Entrepreneurship represents the essence of serving humanity and creativity. (May be controversial for non-entrepreneurs).The startup environment unanimously agrees that the “need to serve humanity” attitude is the prime wheel that keeps the startup to roll in the path to path-breakers legacy.
This attitude and creativity are the “to be transferred info” in a network, then there are some refining needed to make the LAN(Local Area Network) a WAN(Wide Area Network). The primary refining should start from the onset itself if there is a vision for WAN. The most important of all the primary refining is the legal ripples faced by the “scaling up visionaries”.
When it comes to the legal issues remember the words “Do IT COStLy”. Yes, an acronym indeed.
St-Structure of the startup
Ly-Laws on activity
When the startups are small and minimal, there are no signs of dangers or competitiveness. Once the startup faces the ivy league, there is competition. This competition sends a non-voluntary invitation to everyone starting the IT officials to a deep-pocketed organization for uprooting. So everything should be in black and blue.
Let it be the expenses, employee records, minutes of the meeting (However small it may be) everything should be recorded in order to claim your stand in future. Use simple tools to record the events like MS office and other software and don’t forget to endorse it with the respective in-charge with the date.
The seeds may be different, if the fruits are same then there is going to be a problem. The startup idea which beams in people’s mind need not necessarily vary when there are physically identical people why can’t there be mentally identical ideas. The minute your mind ensures that this is going to be a reality, then you ought to protect it at whatever cost. This is a bit tiring in this digital world as there is every chance of “SHARE” option of your idea.
Discern the type of product, and opt between patents, copyrights, trademarks, service marks, trade secrets, confidentiality agreements to protect your intellectual property. Precisely patents are for products, copyrights for arts, advertising and other works of authorship, trademarks for maintaining the symbolic value of a word, name or symbol, Service marks for services, trade secrets for strategies which requires confidentiality and confidential agreements are NDA(Non-Discloser Agreement) stuffs.
The taxes form the real tool for the service to humanity attitude. The taxes are different for different places and for different companies, In a sole proprietorship, the taxes are under normal citizen tax slabs with the advantages of waiver, which are applicable for certain activities like personal loans, educational fee waiver.
In all other business structures such as general partnership, LLC, Limited partnership, Private limited the taxes are around 30% with surcharges of 0.9%. The taxation structure varies with the type of service and structure of startup. Getting the taxation from a renowned auditor with all the exemption and legalities will avoid major tax fines and costly suits.
Contracts are the safety harness for revenues at the time of fallouts. There is no template for contracts as every contract varies on the issue and the need. Get on a sample contract, there is no need for creativity in it unless it is not cunning. Always get a suggestion from distinguished law person on contracts. Contracts are never meant to be long, make it precise but with all necessary inclusions. Include the clauses on the account of breach of contract and more importantly include “force majeure” clause which relieves you from breach if unforeseen events occur.
Co-founder issue uproots the whole passion of startups. Filter the sediments even before they occur to you, make the co-agreement clear with all the information regarding the ownership, responsibilities, commitments, trade secrets, overall goal, operating key for day to day decisions. It is never uncommon for the co-founder to step out of the ship, make the regarding clause in the agreement and also mention what it needs to pack-off the board members if he doesn’t share the vision of the company.
Structure of the company:
Frame the right structure of the startup according to the need and service rendered. The net is filled with “The better structure of startup is LLC”I strongly recommend not to get carried by this. Do an intense research on laying the structure of the organization. In all the corporations like the C and S, the individual persons cannot be sued on legal litigations. The LLC type has limitations such as 200 directors and all are jointly liable on the legal issue.
The private limited type has the limitation of 2 directors on minimum and with all the legal articles on share and memorandum of understanding. But in private limited, Listing of shares can be done. Every structure has its own Pro’s and con’s, only with some professional thinking the structure can be chosen wisely. Registering the structure is different for different types some need CIN (corporate identification number) and some needs registering in ROC (Register of companies).
Laws on Activity:
Whether it may be a product or an app development, startups need to check the state laws. Laws could be against the activity of the startup. For an instance take UBER it faced around 173 lawsuits internationally in each country it faced different suits like in one the drivers need to pay GST on their income from the taxi, in other was sued for unfair trade practices. The whole concept was taxi on the click but due to variance in law it faced many implications.
Lighting up the legal litigations can annihilate the startup’s fame, which results in losing customers and can finally bottle up the company. So it is mandated to keep an experienced eye on the legalities which could be done only by hiring a professional law body’s advice. Spending to avoid ramifications is never spending, it is an INVESTMENT, Investment to make the company strong.