Before starting a new company, an entrepreneur needs to have knowledge about a variety of different aspects of running a firm. One of these components is the law that governs the land. A company’s legislation, including those pertaining to shops and commercial enterprises, professional tax, provident fund, the Goods and Services Tax (GST), and the customs Act, may be applicable to a corporation.
You must decide which laws apply to your sort of business and ensure that the company complies with them in order to avoid potential legal complications. Not all of them will be applicable to all businesses; therefore, you must determine which laws apply to your type of business. Let’s have a look at the legal requirements that must be met before starting a new company in India.
Identifying the Appropriate Kind of Business to Operate
The first thing you need to do is figure out what kind of business entity you want to register as. The answer to this question will change depending on the type of the company, the long-term goal, as well as other aspects including scale and financial constraints. You have the choice of founding a ‘partnership firm,’ a ‘Limited Liability partnership,’ a ‘private Limited company,’ a ‘one person company,’ or even a sole proprietorship.’ All of these names refer to different business structures.
The visibility of a firm, its ability to endure, and its ability to turn a profit are all significantly influenced by the business vehicle that one decides to use. Your long-term objectives and priorities will, as a consequence, play a significant role in determining the brand that you go with. Every type of company is subject to its own unique set of regulations, which must be complied with while bearing in mind the many legal frameworks already in place.
Laws
There is a requirement that a firm have a registered office. There are a total of 28 states and 8 union territories in India; if you choose to register your company in any one of these states, you are required to comply with any and all state regulations that might be relevant to your company.
Different states have different versions of the Shops and Commercial Establishment Act, the Employee Professional Tax Act, the Stamp Act, and labour rules. For instance, the amount of stamp duty that must be paid in order to establish a partnership firm in the state of Kerala will be different from the amount that must be paid in the states of Karnataka and Tamil Nadu.
Legislation pertaining to intellectual property (IP)
The patent, trademark, and copyright for your company are extremely important. Every company is one of a kind, and its leadership is comprised of individuals who do not think alike or produce the same kind of goods. It is of the utmost importance to protect your brand, patent your invention, and get copyright for your content. It is absolutely necessary to submit claims for the appropriate patent, trademark, and copyright. Theft can be avoided as a result of this measure.
Tax Compliance Regulations
You are required to pay taxes regardless of whether or not you like paying them. As a consequence of this, it is essential to have a solid understanding of the taxes that pertain to your organisation and to make timely payments of those taxes. It is also very important to be aware that certain tax requirements will only apply to your company if it is beyond a certain threshold; if this is the case, you will not be compelled to make payments even though they are required.
For instance, in certain situations, the Goods and Services Tax (GST) is only levied if the yearly turnover of the company is more than Rs 20 lakhs. If you obey the law, you won’t have to pay taxes when you don’t have to, and you won’t have to pay penalties for not paying taxes on time when you do have to pay them. This will save you money.
Bookkeeping
You will be able to better examine the costs associated with each division of the firm and improve the overall performance of the business if you keep your books of accounts updated on a monthly or other regular basis. When the necessary financial data is accessible at the appropriate time, it can be of assistance in making crucial decisions that, if successful, can increase profitability and reduce expenses.
The company will also be required to comply with governing authorities such as SEBI, RBI, IRDA, ICAI, and ICSI, amongst others, depending on whether or not such bodies regulate the commercial activity that the company engages in.
You can get assistance with all of the legal aspects of launching a business from Kompany Services. Please give us a call if you have any questions or would like to register your business in India.
