Before starting a new business, an entrepreneur needs to have the knowledge on various aspects of business. One such segment is the law of the land. Multiple laws can be applicable for a business such as company’s law, shops and commercial establishment, professional tax, provident fund, Goods and Service tax (GST), customs Act etc. Not all of them will be applicable for all business, you need to identify which laws are applicable for your nature of business and ensure that the company complies with them to avoid running into legal problems in the future. Let’s have a look at the legal aspect that govern a start-up business in India.
Choosing the right type of business
The first decision to make is to decide what type of company should you register as. The answer to this can be different depending on the nature of business, the long-term vision and other factors scale and funding requirements. You can choose from ‘partnership firm’, ‘Limited Liability partnership’, ‘private Limited’ or ‘one person company’ or even a sole proprietorship. Choosing the most appropriate business vehicle for one’s venture goes a long way in affecting visibility, sustainability, and profitability. So, choosing your brand will depend on long-term goals and vision. Every type of business has a separate set of laws that you have to decide to keep the existing legal frameworks in mind.
A business must have a register office address. There are 29 states and 7 union territories in India and if your business is registered in any one of these states, you will also have to follow the state laws which may be applicable to your business. Shops and commercial establishment Act, Employee Professional Tax Act, Stamp act, Labour laws can change from state to state. For example, the stamp duty payment you make to register a partnership firm in Kerala will be different from Karnataka or Tamil Nadu.
Intellectual property law (IP)
Patent, trademark and copyright are of prime importance for your business. Every business is unique and is run by individual who are not thinking the same way or developing the same product. It’s important to protect your brand, patent your invention and copyright your content. It’s critical that you file the right patent/trademark/copyright claims. This will prevent theft.
You can never run away from taxes, whether you like it or not. So, it’s important to understand what all taxes are applicable to your business and make such payments within the due date. It’s also important to note that certain taxes laws are applicable only which your business crosses a certain turnover, in this case you don’t have to pay when it’s not required. For example, in certain cases, GST is applicable only if the turnover of the company is more than Rs 20 lakhs. Undertaking the law of the land can go a long way saving cost by not paying taxes when not required and by avoiding any penalties by paying on time, when required.
Maintaining you books of accounts monthly or such intervals can help you analyze the cost associated to each segment and help improve the performance of the company. Financial data at the right time can help make important decision which can increase profitability and reduce cost.