According to Merriam-Webster Dictionary, Start-up means “the act or an instance of setting in operation or motion”.
Here’s a quick guide for startups to know the basic incorporation and other legalities involved.
It is very important for a start-up to be in a legal form of business. It can be a one-person company, private limited company, partnership firm, limited liability partnership or sole proprietorship.
The whole point here is to analyze what can be the best option for your start-up considering the budget of the organization:
Human resources related laws or employment laws in India do not stem from any single legislation and there are over 200 laws at the federal level and the state level. Essentials one include:
Venture Capital investment is the most formal way. Despite the young age of the start-up, the investor will usually conduct a due diligence on the Company.
Licensing depends on the nature of business. One should contact their counsel for details regarding the same as ignorance of law is not an excuse in legal matters.
Contracts are indispensable tools of entrepreneurs. Hence, basic knowledge of certain fundamental principles of contracts certainly helps. Contract Law in India is governed under the Indian Contracts Act, 1872.
Disputes are inevitable in today’s business world. Knowledge always helps whether it is about the formal (how court cases work) and informal (arbitration, mediation, conciliation, etc.) ways of dispute resolution.
Indian Tax laws are divided into two types: Direct Taxes, as the name suggests, are taxes that are directly paid to the government by the taxpayer. It is a tax applied on individuals and organizations directly by the government e.g. income tax, corporation tax, wealth tax etc. Indirect Taxes are applied on the manufacture or sale of goods and services.
A start-up should keep in mind, the risk involved in the day to day regime of their work:
With the computerization of the Ministry of Company Affairs, digital signatures have gained significance as a convenient way for foreign companies to conduct their Indian operations. This act recognizes such transactions.
Laws primarily applicable include the Indian Penal Code, 1860, the Indecent Representation of Women (Prohibition) Act, 1986 and the IT Act itself, amongst others.
There are broadly five types of Intellectual Property Rights (IPR’s) that a startup needs to protect to leverage its intellectual property, which are: (a) Patents, (b) Copyrights, (c) Trademarks, (d) Designs, and (e) Trade Secrets.
The information provided in the article is a general overview on how a Start-up should be legally ready. One should always consult a Lawyer and other professionals for customized service according to the Start-up’s requirement.