Legal Issues

Stuttering Startups: Legal Hazards You May Want To Avoid

Stuttering Startups: Legal Hazards You May Want To Avoid
Image credit: Shutterstock
Guest Writer
CEO and Founder,
4 min read
Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Starting a “startup” and running the business would bring up several challenges throughout. It is common to face failure at the beginning of any enterprise. As an entrepreneur, your tenure would be marked with initial hiccups and hit-n-miss opportunities. Legal matters are one of the leading junctures which an entrepreneur often overlooks, often leading to hassles later on. Besides giving shape to your startup, you need to keep yourself updated on legal steps, to ensure a smooth-sail into progress. Here are some of the points you should learn about:

`1. Choosing the legal structure of the startup

Your future plans would depend heavily on the legal structure of your startup. It has an impact on the kind of investors you can accept, your tax liability, your personal legal liability, and so on. By selecting the wrong kind of structure you might end up with unlimited personal liability for debts incurred by your company .So, you need to keep various factors in consideration, which include: type of business, administration control, tax registration, management and ownership, funding, profit sharing, business regulatory and many more like this.

2. Business registration

In India, business registrations and licenses are extremely important to operate a business lawfully in a territorial jurisdiction. It may include PAN registration, VAT registration, TAN, service tax registration, etc. Unless it happens, the entrepreneurial venture could become a subject of scrutiny under government authorities. Also, shareholders need to be kept in mind as often frauds and breech in agreement often happen due to lack of shareholder’s agreement. It is of essentiality to have a shareholder’s agreement, even if the people in question are friends or family members

3. Trademark registrations

One of the common mistakes that startups commit is by not registering their trademarks. This can turn to be costly as to survive in a competitive market, organizations often end up stealing ideas and other entities. You must protect your intellectual rights, not only for yourself but also for the organization as a whole. Go for the trademark registration and bear the responsibilities of an owner.

4. Avoid loose language

In the rage of marketing, some people commit grave mistakes of promoting overblown or exaggerated advantages of their product or services, which has unprecedented negative outcomes. Fraudulent cases are rampant, with consumers being smart enough to take the organization to court. Therefore, you should not opt for a loose language while describing the products and services that are utterly false. A carefully thought campaign would benefit on the longer run.

5. Rights of employees

The legal jurisdiction has brought forwards great deal of reformation, in context to employees and their rights. . Failing to adhere to employee laws in regards to vacations, sickness and disciplinary action can result in a court case. It’s of essentiality to keep yourself abreast about employee rights to prevent any nasty occurrences down the line. Cases of bullying and sexual harassment in workplace, often lead to the strictest punishment being awarded. The goodwill can only be maintained through satisfied employees.

6. Do not miss out the evidence

Legal issues crop up due to employee disagreements, client satisfaction and so on. By not keeping evidence, you are bound to be at the defeated end.  The most positive thing in this instance is reverting to complaint with evidence, putting your case across. Every business related decision needs to be documented in writing. Contracts, emails, and even note-taking apps are aids for you to prove innocence. It is always preferable to have proof to strengthen your case.

7. Agreements with a third party

While you negotiate for a third-party agreement, you should also include a non-disclosure agreement, which protects your rights of intellectual property. It should highlight all the points of agreement in the case of a breach, dispute or termination occurs. At the end, you will have proper documentation that prevents any harm to your startup.

It would be advisable to enlist the help of a lawyer, but self education on these pointers would ensure the prevention from legal complications happens beforehand.





More from Entrepreneur

Terry's digital marketing expertise can help you with campaign planning, execution and optimization and best practices for content marketing.
Book Your Session

In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Apply Now

Are paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.
Get Your Quote Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.