To get to the end of any opportunity, it is important to do the smallest things first, then take the big steps with the right foot.
Everything must be planned and on time for a new startup to be successful. If you want your Start-up business to catch fire since inception, it is recommended to seek advice from the right person.
Every entrepreneur must get their idea into a legal entity in order to bring it to life. A business must obtain multiple registrations in India to operate legally. To become an entrepreneur, entrepreneurs must also familiarize themselves with compliance and ethical issues relevant to different registrations.
An entrepreneur has to familiarize himself or herself with compliance and ethics issues related to various registrations.
1. An uncordial legal structure
In addition to choosing the type of business, which can be a sole proprietorship, a partnership, a company, an LLP, or any other form, it is important to choose the structure with a prior plan of time-bound compliances, statutory responsibilities, and legal duties that entrepreneurs will have to comply with after selecting a particular legal structure.
Entrepreneurs might feel burdened with a long list of compliances when they choose the wrong entity type, even when the business is just starting out. A registration type that is easy to register, however, could also bring competition and even lead to more competitors entering.
Consult a business expert to determine the correct structure for your company based on your requirements and keep in mind the required costs and compliances.
2. Ignoring vital legal registrations
A start-up lacks the legal professionals or personnel who hold the necessary knowledge of business legal issues. Many entrepreneurs are unaware of the requirements for registrations required by the government, despite not having any prior knowledge.
It is mandatory for Indian authorities to check for compliance with all the relevant regulatory laws related to startups, such as Securities Laws, Employment Laws, Labour Laws, Income Tax Laws and State laws. Business owners should register all ancillary documents as well as the core registration of their businesses.
3. A meticulous documentation process
A company’s greatest asset is always its documents. In order to make such documents credible, they should always be drafted and presented to professionals, like MOAs or AOAs or partnership or joint venture agreements.
An organization should do its due diligence in compliance with all legal norms, forms, declarations, and compliance requirements of any given law prior to registering.
4. Preparing a schedule of expenses
A business that registers for a specific entity type or under a specific law is not only bound by regular compliance fees but also incurs additional expenses, such as hiring legal experts, setting up advisory boards, document preparation, and so on, all of which put additional pressure on the startup’s limited income in its initial years.
Before registering, it is better to make a detailed plan of action that includes the expected costs, expenses of incorporation, investment, and minimum compliance requirements.
5. Ignoring the need for agreements
It is imperative that a firm has an agreed MOA or AOA, a director policy document, a partnership agreement, a liquidity agreement, an insolvency, and bankruptcy agreement, an incubation agreement, an employee agreement, an intellectual agreement, etc. These documents need to be in place in case of a dispute.
In Startup Businesses, statutory agreements need to be crafted. Entrepreneurs generally overlook this topic. By drafting and submitting agreements to authorities, businesses can smooth their operations and free entrepreneurs from long legal proceedings. Learn what all legal agreements your business needs from our business expert.
In the end, when you get into a legal registration under any law, it is important to ensure to prepare the related agreements to keep your entity safe from legal penalties.
6. Neglecting intellectual property
The registration of a business entity or multiple registrations under different laws does not constitute complete protection of the Startup entity. A startup is more challenging, but you always run the risk of being copied.
Entrepreneurs often overlook the important aspect of intellectual property, which will prevent them from copying ideas and infringing upon their rights if adopted. So, products or services should be registered for the appropriate Trademarks, copyrights, or patents along with other registrations.
7. Mismanagement of taxation bars
Indian businessmen have to keep up with taxation as a rule. Once an organization has been registered, startups must be sure to keep up with all tax laws when determining their tax liability.
For the first few years, most entrepreneurs ignore the tax implications of their Start-up entities. A tax law is in compliance with every tax law with the necessary registrations (GST Registration, TDS Registration, etc) and consultations with tax agencies determining tax liability are the entrepreneur’s responsibility.
8. Delaying registrations and other compliance actions
A delayed registration application can be very problematic not only for the entrepreneur but also for the business entity.
Entrepreneurs may not be proficient enough to be aware of all registration requirements or they may not have the expertise to start a particular business, but ignorance of the law does not make an exception. Every entrepreneur must be familiar with all types of registrations and compliance requirements in order to prevent penalties and legal actions in the legal environment. The best way is by hiring a legal consultancy.
9. Ignoring the advisory
Be mindful of becoming an overly vigilant person in the management of your company registration mistakes or startup. Even a single false statement while registering with the authorities can result in severe penalties according to the law.
It’s better to hire a legal expert as a business asset and to take prior advice before making any business decisions. This will nearly eliminate half your business worries.