{"id":10392,"date":"2022-01-19T16:34:29","date_gmt":"2022-01-19T11:04:29","guid":{"rendered":"https:\/\/payu.in\/blog\/?p=10392"},"modified":"2022-05-13T20:34:21","modified_gmt":"2022-05-13T15:04:21","slug":"law-basics-every-startup-owner-must-know","status":"publish","type":"post","link":"https:\/\/payu.in\/blog\/law-basics-every-startup-owner-must-know\/","title":{"rendered":"Law Basics Every Startup Owner Must Know"},"content":{"rendered":"\n

In recent years, there has been a boom in the number of startups<\/a>. The Government of India had introduced a program called Startup India to catalyze startup culture. Around 50,000 startups got recognition in 2021 under this scheme<\/a>. <\/p>\n\n\n\n

But to make a startup successful, you need to be aware of all the rules and regulations related to it. In other words, you need to understand the law on startups<\/a> in India. In this article, you will understand the standard rules for startups in India.<\/p>\n\n\n\n

Legal Basics For Startups<\/strong><\/h2>\n\n\n\n

Some of the legal basics that\u00a0every startup, as well as an entrepreneur in India, should be aware of before starting a business have been discussed below:<\/p>\n\n\n\n

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Law basics every startup owner must know<\/figcaption><\/figure>\n\n\n\n

Deciding the Structure of Business and Prepare Founders and Co-Founder\u2019s Agreement<\/strong><\/h3>\n\n\n\n

As an entrepreneur, the first thing while planning a startup is to decide the type of business. You must be clear about your short and long-term goals and visions. Then decide about the company’s incorporation, i.e., sole proprietorship, public limited company, private limited company, LLP, etc. <\/p>\n\n\n\n

Once you are clear about what type of company you will incorporate, then understand the registration process for your company. You must research which kind of company will best suit your needs. A private limited company is the best option for a startup willing to raise funds as it can help you raise external funds. <\/p>\n\n\n\n

An entrepreneur should also prepare a Founders and Co-Founder\u2019s Agreement. This agreement will help define the roles, responsibilities, exit clauses, operative clauses, and executive compensation of the company’s founders. The founder’s agreement reduces the chances of disputes in case of any disagreements between the founders.<\/p>\n\n\n\n

Apply For All Important Licenses Related To The Business<\/strong><\/h3>\n\n\n\n

The best method to start a business is to get appropriate business licenses. Different types of permits are applicable in India, depending on the size of the business. Failure to obtain requisite business licenses can lead to unwanted lawsuits. Registrations and agreements of a company also rely on business licenses. Government agencies can shut down businesses running without licenses. Some standard licenses include Shop and Establishment Act, FSSAI<\/a> Registration, GST Registration, etc. Business licenses also vary from industry to industry, and you must understand how to register your business legally.<\/p>\n\n\n\n

Get Clear Knowledge About Accounting And Tax Laws<\/strong><\/h3>\n\n\n\n

Taxes are an integral part of any business. There are many types of taxes, such as state tax, central tax, etc. The Government of India has introduced many exemptions for startups, such as tax exemptions, for three years. Businesses can also get tax exemptions from investments and capital gains above the Fair Market Value. To avail of the given benefit, businesses need to qualify the conditions mentioned below:<\/p>\n\n\n\n