STARTUP AND BUSINESS FORMATION
Updated: Nov 16, 2019
Startup means emerging, fast-growing business that aims to meet a marketplace need by developing and introducing an innovative product, service, process or a platform or it come with new strategies to establish space/place in market very effectively.
Business can be of small scale with limited clients or customers. The business of any product, service or process can be grown by establishment of reputation. Before that business needs to get identification. Identification can be done by approaching clients and customers directly or through marketing strategies. This process of establishment of identification is called as business formation which should be done by legal way.
There are list of legal compliance which has to be followed by entrepreneurs and future entrepreneurs. At every step there are set of rules to be observed.
1. Setting business structure: It means, how you want to run your business?
The options are proprietorship, partnership, limited liability company, one person company or corporation. Every form of business required different compliance.
a. Proprietorship is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business's debts, losses and liabilities.
b. Partnership is a form of business where two or more people share ownership, as well as the responsibility for managing the company and the income or losses the business generates. There are types of partnerships: General partnership. Limited partnership.
c. Limited liability company: A limited liability company (LLC) is a corporate structure whereby the members of the company cannot be held personally liable for the company's debts or liabilities. Limited liability companies are essentially hybrid entities that combine the characteristics of a corporation and a partnership or sole proprietorship.
d. one person company is the business formation formed under one head with characteristics of company or corporation.
e. corporation is a legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that an individual possesses; that is, a corporation has the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes.
2. Registrations: once business decides its structure then it has to get registered with government authorities. The procedure of being registered is depend upon structure of the business but crucial thing is contracts/agreements as it establishes the rights, duties of persons involved in business. It becomes proof of understandings. This is how business gets legal recognition.
3. Licensing & permits: obtaining business license is the step prior to that you can not start your business.
Depends on business type you have to apply to concern government departments. Business should hold licenses for
There are different types of licenses according to the goods or services are being handled.
There are procedures of manufacturing, packaging and transporting the goods, these licenses are for that purposes as goods must be handed with proper care and due diligence. Quality of product is main thing which should be maintained and licenses are one of the recognition from government machinery for quality check of products.
4. Intellectual property registrations and infringement: The aspects of business which can be protected include the business name, logo, trademarks, designs, inventions, confidential information, trade secrets or other creative works that differentiate your business.
While doing business, one should also careful about other businesses rights that should not be infringed, specially in this era of information technologies.
5. Legal compliance: Businesses are responsible to follow compliance related to employment laws, tax laws, etc. if you are using latest information technologies for you business then you have to comply cyber laws and its regulations.
Even for marketing and advertisement you must follow fare and legal way. Competition is also core part of business but it should be played with proper compliance. There are laws related to prohibition of completion by unfair trade practices which regulated unfair trading practices.
6. Complying property laws: your business obviously needs the place/property to being carry out. According to your business type you have to get property in commercial or industrial area, then only you can get business license as place. You can not carry your business in residential zone. For that purpose proper documentation must be done to create safer environment. Business place should be handle with safety and care in case of dangerous product dealing by you.
Despite all these thing you need proper guidance or consultation as every business core is different and legal technicalities are involved. It can also help you if you are not able to handle things by your own.
By Adv. Anjali Jachak