With start-ups and businesses popping up everywhere, one might think that jumping into this trend might be an easy thing. But it is really not. Only an entrepreneur knows the difficulties of running their business and the amount of hard work it requires.
There are numerous formal legalities like tax obligations, law regulations, GST registration, etc. that need to be followed.
A business needs to maintain a cordial relationship with its customers and consumers. Similarly, the venture has to understand several laws and rules laid out by the Indian government so that it runs its course smoothly.
From the founder’s agreement to the safety of intellectual property, this guide will be able to quell all doubts that come along with establishing a new business.
Some Essential Documents Required
Given below are some of the fundamental documents that are required to get a business going.
- Digital Signature Certificate (DSC)
- Certificate of Incorporation
- Registration on the MCA Portal
- Director Identification Number (DIN)
- Commencement of Business Certificate
Business Name and Founder’s Agreement
Before one starts a business, one needs to know the various types of business structures present.
- Sole Proprietorship
- One Person Company
- Public Limited Company
- Private Limited Company
- Limited Liability Partnership
After deciding the type of venture that fits one’s requirements, the next step will be to select a name that represents the business suitably. It is also important to note that the name should be unique that has not been claimed by any other entity.
Choose a name that represents the goals and ideologies of the venture perfectly.
Next, we move on to a crucial document – the founder’s agreement. It defines the relationship between the founders and the company.
The agreement deals with responsibilities, roles, rights, operational details, and many other clauses crucial for the smooth operation of a venture.
This document will be a solid foundation for a venture and will guide the founder through any disagreements and disputes that may arise.
Legal Business Licenses and Registrations
The next step in this process is to authorize the venture/business. Registration is the document that officially lists a venture with an official. License is the official document that allows a business to operate in the country.
The number and type of licenses one needs will depend on the size of the business one is starting. Ignoring this can result in enormous lawsuits and unwanted legal issues.
There are some general registrations that every business needs to apply to, like the GST Registration. The Goods and Service Tax (GST) differs from one sector to another, but it applies to all businesses. Here are a few:
- Permanent Account Number (PAN)
- Tax Account Number
- Bank Account
- Shop and Establishments license
Other licenses will vary as per the industry. For example, a food venture will need a few like the Food Safety License, Health Trade License, etc.
Accounting Laws and Taxation
When beginning a venture, one should be aware of the various taxes that apply to them in India. There are several taxes like the central tax, state tax, professional tax, value-added tax, etc., and the nature of the business will decide the relevant tax regime.
For those who are in search of a trustable source of funds, plans like CGTMSE can come in handy. CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) is devised for MSMEs those businesses that do not possess any third party collateral.
After constructing a proper business plan, one can approach a bank and apply for the fund. Or one can also approach registered NBFCs, like ZipLoan, and get their loans sanctioned.
For street vendors looking for a fruitful opportunity to kick off their services, the government launched the PM Svanidhi scheme that provides collateral-free loans for one year, for services like cobbler services, barber services, laundry services, etc.
Many-a-times, small ventures ignore how crucial of a role accounting plays in their services. No matter the size of the business, it is a good discipline to maintain proper records and accounts of all the transactions and ensure that all the tax and accounting rules are adhered to.
Maintaining the accounts is not just helpful for the business, but it also acts as proof of credibility for the investors and partners.
Labours are the backbones of any organization, so adhering to the laws that protect them is a rule of thumb. The business can be of any size, in any sector, but if it is recognized as a venture that hires workers, then the laws are to be followed.
Laws like these deal with various areas – PF, sexual harassment, minimum wages, holidays, gratuity are some of the basics that are covered by them.
Fashioning an attractive employee policy can be a stand-out feature for a venture – the more accommodating a company is, the more it is like to attract workers.
Intellectual property refers to the creations that arise from the human mind, like symbols, designs, artistic works, even pieces of code. This consists of trademarks, copyrights, patents, and trade secrets.
The intellectual property of a company plays a significant role in its growth and sustainability, so protecting them is vital for a venture.
Business Policy and Insurance
Drafting a proper business policy defines the goals and visions of the venture. Effective employee contracts can serve helpful for both the workers and the management.
Possessing the clarity to articulate the policies and conducts of the business will come in handy in the future.
A few types of insurance, like unemployment and disability insurance, have been made compulsory by the law, while a few others are as vital as the mentioned ones. Insurance will safeguard both the business’s assets and the business itself.
One can opt for others like general liability insurance, product liability insurance, commercial property insurance, etc.
If you are a business firm looking to kick start your venture, then surely, you’ll require a good business loan. ZipLoan is the one-stop solution for a variety of people who need business funds – get fast business loans with minimal documents and give a boost to your business!