Before starting a business, entrepreneurs must be aware of the laws governing the market and business. The following are the legal requirements that required to start a business in India.
Registration of a business entity: The first step is deciding the business structure and registering it. Some of the common business entities are Sole Proprietorship, One Person Company, Limited Liability Partnership, Partnership Firm, Private limited company, and Public limited company.
Name: One of the most important steps is deciding the name of the business as it reflects the vision of the business. Check to see if the name you selected hasn’t been claimed by another entity.
Founders Agreement: Creating a founder’s agreement containing all the details regarding founding members of a business is a solid foundation of the business. As a result, the document serves as a contract that legally establishes the founders’ and company’s rights, ownership, obligations, dispute resolution, and other aspects.
Documents: The first step is to ensure that all of the necessary documents for registration are in order. Setting up a business in India necessitates a plethora of legal requirements and documentation. Important documents that are required includes, Digital Signature Certificate, Director Identification Number, Registration on the MCA Portal, Certificate of Incorporation, Commencement of Business Certificate and documents of the company such as Address, PAN number, GST registration, ESIC registration, ROC registration, Professional Tax registration, etc.,
Legal licenses and registrations: To conduct and run the business, there are few registrations and licenses required. Some of the general registrations include Shops and Establishments License, Permanent Account Number, GST registration, Income Tax registration, Bank Account, etc., some of the specialized registrations examples include, FSSAI License to start a food business, IEC code to do import and export business, Halal registration in case of dealing with such goods and other licenses involved for respective types of business fields.
Taxation laws: In any kind of business, taxes play a crucial role. There are respective local taxes, state taxes and central tax that apply to different business sectors, therefore, knowledge of the tax regime with respect to one’s business sector is very important. For example, there are certain tax exemptions and waivers for startups under various government schemes and initiatives in India. Such exemptions may be used for the benefit of the organization. In terms of business accounting, it is best practice for a company to keep adequate books of accounts and audit them on a regular basis to ensure that all applicable and relevant accounting and taxation rules are adhered to.
Labour laws: Labour laws regulate minimum wages, maternity benefits, gratuity and PF payments, laws relating to sexual harassment at workplace, etc., and every business must ensure that the labour laws are strictly adhered to for smooth and successful running of the business.
Intellectual Property: Protecting the Intellectual Property rights are a very important aspect for enhancement of the business. Any new inventions, symbols, logos, brand name, etc., is to be registered which in turn helps in the recognition of the business among the competitors and enhances the Goodwill of the company.
Business policy: Another step that can help a business succeed is to develop a proper business policy. It’s something that keeps both employees and management on track. This makes achieving the desired targeted growth more easier.
Insurance: It is always safest to get insurance to safeguard your business from other potential threats. Business insurance can help one to protect the assets of your company. Unemployment and disability insurance are two types of insurance that are required by law. General liability insurance, product liability insurance, and commercial property insurance are just a few examples.
Legal compliance is critical for any organization and understanding and adhering to all the applicable laws ensures smooth running of the business of the company.