What are the legal procedures required for a startup In India?
Though you have a well-managed solid team, good investors and a distinct business plan, if you haven’t registered your start-up legally in india, then a huge storm of legal notices can sink the start-up in a day without a prior alarm. In India, several numbers of start-ups either forget or avoid the process of legal structure & face lump-sum issues in mere time. So, it is vital to know what all the documents legal documents required to begin a start-up. Every type of business has its own financing needs, experts have some tips to help you figure out how much cash you’ll require.
The startup should not be more than 7 years old (or 10 years for biotech) from the date of incorporation. Is incorporated as a Registered Partnership, Limited Liability Company or Private Limited Company. Turn over in any year should not have exceeded 25 crores. Here, we have provided the list of primary legal procedures in India that you should follow.
- Create a LLC or Corporation
- Register Your Business Name
- Apply for a Federal Tax ID Number
- Determine If You Need a State Tax ID Number
- Obtain Business Permits and Licenses
- Protect Your Business with Insurance
- Open a Business Bank Account
- Consult the Professionals
IPR (Intellectual Property Right) Certificate
This legal procedure in India aids all kinds of start-up to have the complete ownership of their assets in a legal document. The major use of this document is that it can protect from any other companies try to produce the same service and product as your business model. So, IPR gives you the power to guard your inventions and product designs. In addition to this, the IPR procedure can be availed across the countries; as it provides the original product availability and credit to the investors of the firm.
Along with these documents, you will also need documents that officially represent your business’s company’s office address, PAN number, GST registration, ROC registration, Professional Tax registration, Provident Fund registration, and ESIC registration.
Trademark Certificate Online India
Trademark is one of the effective ways to refer to a brand or start-up internationally. It helps to have the monopoly towards a mark that you use to represent a business or start-up & also it is a pivotal asset, an effective communication link between customers and owners of the start-up. According to central government policies, trademark licensing is compulsory for all start-ups to avoid the duplication. Despite that, this trademark certificate can be used as a property asset by the owners of the start-ups.
Bylaws are mandatory to formulate the working rules of the start-ups. Bylaws help you to establish a good, strong working culture internally and to have lesser complications. In addition to this, New CEO’s or Directors can be added in a start-up with the help of by-laws. So, Bylaws overall can sort out every issue between employees, stakeholders and team leaders.
Patent Registration Certificate Online in India
With the help of Patent certificate, you can have authority over the ideas and products of your start-up business. To apply for a patent, you are supposed to follow the guidelines allocated by the respected departments. But, in India, this process is faster than other countries after initiating a scheme known as Start-Up India Action Plan. To motivate and empower the younger to start a business, the Indian government formulated this scheme and for first patent registration by a start-up, above 75% provision would be given on the fees.
Registration & Business License
While incorporating a start-up in India, there are some mandatory registrations required as per the law. Some of such registrations are PAN (Permanent Account Number), TAN (Tax Deduction and Collection Account Number) and GST registrations.
The business license provided by government authority allows the start-ups to start, stop or continue to operate a start-up within its territorial (jurisdiction) as per law. The nature of start-up activity determines most of the license requirements. Some other prominent factor includes the location of the business, number of employees and business ownership forms. A few examples of such licenses are Health license, Trade license, Establishment license, Shop license and Safety license.
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To encourage and motivate start-ups and its growth, the government of India has come up with a tax exemption scheme. According to this scheme, a start-up founder can avail 100 % profit without paying tax & also there is an exemption for consecutive three years out of five initial years. Yet, the Minimum Alternate Tax is applicable.
The Capital gain from the sale of long-term assets is exempted from income tax if the gain is invested in business funds that are used to purchase computers, hardware, software and other requirements. In addition to this, for the investments made by resident investors, there are enormous tax exemptions. For the patents registered and developed in India, a discount of nearly 10 % of the income it generates worldwide is available.
Third-Party (Or) Non- Disclosure Certificate
It is advisable to have a non-disclosure agreement before negotiating the terms of start-ups and third-party agreements. If development or creation of a property (intellectual) is a component of a third party agreement then it should state clearly that all rights to the property (rights) must vest and be owned/claimed by the start-up and the third-party in the start-up shall not ask for any claim on the same and should possess all acts to ensure saving the intellectual property. Issues related to termination, breach or dispute resolution should be negotiated properly and portrayed in every third-party agreement.