More often than not, a person/company is made to believe that the accountant can draft the incorporation documents and do all the necessary filings. However, in our experience most companies come to us after they realise that the accountant has failed to or missed drafting an essential clause due to which the company faces penalties or their rights have been protected properly.

Thus, it is vital to engage a lawyer and an accountant to do their respective jobs, to ensure that you are protected.The advantages of hiring a lawyer of the stage of conception are multi fold.

 There are numerous matters such as contractual disputes, property disputes, environmental disputes that have to be dealt by a business owner and in order to prevent these disputes from arising and the services of a lawyer prove essential.

Yes, it is pertinent to execute employee contracts as it lays down the rights and responsibilities of the employee and the obligations of the employer as per the law.
Such as:

  • It is mandatory that all employees in factories or establishment shall be insured.
  • Maternity benefit, sickness benefit, disablement benefit have to be provided.
  • Any establishment with over 20 employees, has to be registered with the Employee Provident Fund Organisation.

It is also beneficial to have a lawyer draft an employee manual to ensure that the employees are aware of the governance of your establishment.

It is better if the tradename is registered as it gives you the exclusive right to use such tradename. It is not mandatory to register a trademark however to be on the safe side, it is better to get it registered. Due to the awareness created about the rights and privileges of ownership, today, it is relatively easy to get your trademark registered, provided you have the right person/ firm to do the filings.

Intellectual property rights are valuable assets to your company. Once you have created a distinctive intellectual property, it is necessary to get it registered. Some of the benefits that you receive by registering your intellectual property is as follows:

  • The exclusive right to use such registered intellectual property.
  • You can obtain relief from a court of law if infringement of your intellectual property takes place.
  • A registered intellectual property dissuades others from using such property.

In order to promote entrepreneurship in the country, the Government of India recently amended the definition of a start-up:

  • Considering the long gestation period by start-up to establish, an entity shall be considered a start-up up to seven years from the date of its incorporation/ registration (from earlier 5 years). However, in the case of start-up in the biotechnology sector, the period shall be up to ten years from the date of incorporation/ registration.
  • The turnover does not exceed 25 crores in the last five financial years.
  • The work involved should be aimed towards innovation, development, deployment, and commercialisation of new products, processes, or services driven by technology or intellectual property.

A lot of factors have to be looked into before investing in real estate. However, the major issue that start-ups face is availability of funds. If you have enough funds to rent a property then that is a viable option. The other option that you have is to take up a space as per your requirement at one of the various co working centres. Co working is a style of work that involves a shared working environment.

The reasons it the most practical option for a start-ups are:

  • It is cheaper which means the cost of the start-up is lower.
  • It is flexible since as the business grows it is easier to scale up a shared office.
  • There are networking opportunities in a co working space.

It is not advisable to get a Non-Disclosure Agreement (NDA) signed by prospective angel and venture capital investors. The reason for the same is that venture capitalists meet a lot of entrepreneurs and therefore they have to look into a lot of ideas that are similar to one another due to which they prefer not to get entangled in NDAs. It is better to build a relationship with the venture and angel capitalists instead of getting a Non-Disclosure Agreement signed.

Prior to approaching an investor, ensure that all your registrations, permits, consents, licenses required for your work have been obtained and your books of accounts are updated. Ideally, your lawyer should be able to identify whether all your compliances are in order and if you require any further protection.You should have a clear business plan drawn out and a reasonably good track record to be able to leverage investment into your company.

Depending on the kind of work, capital available and your general business plan, you have the following options:

  • Sole proprietorship
  • Private Ltd Company
  • Public Ltd Company
  • Unlimited Company
  • Partnership
  • Limited Liability Partnership (LLP)

You also have the option of converting one entity to another at a later stage, such as a sole proprietorship into a partnership, or a partnership into a private limited company.

For a foreign Investor in India it is very important to choose the right kind of corporate entity best suited for its purposes, takes care of liability and tax planning issues.


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