8 Business laws required for a Business
When establishing your small business, numerous concerns may arise, but among them, adhering to legal regulations within the country is of utmost significance.
Having a foundational understanding of the law is beneficial for every business owner. Consequently, it is crucial to address several key categories of small business law, irrespective of the nature of your enterprise.
Company Law in India
When embarking on your entrepreneurial journey, it is crucial to determine the type of company you wish to establish. By understanding your long-term profit goals and the scale of your business, you can make informed decisions regarding the legal structure of your venture.
The legal structure you choose for your business will have implications on various aspects, including taxation, required paperwork, and fundraising opportunities. Hence, it is important to carefully consider and select the appropriate legal structure that aligns with your business objectives.
When commencing a business, it is essential to acquaint yourself with various legal structures available. Here are some important legal structures to consider when starting your venture:
- Sole Proprietorship
- Partnership
- Limited Liability Company
- Corporation
- Cooperative
Each legal structure follows specific company formation laws. In India, these laws are outlined in the Indian Companies Act of 2013.
To establish your business, you must fulfill several pre and post-incorporation requirements. These begin with registering your company with the Ministry of Corporate Affairs.
If you are a startup with an innovative concept, you also have the option to register with Startup India, which can be done conveniently from your home.
Business and Finance Law in India
Broadly speaking, there are three primary types of funding available for businesses:
- Equity Financing: In this form of funding, investors acquire shares in your company in exchange for capital investment.
- Debt Financing: This involves obtaining a business loan from a financial institution, which must be repaid over time along with interest.
- Self-Financing: This refers to funding your business using personal savings or reinvesting profits generated by the business itself.
When securing equity funding from venture capital firms or angel investors, certain essential documents need to be prepared. These may include a letter of intent, a share subscription agreement, and a shareholders agreement.
On the other hand, if you opt for debt financing, such as borrowing from a bank, you will need to gather relevant documentation. This typically includes an application for loan sanction, a sanction letter, a loan agreement letter, and collateral-related paperwork.
Tax and Accounting Laws in India
As an Indian company, it is crucial to have an understanding of the applicable tax categories. If your business achieves a turnover exceeding Rs 40 lakh, it is mandatory to register for the Goods and Services Tax (GST).
Additionally, depending on your business structure, you will be required to file taxes. The introduction of a simplified tax structure has amalgamated several taxes into a single central tax.
To gain insights into GST and its implications on your business, here are some recommended resources:
- “Everything you need to know about the new GST return in 2022”
- “GST E-Invoicing: How to leverage it for your small business”
Securities Laws in India
Are you aware that you have the opportunity to list your small business on the SME stock exchange in India, overseen by the Securities and Exchange Board of India (SEBI), without the need for an Initial Public Offering (IPO)?
For further details on this topic, I recommend reading an informative article by Tax Guru that delves into the intricacies of the SME exchange.
Labor or Employment Laws in India
If your intention is to employ individuals or if you already have employees working for you, it is essential to have proper employee agreements in place and comply with labour laws.
These laws encompass various aspects, such as employee privacy rights, federal regulations, disability rights, and anti-discrimination acts, among others. It is crucial to adhere to these regulations to ensure a fair and lawful working environment for your employees.
Intellectual Property Laws in India
If your business is engaged in the creation of new assets such as code, products, or designs, it is advisable to protect your intellectual property by copyrighting, patenting, or trademarking them.
By taking these measures, you can safeguard your creations from potential intellectual property theft. Moreover, securing intellectual property rights can enhance your profitability through avenues such as earning royalties and maintaining exclusivity over your unique offerings.
A few Major Intellectual Property laws are Trademark, Copyright, Patent, and Design.
Information Technology Laws in India
In today’s business landscape, technology plays a pivotal role. It enables businesses to utilize various technologies to enhance their operations and drive growth. However, it’s important to acknowledge that technology also comes with vulnerabilities.
To address these concerns, the Government of India has implemented the Information Technology Act (IT Act), which encompasses cyber laws aimed at safeguarding online privacy and protecting digital identities. These laws play a crucial role in ensuring a secure and protected digital environment for businesses and individuals alike.
Dispute Resolution & Contract Laws in India
All the aforementioned aspects heavily rely on contracts. When entering into an agreement, both parties mutually accept specific conditions. However, if not effectively communicated, agreements can easily transform into disagreements and lead to disputes.
To safeguard your business and ensure its smooth operation, there are numerous contractual and dispute resolution laws in place. These laws serve as valuable tools to protect your business interests and facilitate efficient resolution in case of any contractual disputes that may arise.
LAWMITRA – Your ultimate legal advisor for all your needs!
Are you exhausted from the daunting task of researching numerous small business laws without a streamlined execution plan? We have a solution that can set you on the right path.
In partnership with Lawmitra, a prominent provider of business professional services in India, we aim to assist businesses in gaining a comprehensive understanding of their everyday interactions with business law. With their expertise, you can navigate the legal landscape with ease and confidence.
Read meanwhile: What are the AI-related issues in Intellectual property?
