When you set up a new enterprise, you also need to think about its legal corporate structure, compliances and business laws in your region. From formalising a founders’ agreement to safeguarding intellectual property to enforcing business contracts, it is essential that entrepreneurs are aware and up to date with the latest laws governing their business and market. These legal tips for businesspeople aren’t a replacement for one-onone advice. But they do present some food for thought.
- Formalizing a business structure: The first thing to starting any business is to be clear about the nature and type of the business. Founders will need to incorporate the business as a specific business type – sole proprietorship, private limited, public limited, partnership, limited liability partnership etc.
- Founder’s agreement: A Founder’s Agreement is essentially a document that specifies important details about the founding team and the business, such as, roles, responsibilities, executive compensation, operational details and exit clauses among others. The agreement can also act as the go to guide should disagreements arise.
- Intellectual Property: For organizations delivering innovation to the marketplace, intellectual property (IP) may be the exclusive most important piece of their business. IP doesn’t just refer to physical inventions. It can also incorporate ideas and designs—or even trade codes about how a business is managed. Intellectual property can be preserved through patents and other legal tools.
- Business licenses: Licenses are integral to running any business. Depending on the nature and size of business, several licenses are applicable in India. Business licenses are the legal documents that allow a business to operate while business registration is the official process of listing a business (along with relevant information) with the official registrar.
- Taxation and accounting laws: Taxes are part and parcel of every business. There are a broad variety of taxes, such as, central tax, state tax and even local taxes that may be applicable for certain businesses. Different business and operating sectors attract different taxes and knowing this beforehand can prove to be useful.
- Document Everything Completely: Good recordkeeping supports new businesses manage compliance—and demonstrate that they are doing so in the instance of an audit. When going into business with one or more companions, a properly-designed partnership agreement is necessary.
- Do-It-Yourself (DIY) platform for legal document drafting: Platforms like MakeMyDeed provide free customized legal documents for startups. The legal documents are drafted instantaneously based on a simple questionnaire completed by the user.