Soon after the launch of start-up campaign and Government funding for start-ups in India, many people have left their hectic job schedule and adopted a more comprehensive yet satisfying work pattern that we call a start-up, where they are the boss and they can work as per their will and wish. This may seem like the cherry on the cake, but one has to be very careful while setting up his business.
The legal formalities, legal documents and everything that can land a start-up enthusiast in big trouble or even worse if avoided are a must to comply with before self-starting any business. One may know how to start a business but do you know the formalities that you should know and follow before setting up your empire? Following is the list:
1. Business licenses: Different kinds of business ventures require different and several license to start with. Though it is a bit surprising, the law is superior and we cannot go against it, and we know the consequences of not abiding with the country’s laws.
Say, for example, you are going to open a business that deals in food items and your business will manufacture and then sell those food items. For this kind of business, you need to have a state and central FSSAI (Food safety and standards authority of India) license from the concerned authorities. Similarly, there are different licenses for other businesses.
2. Intellectual property right (IPR): IPR are indispensable for start-ups as they help in realization of the actual value of a business idea to the potential investors. Also, IPR helps the businesses to enjoy a complete and sole proprietorship of all the assets it has in a written form.
3. Trademark: For a brand, it is imperative to get your trademark registered. The benefit is that it creates your monopoly in the very business you are dealing with. Trademark is like a property asset in which you will have the right to use it, sell it or lease it to other businesses.
4. Bylaws: Bylaws are some of the rules, policies that must be framed before commencing the business, as they help a great deal in settling the issues and disputes arising in the future between the employees or employer and employees, etc.
5. Patent registration: Patents are granted on some kind of innovation that a person has derived so that other people do not copy his or her formula. Some terms and conditions obligates you that your product must be reasonable, and beneficial to people, else it is cancelled.
6. Founder and shareholder contract: Indian Contract Act says that an agreement is enforceable at law only if it is executed in compliance with the law, i.e. it fulfills all the ingredients laid down under section 10 of the Act. However, there is no relevance of oral agreement between parties.
What if your shareholders make some wrong allegations on you after the business commences? What if you do not have the proof of the negotiations and discussions that happened between you and your shareholders or other people? This is why written contracts or deeds that are enforceable at law only have relevance in the eyes of law and they must be executed in compliance with the Indian Laws.
Hence, these are some unavoidable and crucial legal formalities that you must not compromise with if you are thinking to start your own business. Whether it is a food business, small business, and agricultural start-up, low investment high profit business, creative business or any other business, legal formalities and documents are a must to comply with.