Stuttering Startups: 7 Legal Hassles To Avoid

Starting a “startup” and running the business would bring up several challenges throughout. It is common to face failure at the beginning of any enterprise. As an entrepreneur, your tenure would be marked with initial hiccups and hit-n-miss opportunities. Legal matters are one of the leading junctures which an entrepreneur often overlooks, often leading to hassles later on. Besides giving shape to your startup, you need to keep yourself updated on legal steps, to ensure a smooth-sail into progress. Here are some of the points you should learn about:

Choosing The Legal Structure Of The Startup

Your future plans would depend heavily on the legal structure of your startup. It has an impact on the kind of investors you can accept, your tax liability, your personal legal liability, and so on. By selecting the wrong kind of structure you might end up with unlimited personal liability for debts incurred by your company. So, you need to keep various factors in consideration, which include: type of business, administration control, tax registration, management and ownership, funding, profit sharing, business regulations and many more.

Business Registration

In India, business registrations and licenses are extremely important to operate a business lawfully in a territorial jurisdiction. It may include PAN registration, VAT registration, TAN, service tax registration, etc. Unless it happens, the entrepreneurial venture could become a subject of scrutiny under government authorities.

Also, shareholders need to be kept in mind as often frauds and breach in agreement often happen due to lack of shareholder’s agreement. It is of essentiality to have a shareholder’s agreement, even if the people in question are friends or family members

Trademark Registrations

One of the common mistakes that startups commit is by not registering their trademarks. This can turn to be costly as to survive in a competitive market, organisations often end up stealing ideas and other entities. You must protect your intellectual rights, not only for yourself but also for the organization as a whole. Go for the trademark registration and bear the responsibilities of an owner.

Avoid Loose Language

In the haze of marketing, some people commit grave mistakes of promoting overblown or exaggerated advantages of their product or services, which has unprecedented negative outcomes. Fraudulent cases are rampant, with consumers being smart enough to take the organisation to court. Therefore, you should not opt for a loose language while describing the products and services that are utterly false. A carefully thought campaign would benefit in the longer run.

Rights Of Employees

The legal jurisdiction has brought a great deal of reformation, in context to employees and their rights. Failing to adhere to employee laws in regards to vacations, sickness and disciplinary action can result in a court case. It’s essential to keep abreast about employee rights to prevent any nasty occurrences down the line. Cases of bullying and sexual harassment in workplace, often lead to the strictest punishment being awarded. The goodwill can only be maintained through satisfied employees.

Keep Meticulous Records

Legal issues crop up due to employee disagreements, client satisfaction and so on. By not keeping evidence, you are bound to be at the defeated end.  The most positive thing in this instance is reverting to complaint with evidence, putting your case across. Every business related decision needs to be documented in writing. Contracts, emails, and even note-taking apps are aids for you to prove innocence. It is always preferable to have proof to strengthen your case.

Agreements With A Third Party

While you negotiate for a third-party agreement, you should also include a non-disclosure agreement, which protects your rights of intellectual property. It should highlight all the points of agreement in the case of a breach, dispute or termination occurs. At the end, you will have proper documentation that prevents any harm to your startup.

It would be advisable to enlist the help of a lawyer, but self-education on these pointers would ensure the prevention from legal complications happens beforehand.

[The author of this post is Shubham Patil – an industry veteran and founder and CEO of BusinessWindo.com.]