register a company

Legal steps to be taken to start a business

Often Startups overlook the legal parts before starting the Business. Many disputes arise between the associates soon after the business starts growing. Therefore it is always prudent to take the legal part together with the starting of your new business.

I have tried to cover the relevant Legal part which all the new and budding entrepreneurs must look at before starting the business.

1. Register your company:Is it mandatory toregister a Company? Can't we run the business in proprietorship or with unregistered partnership Firm? Most of theentrepreneur thing why should we register the company?

Though it is not mandatory to register the company before starting the business i.e. you can run it as proprietorship or with unregistered partnership Firm but the main drawback of a unregistered entity is that it carry the burden of Unlimited liability, that is the owner of the unregistered firm will be personally liable for all the debts and actions of the entity.Moreover, as a sole trader, it is possible someone else could be doing business under the same name as you, and you couldn't do anything about it. This could hamper your business and goodwill, and in some cases, you having to go through the costly and time-consuming effort of changing the name of your business.

While in case of a Registered Limited Company as the name suggests, if you run a limited company, you are protected in case things go wrong. Assuming no fraud has taken place, you will not be personally liable for any financial losses made by your limited company.Those running a business as sole trader do not enjoy such protection from financial claims if things go wrong with their business they are personally liable for all the debts and liabilities. Further your company name is protected by law. No-one else can use the same name as you, or anything deemed to be too similar.

2. Register your Brand name:Register your brand name as it prevents other merchants from using same Brand name that are alike or identical to yours in relation to goods and services.

Registered Brand names gives a constructive notice to the outsiders that you are the owner of the brand,puts others on notice of your rights. Still, after registrationif you discover another trader using a conflicting mark in the market place you can sue the trader for infringement.

For example Coca-Cola Company has registered the Brand "Limca" "Thums Up" "Sprite". Imagine what would have happened with these products without registration, other traders may have used this brand name for selling their low standard product and ultimately the end user i.e. customer would have been getting poorest product.

3. Register with the relevant tax authorities:Stay on the radar and stay compliant.For example If your business is of providing service then your company is mandatorily required to apply for service tax registration if the value of the services provided in a particular year exceeds Rs. 9 lakh. In the same way if you are trader or manufacturer of Goods and have reached the turnover prescriber by the respective state sales tax law or your company have purchases goods in the course of inter-State trade or commerce then you need to apply for Sales tax registration/TIN Registration/VAT Registration.

Service tax and Sales tax was just an example, depending on the nature of your business you have to apply for many other licenses after the registration of the company.

4. Get your company structure right:Entrepreneurs face the tough task of selecting the right structure of business entity between proprietorship, partnership, limited company, while they plan to start the business. They should see all the pros and cons of the different type of business entity available for registration and select the right one to avoid any future complications.

5. Website:Though it is not the mandatory clause for the entire entrepreneur's, but if you are planning to start an e-commerce business and you want a website for it, you have to plan it be it keeping the name of the domain or name of the company.In many cases, same domain name and the company name is preferred by most of the entrepreneur's. Complications arises when after booking the domain name you go for registrationof the company name and vice -versa, you find the name/domain is already reserved by someone else. Therefore you should book or search both company name and domain name together in case you want both to be the same.

Conclusion:If you have a million dollar idea and you want to go in long run, it is always prudent to make the base (legal part) strong.Moreover, in future if you are planning for Investor in your company, Investor always does due diligence of the Company before Investing and the above points will matter during this period.

Disclaimer: Statements and opinions expressed in articles are those of the author's personal views.

About the author: Satyendra Kumar Mishra

Satyendra Kumar Mishra is the founder and CEO of which was founded with the singular objective of offerings the highest quality corporate and incorporation services to its clients all over the globe. Since its foundation, has helped entrepreneurs across India to incorporate their businesses in a fast and secure manner.

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