THINKING OF A STARTUP ? DO READ LAWS BEFORE STARTING YOUR ENTREPRENEUR JOURNEY
INTRODUCTION - Indian startups have raised $42 billion in 2021, up from $11.5 billion in the previous year, a report by Orios Venture Partners said. The report titled 'The Indian Tech Unicorn Report 2021' said India saw 46 unicorns (companies with $1 billion valuations) in 2021 alone, more than doubling the total number of unicorns to 90. These include ShareChat, Cred, Meesho, Nazara, Moglix, MPL, Grofers (now Blinkit), upgrad, Mamaearth, GlobalBees, Acko, Spinny, and others. After coming up with SHARK TANK, there is a revolution brought by younger generations from startups. There is an entrepreneur in every household and there are certain laws that must be kept in mind while starting up a new business. Some fundamental eight laws are mentioned for each enterprise's efficient operation.
1. Business Structure Formalization and Registration - There is a want for expertise and making use of the right business structure because distinct enterprise structures require distinct enterprise programs while carrying out the enterprise. There are distinct sorts of enterprise structures including a proprietorship, partnership, constrained legal responsibility partnership, and personal owned company. Companies have a mandatory registration requirement under the laws of India. A company may be registered as a legal entity under:
a) The Companies Act, 2013 – for private, public, not-for-profit, and one person companies b)India PartnershipAct,1932 c) Limited Liability Partnership Act, 2008, for restricted ownership
2) Licensing Business- Every entrepreneur desires licenses consistent with the sort of business carried out. Before launching a startup the suitable licensing issuing method need to begin to live away from the legal battles on the inception. All the licenses vary from enterprise to enterprise. Business licenses vary from industry to industry. Various environmental, food and safety, labor and employment laws and import-export laws, FDI Policy, FEMA, SEBI/RBI regulations, VAT regulations, TAX regulations, Service tax relations, in India impact the procurement of licenses.
3. Taxation And Accounting Laws -The government scheme of startup India released provided many tax exemptions for startups. Different enterprise desires distinct tax coverage to be carried out consistent with the tax and enterprise structure implemented. For tax exemptions in a startup, the primary 7 years' lifespan has may be availed for tax concessions. The corporation must be registered because of the limited liability partnership, company. The overall turnover for the beginning years needs to not be greater than 25 crores annually. Every company or business desires to keep accounts and tax audits to stick to the taxation guidelines and adhere to in the country.
4) Labour Laws- As each business company has personnel or labor which facilitates in proper and efficient functioning daily. Many laws are associated with labor like minimum wages act, gratuity, Provident funds payment, paid vacations to workers, maternity benefits, sexual harassment at workplace, payment of bonus, and many others. Even the authorities have provided an exemption from labor inspection for a startup if they practice all of the fundamental nine labor legal guidelines of the country
The Industrial Disputes Act, 1947
The Trade Unit Act, 1926
The Inter-State Migrant Workmen (Regulation of Employment and Service) Act, 1979
The Payment of Gratuity Act, 1972
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 The Employees’ State Insurance Act, 1948
. Building and Other Constructions Workers’ (Regulation of Employment and Conditions of Service) Act, 1996
The Industrial Employment (Standing Orders) Act, 1946
The Contract Labour (Regulation and Abolition) Act, 1970 Proper employee's and laborers guidelines may also assist in increasing the morale and efficiency of the workers.
5) Intellectual Property Rights- Protection Startups in many instances come up with specific uncommon thoughts that may be safeguarded using certain laws. A revolutionary product, improved method, or system of creating something in a better manner or any intangible human asset created or a revolutionary product may be counted as our revolutionary assets rights. This scheme could ensure the safety and commercialization of intellectual assets and control the trademark, copyright, and designs involved withinside the business startup
1. Copyright describes the rights that creators have over their literary and artistic works like books, music, paintings, sculpture, and films, to computer programs, databases, advertisements, maps, and technical drawings.
2. A patent is an exclusive right granted for an invention. A patent provides the patent owner with the right to decide how - or whether - the invention can be used by others.
3. A trademark is a sign that distinguishes the goods or services of one enterprise from others.
4. Trade secrets are IP rights on confidential information which may be sold or licensed.
6) Foreign Investments- For encouraging overseas funding in the startup there are policies for overseas venture and capital investors. Schedule 6 of the foreign exchange management act (FEMA), 2000, and the third modification on this same act in 2016 has been used for regulating investments. Any investor from overseas may also make a contribution to the 100% of the capital of the Indian startup engaged in any enterprise under Schedule 6 of Notification
7) Business Contract Management- The right legal agreement is judged under the Indian contract act, 1872. For creating a legitimate agreement the conditions are mentioned in Section 10 of the Contract Act. The first contract in business is the employment contract which needs to be correctly made. The salary, stock options, scope of work, and many others need to be mentioned properly.
8. Winding Up Of Business- When a business has commenced the laws need to be acknowledged regarding the windup as when the worst could come, no one can predict. The winding-up process is a systematic method with three modes of winding-up that are speedy exit, court or tribunal route, and voluntary closure. The Insolvency and Bankruptcy Bill, 2015 is likewise used for easy and efficient enterprise windup. The Ministry of Corporate Affairs has notified sections 55 to 58 of the Insolvency and Bankruptcy Code, 2016, to effectively reveal the insolvency decision process and the short track method calls for a startup as in step with government policy. Hence, those are the fundamental legal steps for a framework of the startup to be formed.
Conclusion -Entrepreneurship is a uniquely powerful mechanism for economic and social development, generating incomes and jobs while enabling and enriching individuals and communities. Truly, an engine for change. Staartups create jobs and diversify job fields, giving employment opportunities to youth. Startups revitalize the areas with their progressive policies.
Startups bring new innovations and inventions paving way for the holistic development of the country. Government must support these startups and every entrepreneur must look into these 8 laws. After holistic study of these 8 laws mentioned above, an entrepreneur must start his journey