It is never simple to start a business. Every step has its own set of difficulties. However, a strong strategy makes the process easier, and a plan is incomplete without keeping business laws in mind.
Are you finally ready to make your entrepreneurial aspirations a reality? But are you still concerned about the lengthy and difficult company laws that you must be aware of? You’ve come to the right spot; in this article, we’ll go through the business laws you need to follow in order to succeed.
Entrepreneurs must be informed of and up to date with the newest regulations regulating their firm and market, from formalising a founders’ agreement to securing intellectual property to enforcing commercial contracts.
Financial restrictions, tax duties, and employment rules are only a few of the legal requirements for new firms and startups. Make sure your new company meets all of its legal requirements so you can concentrate on building your business.
- Company formation laws
You must determine the nature and type of the business. There are several business structures from which to pick. When forming a business in India, the Companies Act 2013 specifies the legal requirements for each type of organisation. For example, you must pick between a sole proprietorship, a family business, a partnership, an LLP, a private or public limited company. This selection is critical since it must not contradict your entire business vision and mission.
Each sort of business has its own set of legal requirements and rules, which entrepreneurs should pay close attention to before establishing.
- Required License
You should be familiar with various licences before beginning your firm. If you don’t have the right licences, your company might face legal issues right from the start.
Business licences are the legal paperwork that allows a company to function, whereas business registration is the act of officially listing a company (together with pertinent information) with the registrar.
The Shop and Establishment Act is a licence that all enterprises must have. The Department of Labor is in charge of enforcing this legislation, which governs the locations where trades and enterprises are conducted. This statute governs employee empowerment rest intervals, opening and closing hours, working hours, maternity leave, and so forth.
You’ll need permits like VAT registration, service tax registration, and professional tax registration if you want to establish an e-commerce business.
Along with the previously stated licences, restaurants may require licences such as a Food Safety License, Certificate of Environmental Clearance, Prevention of Food Adulteration Act, Health Trade License, and so on.
- Labour laws
Every business, no matter how big or small, must follow labour regulations. Regardless of the size of your business, after you’ve established yourself as a company and employed individuals to work for you, you’ll be subject to a number of labour regulations.
Minimum salary, gratuity, PF payment, weekly holidays, maternity benefits, sexual harassment, and bonus payment, among other laws, would have to be followed. It’s advisable to seek legal advice to examine the rules that apply to your company and ensure that it complies with all applicable labour laws.
New laws, part of the Startup India programme, exempt startups from labour inspection if they self-declare their compliance with labour laws. Entrepreneurs should pay attention to the new guidelines that the Central Government is developing to replace the present Labor laws.
Some important labour laws are listed below for your convenience:
- The Contract Labour Act, 1970
- The Trade Unit Act, 1926
- The Employees’ State Insurance Act, 1948
- Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) Act, 1996
- The Industrial Employment (Standing Orders) Act, 1946
- The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
- The Industrial Disputes Act, 1947
- The Trade Unit Act, 1926
- Contract law
A contract is essential to guarantee the smooth operation of work and is an excellent tool for ensuring redress in the event of non-performance. Entrepreneurs might benefit from having a basic understanding of several areas of contract administration.
All agreements are contracts if they are made with the free assent of parties competent to contract, for a lawful consideration with a lawful intent, and are not expressly declared to be void, according to the Indian Contract Act, 1872.
One of the most important factors to consider when beginning a business is employee contracts. While founders frequently cooperate with their own trusted circle of friends in the early stages of their businesses, defining and formalising employment contracts with information regarding remuneration, scope of work, and stock options (if any) with even your first few workers is always a good idea.
Another crucial contract that a startup can find beneficial is an NDA, or non-disclosure agreement. A startup’s ideas are discussed with a variety of people, from investors to employees to customers. As a result, there is a significant risk of the ideas given being stolen. This is where non-disclosure agreements (NDAs) come into play. This stops knowledge from spreading not only within the business, but also beyond the organisation.
- Information Technology and Privacy Laws
We live in a technologically evolved world, and in a digitalized environment, where IT laws in the business can manage things like e-contracts, digital signatures, and protecting the organization’s private data, organisation should be a top priority. Knowing the regulations governing information technology will aid the corporation in pursuing new business prospects. Using technology to assist a business achieve its goals is extremely beneficial.
India’s government has passed the Information Technology Act, which establishes cyber rules to safeguard online privacy and identity. Entrepreneurs must have a solid security plan in place if their firm deals with sensitive personal information from clients. To avoid any data leaks, all necessary precautions must be done.
Businesses that collect and handle personal data based on consent must present users with notifications at the time of collection and again when the data is processed. All businesses will need to put in place infrastructure to ensure that the new law’s provisions are satisfied. A stable system will need to be put in place to avoid data breaches, as well as a notification mechanism for users in the event that one does occur.
- Intellectual Property Rights laws
Intellectual Property (IP) is a legal right that every business should own. It is concerned with the regulations that will protect any person’s innovation, new concept, or artistic creation. Intellectual property offers a creative concept legal protection so that no one else can replicate it, which is why intellectual property is such an essential industry. Copyright, trademark, and patent are examples of intellectual property.
Organizations possess intellectual property such as codes, algorithms, and research discoveries, among other things. Startups can take use of the Startup India initiative’s ‘Scheme for Startups Intellectual Property Protection’ (SIPP).
This programme was created to safeguard and commercialise your intellectual property. The Controller General of Patents, Trademarks, and Design appoints the scheme’s facilitators. This group of facilitators also assists the startup with consulting services, patent filing, and patent application disposal.
As a business owner, you have to comply with all the laws that govern your industry. This is not always easy, but it’s necessary to ensure your business stays on the right side of the law. There are many laws governing businesses in India, and this blog post will help you understand what they are and how they apply to your specific business.