With so many new businesses springing up in India, it is crucial to ensure that these businesses are compliant. While most startups are keen on disrupting tradition, doing so can have adverse consequences. Therefore, it is wise to choose the best business professional services when dealing with business legal issues. With such services, you will avoid a lot of work that requires expertise. :- www.deekpay.com

At the same time, you still have a number of other tasks that you need to be personally involved in. Here are some proactive steps you should take to avoid legal problems when starting your business:

**Clarification of enterprise structure**

At first glance this may seem simple, but this decision should be taken carefully. In India, there are more than 10 business structures to choose from. It is vital to choose the right one for your startup.

Check out the table below to learn about the different types of business structures so startups can make a choice.

Typically, startups in India have the option of registering as an LLP or a private limited company. The core issues are identifying the nature of the business, flexibility of the company, tax efficiency, compliance requirements and cost of incorporation. In a typical Indian scenario, startups are usually registered as private limited companies purely because it is easier to raise funds from investors.

**Legal documents**

Start-ups should adhere to standardised policies and procedures from the outset. Due to operational needs, companies usually enter into agreements. Policies in this regard should be set.

Agreements such as shareholder or co-founder agreements, non-disclosure agreements, and website terms and conditions of use represent the concerns of the business.

**Co-founder's agreement**

A founder or co-founder agreement specifies the roles, duties and responsibilities of the founding members of a company. It is a wide-ranging agreement covering several aspects of the tasks that the founders may undertake during their tenure.

**Shareholders' agreement**

A shareholders' agreement clarifies the rights of shareholders by defining the circumstances in which they can exercise their rights. This includes shareholders' rights to transfer shares, pre-emption rights, redemption rights in the event of death or disability, and control of the start-up.

**Non-disclosure agreement**

Non-Disclosure Agreements are designed to protect startups and ensure that the ideas and intellectual property of founders and employees are safe. Here are the key legal documents needed when starting a business.

**Clear definition of confidential information**

Information owners who handle confidential information

**Vendor agreement**

Imagine signing a supplier contract that contains certain hidden clauses that could lead to unpredictable price increases or give the other party the right to cancel the contract without notice. This could cause chaos in your startup. Therefore, although not mandatory, it is important to establish reciprocal contracts with third parties to safeguard your business transactions.

**Mandatory documentation**

Articles of Association and Memorandum of Association are the two basic documents of any limited company. For the registration of a partnership, signatures of all the partners are mandatory. It is also important to have a partnership agreement for the smooth running of the partnership.

**Knowledge of applicable tax laws**

Understand the tax structure that applies to you. Taxes will have a serious impact on your business results, so you should plan accordingly. You need to familiarise yourself with tax and accounting as this is a pre-requisite for any filing and annual legal compliance. Familiarise yourself with GST as all indirect taxes have been abolished. GST on different goods and services is categorised into multiple tax brackets.

From monthly GST filings to quarterly and annual returns, GST compliance is crucial for any business to avoid future troubles. Taxation of startups also includes filing tax liabilities at the time of incorporation.

There are many tax and incentive schemes at national and local level. Keep an eye on the Indian government initiatives. There are schemes that allow startups to avail tax breaks for 3 years even on investments above capital gains and fair market value. However, ensure that these conditions are met to avail this scheme. Staying updated is key!

**Licence requirements**

Startups cannot operate in ambiguity. If your startup is in a business that requires a licence, then apply for it. Comply with the rules or get ready to face expensive, multiple lawsuits, slow investments, loss of investor confidence and even business closure. Therefore, understanding the licensing requirements is a basic hygiene requirement that startups should strictly adhere to.

**Cash flow management**

Startups need to inject capital and funding into their business to meet their day-to-day business needs. Ensure this by bringing in working capital for your startup. However, there are multiple ways to raise capital. Be sure to track your finances on paper to confirm their legal status.

The books are also another important aspect. Good startup hygiene practices include regularly maintaining and auditing accurate books of accounts to ensure compliance with all necessary accounting and tax rules. Neglecting to do this can lead to serious accounting discrepancies and annual compliance issues.

At the inception of the business, marginal capital will be introduced. However, this is not sufficient to run a healthy business, so it will need financial support from multiple sources, such as internal and external.

**Conclusion**

The steps of forming, registering, managing and operating a business require more detailed attention. This should focus on defining the terms that govern the appropriate transactions, procedures and business practices. This can be a bit frustrating for entrepreneurs who are focused on their primary business activities. However, the importance of legal requirements and procedures, which fundamentally protect the business, should not be overlooked.

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