‘Starting-up’ with minimal legal awareness? Take a glimpse.

Posted By MyAdvo / February 5, 2016 / Startups / 0 Comments

The idea of commencing a start-up may tingle your heart or pulses but should never affect your mind. One must be thorough with all the legal procedures involved, pertaining approvals, clearances and licenses, registration process and many more. But, important question is how to make sure that we are on the right track or haven’t missed any step in the process? In order to establish a successful start-up, brace yourself for unpredictable results, bizarre regulatory turmoil and should have an unbeatable product or service to offer.

Undoubtedly, you are new in the territory and have limited capital to invest as well as spend. Our judicial system and regulatory bodies have made justifiable and complex legal system to abide by one and all. So, even the start-up companies who have just stepped on the first step to make profit can’t avoid their aggravating cost due to rise of legal issues.

Let’s take a look at the legal compliances that will knock the door of startups even before the moment they step into their new venture’s house:-

What you prefer to be your ‘legal status’?

Essentially, you have to make a choice by picking your viable business vehicle after understanding its impact in terms of suitability, legal complications, profitability, feasibility and future visibility. In simple terms, decide whether you want to have a limited or private limited company, partnership or LLP firm, one person company or trading firm etc. Obviously, all the legal structures are governed by different laws and thus, become considerable factors to decide on choosing the legal status of your start-up. It would be wise to seek online legal advice or read informative stuff to get informed.

Legally register your professional relationship:

Set up a startup management team and create a founder’s agreement to legalize your professional relationship in order to avoid future hassles as well as to get the clear picture of the deal between you and your partner(s).

Seek the procedures to obtain apt & requisite licenses:

It is better to understand the licenses and registrations before starting up. For example: – shop & establishment registration, tax registration, trade licenses, labor & employment registrations, Intellectual property registrations, patent examination etc. Make sure to know the processes involved in obtaining these license/registrations and start acquiring them carefully.

What is ‘Taxation’?

Just that you have no idea about the taxation issues or rules as applicable on your startup, you can’t be excused. Then, guess what? You will have to face the wrath of heavy taxation fines, punishment, law-suits or imprisonment. Dare not mess with them! Instead, get abreast about the basics of accounting and taxation workings. It would be helpful to acquire sector and area specific knowledge as tax laws in India vary with state and central government.

Systematize your Legal documentation:

Make a list of documents that are required to be filed with the respective State or Central Government and at what time periods. Also, you must seek legal advice or surf internet on preparing your terms and conditions, disclaimer, privacy policy or other respective agreements, as requisite for smooth functioning of startup. It is important to build a legally secure base in order to establish a successful & growing company.

How to deal with unforeseen events?  

Beware of disputes, unpredictable legal hiccups or unexpected legal notice or law-suit, as they may come up in the middle of your journey to growth. You must prepare yourself to deal with all kinds of formal or informal ways of dispute resolution.

Why do you need a start-up lawyer?

A legal whirlpool can boggle the minds of entrepreneurs and the legal intricacies that are involved in the starting up of the companies are quite complicated. Many a times, the entrepreneur gets engaged in resolving them and forgot about the effective execution of his great idea or offering his new products and services. The bottom-line here is finding the right lawyer, who can hail you from the legal pitfall and support you in sailing up your start-up ship from tempestuous seas successfully.

Starting up

A start-up lawyer can proficiently help an enterprise in making timely compliance as required in incorporation with respective authorities, getting licenses by filing right applications and in desirable format, applying for requisite tax or accounting registrations and returns, inform up about applicable employment of labor laws, patent application, auditing, IT laws etc. Furthermore, he/she can guide on the ways of dispute resolution both, within court or out of the court.

Capital funding or investment

All the above compliances are statutorily required but what about pre & post funding compliances? Start-up companies go panicky when the time comes to fulfill legal formalities, as applicable, once the funds from investors come into their bank accounts for business initiation. It is essential to have little knowledge about securities laws and fund management. A startup lawyer is well verse with legal issues that come with different options for fund raising like crowd funding, venture capitals, angel investors, FDI or joint ventures. For instance, it involves filing with Registrar of Companies, if securities are to be issued on preferential basis and requisite forms to be filed with RBI/SEBI, if the shares are to be issued to foreign investors. Thus, it reflects involvement of lengthy procedures, legal advices, regulatory compliances and careful functioning.

In such cases, lawyers or boutique law firms play crucial role in crossing this hiccups easily.


Today, such growing ideas can bring a positive difference to the economy of the country and are given appreciation as well as encouragement in different possible ways. Our Government of India is coming up with its ‘Start-Up India’ initiative to boost them and is emancipating legal hurdles to ease their commencement as well as cost burdens. Still, it is wise to seek a reasonable lawyer for start-up on initial stages to avoid future unforeseen legal complications.


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