is required to procure the business license, obtain registration, maintain books of accounts, taking care of taxation, drafting vendor contracts etc. the various legal advice that every startup must take include the following:-
- Choosing the best legal structure: This is one of the most crucial decisions that must be taken by every startup. While taking this decision multiple factors must be considered such as nature/sector of business operation, business trajectory, regulatory and tax considerations, cost of formation, ongoing administration and many more. However the most preferred entity structures for startups in India are Limited liability partnership and Private Limited Company.
- Obtaining Registrations and licenses: Any business entity is mandatorily required to obtain certain registrations as per the applicable law. Some examples are Permanent account Number (PAN), Tax Deduction and Collection account Number (TAN), Goods and service tax (GST)number. Further according to the nature of business entities they are required to obtain he business licenses issued by a Government authorities that allow startup to start/conduct/continue to operate a particular business within its territorial jurisdictions lawfully.
- Protecting Intellectual Property rights: In the era of Modernization, one of the most crucial assets for any business entity is its Intellectual Property rights. These assets help the startups to establish a distinct brand image and gain the competitive advantage over others. One significant thing to be noted here is that registration of a company or a business in India does not by itself gives protection against others who might commence using identical or similar marks. A Trademark search should be conducted before deciding on these business names, trade names to prevent any issues in future including potential infringement.
- Agreements: In case there is more than one founder of the startup then there is a need to formulate the agreement between them in order to establish the relationship between the founders of a startup. In an agreement the role, responsibilities and rights of each partners shall be specified.
- Compliance Management: Just incorporating a startup is not enough. The company once registered are required to fulfill certain annual compliance requirements and other requirements to avoid Government interference and hefty penalties. To manage the compliances of the company it may take some professional guidance.
- Third party agreement: Utmost care must be taken by the company while entering into any third party agreements and setting out its terms and conditions. The clauses related to breach, termination and dispute resolution should be well negotiated and captured in all third party agreements.
- Contacts with employees: Before employing any person the startup must ensure to enter into clear employment contracts detailing terms and conditions of employment. The contract must specify the details regarding the job profile, compensation, and other associated benefits, a number of clauses must be inserted to safeguard and protect the interest of the startup- such as stopping employees from setting up competing entities, prohibiting employees from exercising any legal right on Intellectual Property Rights on the work done/developed during the course of employment.
This is how Company in India, a Company should get started and in case of any legal or professional advice regarding company registration or related to Intellectual Property rights you can contact us at BIATCONSULTANT.