5 Crucial Business Laws for Entrepreneurs – Unboxing Startups
| 3 minutes read
Starting a business is a dream of every entrepreneur, but starting a business needs a lot of research, and every country and state has its own business laws. To operate a business, one has to follow the business laws set by the government. So whether you’re doing business in the US, India, or any part of the world, you have to follow certain norms or business laws to operate the business.
In previous articles, we had already covered How to start a business? Innovative ways to attract customers to your startup. In today’s article, we will be discussing business laws for entrepreneurs.
And there’s a lot to know, so you might not know where to start. So we’ve broken down five types of business laws you should be familiar with when you start a business.
1. Company Formation Law.
This is the first business law that needs to be considered during company formation. Not to forget, every business structure has different business applications that must be verified during the process.
Structuring the organization and business depends upon the business’s long-term objectives, goals, and visions. Therefore, before deciding what kind of business you want to set up, it is crucial to review the practicality, suitability, and profits expected from the organization to achieve the company’s goal.
In India, the Companies Act 2013 states law for each type of company while starting up a business; you have to choose a company: proprietorship, family business, partnership, LLP, private or public limited.
2. Business Licenses.
Once you follow the company law, a business license comes into the contest. Based on the type of business, you need that type of license. Every entrepreneur wants to stay away from the legal battle. Therefore, it is recommended to apply for a license as per your establishment’s business.
All the business licenses vary from one business to each other. The standard licensing applied for most companies under the law is registered under the shop and establishment act, 1953. Obtaining Professional Tax registration, PAN, and TAN registrations for commercial invoices and billing.
For some specific companies like manufacturing dealing in export-import, you may need many licenses like Import and Export Code, STPI, Factory license, etc.
3. Intellectual Property Rights.
You must note this law if you have a secret sauce or an algorithm in this high-tech world. According to this, you can patent your innovative product; with this, if anyone tries to copy your product, he will face circumstances, and it is a punishable offense. A brand name or a trademark comes under intellectual property rights.
A Startup can leverage the ‘Scheme for Startups Intellectual Property Protection (SIPP) under the ‘Startup India program.’ This scheme was set up to protect & commercialize your intellectual property. The facilitators of the scheme are impaneled by the Controller General of Patents, Trademarks, and Design.
4. Employment Laws.
Employment laws, or labor laws, are the general set of rules that apply to businesses that have workers/employees. These laws cover the rights and responsibilities between employers and workers and are governed by both state and federal law. It protects the interest of employees and workers working in the company.
Some of these laws only apply to businesses of a specific size, but it’s a good practice to follow them regardless of the size of your business to make sure you’re treating employees fairly.
5. Finance Laws.
As a business, you must follow finance laws. Finance laws govern how companies can spend money and grow their businesses.
Bankruptcy falls under this category. If your business debts become unmanageable, you can file for Chapter 7 (closing your business) or Chapter 13 bankruptcy (plan to reemerge). The type of chapter you file for depends on your business structure, how much debt and assets you have, and whether you plan to continue running the business.
All entrepreneurs want to go high, but you must consider these business laws to run the business flawlessly.
Most entrepreneurs spend a lot of time developing their business strategies and goals, but they don’t give must importance to laws. Therefore, the entrepreneurs must follow all the critical legal documents for startups for proper functioning.