3 Company Registration Mistakes Every Startup Should AvoidJuly 4, 2017
Registering a new company can be a bit of hassle. If you’re a young startup, the process can be trickier still. Every year, thousands of startups register their companies, but a lot of them end up doing it the wrong way and end up paying an exorbitant price in the end.
We’re going to tell you how, as a startup, you can protect your interests by being more careful while registering your company. Here are three major company restoration mistakes you should avoid.
Choosing a Legal Structure
When registering your company, you can choose from one of the following entities:
- One Person Company (OPC)
- Limited Liability Partnership Firm (LLP)
- Private Limited Company (PLC)
- Sole Proprietorship Firm
- General Partnership Firm
Each kind comes with its own set of directives and rules. They are also bound by very specific restrictions on the functioning of your company, which can range from the number of people who can sit on your board to the kind of funding you are allowed to accept.
It’s recommended that you understand the functioning of each of these entities in detail before committing to any one type.
Safeguarding Intellectual Property
As you grow, your idea is exposed to more and more people. It’s not uncommon to see someone else pick up your idea, or a part thereof, and sell it as their own product.
It’s imperative, therefore, that you protect your intellectual property. Think of it like an insurance policy for everything non-physical in your startup.
It also stops copycats from using other aspects of your company for their profits. Such things can include but are not limited to, logos, product designs, labels, branding elements, even processes and domain names. All these form a part of your intellectual property and must be protected at all costs.
Lack of Awareness About Taxes and Other Laws
The spread of businesses across the country is governed by a host of rules and regulations, which can be divided into two main categories — Central Laws and State Laws.
These laws require your business to be registered under various legislations, such as State Value Added Tax Act (VAT), Central Excise, Customs, Professional Tax Act, etc. Since this can get pretty complicated for the layman, you should sit down with a qualified CA. He will help you understand what laws apply to your business and its place of operation and register your company in all the necessary authorities.
Non-compliance fines are usually very severe, and, in extreme cases, it can even lead to cancellation of your permits. It’s highly recommended, therefore, to operate in clear daylight as per the rules and regulations surrounding your business.
By taking care of just three fundamental aspects of company registration, you can avoid a lot of trouble and money at a later stage. Most information is freely available today in the public domain (Internet) free of cost, but if you have any doubts, you should always reach out for professional help. As we always say, it’s better to be safe than sorry!