LAWS RELATED TO START-UP ENTREPRENEURSHIP

Start-up is a company that is at its first stage and the main drawback is that the company does not hold great capital to invest in the venture. They seek help from the venture capitalist and they also invest in the startup because the investors are very much attracted towards the startup. The founder of the startup have to face so many problems at the time of starting a new venture. To start a new business or a company which we call a Startup the entrepreneur should keep in mind the legalities he must follow.

There are some points to remember to check the eligibility of the firm while registering the firm for the startup scheme started by the government of India that are :

1. The form must be Incorporated in India for less than 7 years.
2. It does not exceed the annual turnover of rupees 25 crores in the previous financial year.
3. The startup must be working with the aim of discovering or innovating new things, development, increasing productivity etc.

There are certain benefits provided by the government so that the entrepreneur of the startup can easily grow his or her business.

1. The govt. made the process very easy by providing mobile app for the registration of the startup online only.

2. The government set up for 10 crore rupees fund for the new venture and many venture capitalist are very much interested in investing in the new ventures.

3. The government also provides tax rebate for three years from the day of commencement.

4. The government also get this benefit of easy exit. The entrepreneur has to give letter of winding up before closing the business.

The different laws for startup entrepreneurship are:

1. Deciding the type of business: This is the first and foremost step to decide that what kind of business of individual is going to start. There are different legalities for different kinds of businesses like for proprietorship, partnership, limited liability partnership, private limited company for all of these the legal terms will be different. 

2. Licensing of the business: This is the most important part for a Startup because if there is no license then it may result to lawsuit and the entrepreneur cannot claim the defense that he or she was unaware of the law. There is a maxim in our law that is ignorantia juris non excusat which means ignorance of law is not excusable.

There is a common license for most of the businesses that is shop and Establishment Act and it is applicable to the businesses all deals with trade and profession. The act is different for every state. It is mandatory for all the entrepreneurs to get registered under this act and get the license.

The license of the business is totally depending upon the nature full stop some businesses requires certificate and licensee, but some does not require the things.
There are different types of licenses and certificates also which are required for the different types of businesses for example, if a firm or a company want to start an e commerce company that in this case the entrepreneur must require license that is VAT registration, service tax registration, professional tax registration and many other registrations of certificate according to the nature. On the other hand, if an entrepreneur wants to start a restaurant then he or she must require the licence of food safety, certificate of environmental clearance, prevention of Food Adulteration Act, health trade licence along with the basic acts.

3. Paying tax: types of the most important part of an individual as well as for an entrepreneur. The tax is the only ingredient through which the government provide all the resources, and this is the only source of funds to the government to run entire economy or Nation. The taxes we pay the government uses those taxes and run the country. The entrepreneur must check all the taxes he or she have to pay. Under the scheme of startup India which was announced by the Prime Minister of India in that scheme he provides three years rebate or exemption for the startup programs for the organisations to not to pay the taxes for 3 years. Have to pay so many types of taxes and there is a category of taxes that is the taxes are divided into three categories which are discussed below:

• Direct tax: This tax paid directly to the government and is very important to be paid. It further includes so many taxes under the head of direct tax that are:

1. Income tax
2. Capital gain tax
3. Security Transaction Tax
4. Payroll tax

• Indirect tax: these taxes are paid indirectly to the government, or these are levied on the goods and services provided to the customer. For example, if we purchase any kind of beverage from the market then includes VAT that is value added tax with amount itself. This is a very common example and everybody of us uses this in our day to day life. Under this head also there are different taxes –

1. Sales tax
2. Service tax
3. GST
4. VAT
5. Custom duty
6. Excise duty

• Other taxes : two types of taxes we have research upon but there is one more generating revenue but somehow it is also useful to the government. These are the taxes are of different types that are –

• Professional tax
• Property tax
• Entertainment tax
• Gift tax
• Toll tax
• Swachh Bharat cess

It is advised to each and every businessman to pay taxes and to the individual as well. These taxes generate revenue for the government and also helpful for the firms to maintain proper books of accounts or category that is other taxes which is not very main ingredient.

4. Labour laws: in our country there prevails rights of the labours and several labour laws has been introduced in the country with the changing time. Every business can’t be Run by the entrepreneur itself and he or she wants some manpower also. The entrepreneur has to take care about the several laws which are created in the favour of labour and employees working for a business or a company. In short there are laws in this favour that are minimum wages, gratuity, PF payment, weekly holidays, Maternity Benefit, sexual harassment, payment of bonus, Medical and health facilities et cetera.

Entrepreneurs does not have to take tension about the laws in everything because they are exempted for three years in several labour laws under the scheme of startup entrepreneurship in India and those laws are:

• The industrial dispute act
• The trade unit act
• Building and other construction worker act
• The industrial employment act
• The Payment of Gratuity Act
• The Contract Labour act
• The Employees Provident Fund and miscellaneous provisions act
• The employee State Insurance act

5. IT laws: there are so many IT laws with are very important for any business that a Startup or any running business. There are many plans of a business for its customers which should be secured. So, for that data security main and very important component. This component is mostly ignored by the entrepreneurs it is not very common in our day-to-day life.

6. Contracts laws: Sometimes there are many disputes with the customers or with the employees both so the company must acquire these laws or make proper contract with the customers and the employees both so that to ignore avoid the unnecessary consequences of the dispute. There are different ways to avoid dispute to get to another level or to the court that is arbitration which means to resolve the matter outside the court with the presence and good intention of both the parties.

Closing the business:

It is very unfortunate to think about winding up of a business before starting it. But we are the human being and Indians as well things about both best and worst at a same time which makes us to think for long run.
There are different ways to wind up auto close a business and that are:

1. Fast Track exit mode: this seems to be the very simplest and easiest way to step back. Most of the people to this mode because it involves very minimum cost to shut down the company. The Entrepreneur who wants to wind up the form through this way or more then he or she Mast remember two things which is necessary for this mode that are :-

• The very first thing is that there should not be any Assets and liabilities with the company.
• For the previous one year the company was not having any business operation.

If an entrepreneur fulfils these two conditions, then he will be eligible to wind up the company with this process.

2. Court or Tribunal route : This is the least advised way to the Entrepreneurs because once any individual or a company gets into lawsuit then it will takes long time to get out of it.

3. Voluntary closure : As the name suggests it involves both the parties that is entrepreneur and the shareholders of the firm who wants the same listen to wind up the company but in most cases this is very unpractical.