9 basic startup laws in India which every entrepreneur needs to know

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Nurturing a new business includes many things. One such stepping stone is knowing basics of the startup laws. Before diving into a deep legal sea, let’s have a look at the vital startup laws with which you can start the long journey…


1. Basics of accounting and tax related laws

Running any kind of business means that one has to pay taxes to the Central/State government or local bodies. Therefore, it becomes a necessity for every new entrepreneur to be aware about accounting details and tricky lanes of the taxation world.

Different sectors have diverse tax laws and it is imperative to be acquainted with any recent changes that have taken place. In fact, tax laws change according to geographical region and the kind of business/product too.   

It is always beneficial to keep a record of accounts and go through them periodically to adopt best practices. Taxation information according to area and sector of work will help in retaining and improving the financial and legal strength of any organization.

2. Choosing the type of venture

The most important thing before pulling up a startup is knowing what kind of organization you want to set up. It can be a private limited company, public limited company, partnership firm, or a limited liability partnership.

Before taking this decision, it is indispensable to analyze and ponder upon the practicality, visibility, sustainability, aptness and related profits that are expected from this type of organization.

Structuring the organization and business vehicle may take some time. It will vary according to your long term objectives and vision.

However, an entrepreneur needs to be careful that finer points in the existing legal framework have been taken care of.

Each form of business will be governed by separate laws and not complying with them means loss in the form of heavy fines before you can even start making profit.

3. Labour Laws

Each startup will eventually have to hire new people. Even if you plan to outsource or employ independent consultants, every such employee-employer relationship will be directed by labour legislations.

Breaching these will not only harm you financially but also spreads a negative review about the startup even before you initiate it.

Productivity of employees and ultimate success of the startup are dependent upon how happy your employees are to work for you.

4. Securities and Exchange Board of India (SEBI)

Familiarity with Securities laws which is carefully regulated by the Securities and Exchange Board of India (SEBI) will aid in easing out the process of listing.

Keeping a track of various updated regulations issued by SEBI will assist in managing the various stages of nurturing a new business, including fund-raising.

Foreign direct investment, angel investors, crowd funding, venture capitals and even joint ventures are areas that a new entrepreneur must be aware about.

5. Corporate governance

A running-knowledge about corporate governance will help a budding entrepreneur to effectively manage and formulate further expansion plans.

6. IT laws

We are living in a technologically advanced era where things like e-contracts, cloud computing, digital signatures, securing confidential data from hackers, cloud computing, protecting your privacy are not only very common but extremely important too.

Knowledge of IT laws will help in exploring these avenues and thus, growing your business.

7. Contract laws and dispute resolution

A business survives on contracts. Nevertheless, disputes may be one of the unavoidable consequences of few contracts sometimes. Therefore, fundamental knowledge regarding contracts, arbitration, mediation, conciliation can smoothen the progress of a successful business.

8. Intellectual property laws

Legally protecting intellectual property is of supreme importance to any business. Timely IP audits, filing the accurate trademark/copyright/ patent claims will not only protect your business but increase profits too.

9. Knowledge related to government contracts

This might not be extremely necessary but a successful venture depends upon a steady flow of funds. Bidding for government contracts can create wonderful opportunities for growth, revenues and reputation building.

Hence, knowing about all the above legalities can help out in smooth sailing even on a rough sea.