Why Should You Consult a Lawyer for a Startup?

Law
09-Feb-2023
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Regardless of the work you have to do, the people you decide to work with make all the changes. The qualified team can either break or make it and all the changes between you 'achieving' or 'failing short of' your chosen goal. The 21st century is stated as a 'start-up era.' The basic principle of businesses these days is a team effort. While stating what and to whom, the team must receive good legal advice. It is one of the essential aspects. A start-up works in a dynamic business environment. Thus, it must have access to sound and prompt legal advice on managing obedience under the law and needed under diverse accords. Proper adherence is required to not become responsible for paying fines later on.

 

Starting an enterprise is a multi-step approach that can be both thrilling and overwhelming. If you're starting your business yourself or along with other enterprise experts, it is crucial to work with a professional lawyer during the startup process. Safeguarding yourself and others from debts, liability, and undesirable legal action are many grounds to confer a lawyer before starting a business. If you are in a dilemma about taking legal advice or legal services, keep reading this article till the end. You'll get all the answers to your questions.

Need of a Lawyer in Start-up

From incorporation to acquisition negotiations, startups need a legal advisor for their business's success. Secondly, managing risks equally tops the list as your business startup has to be safeguarded from diverse types of risk that arise when dealing with third parties. Contract Management and drafting come in handy to prevent threats, be it a Nondisclosure agreement or a founder agreement. Contracts are necessary papers for any business startup. Additionally, the Protection of Intellectual property is equally essential at the onset. Registration of trademarks and patents can also occur at the start of any startup, especially those deemed creative or dealing with clients and consumers.

Role of a Lawyer in a Business Start-Up

 

When entrepreneurs start their enterprises, they are mainly involved with the goods or services they offer, the supply chain, and other linked technicalities. While prioritizing this, owners must notice how their legal procedure may affect their enterprise. The following are the role of an attorney in a start-up:

Formation of the Company

Lawyers can advise business owners on the structure of their enterprise that suits them most, whether a sole proprietorship, LLP, partnership, or corporation. Lawyers can also enable entrepreneurs to decide how to structure their acquisition in their firm. A legal expert is also required when an owner raises funds from angel investors or venture capitalists at the beginning of their enterprise. Investors and founders should agree on the rights, equity, and duties that will make the investment agreement during fundraising. It is when an attorney may help as they can arrange the agreement's conditions and show the ramifications of the required rights and duties to their consumers.

Licenses required

To begin is to succeed. Starting a business startup in India isn't just a fairy tale story that will go smoothly. Yet, India has made remarkable advancements recently, making it easy for the business owner. Getting a license varies from business to business depending on factors such as the number of workers, the sector, the kind of enterprise, the place, etc. To specify the exact needs of your startup, it is essential to get in touch with an experienced startup lawyer so they'll determine the necessary license that you should have for a smooth flow of business and can save you from future liabilities.

Following are some of the required licenses that a startup must have:

MSME

The MSME sector, also known as Micro, Small, and Medium Enterprises, is an essential part of the legacy of Indian economic standards and a part of the required reserve chain for goods and services. The Act begins in the year 2006 in India. The initiative made by India's Prime Minister, "Made in India," has been made simple with the Act. It has become a backbone in the formation and working of the business. Also, the government has led the economic association to lend more credit to companies in the MSME part. An MSME license is essential for the business's smooth working.

Trademark Registration

A Trademark plays an essential role in promoting the goods and stating the details about the quality of the product. It allows a business to acquire personal rights to use, circulate or assign a mark. You can get the trademark for your startup through the Trademark Registration process. It is a legal process of the trademark stated under the Trade Marks Act of 1999. Furthermore, the trademark protects the brand name. It gives the tools to prevent a third party from using the name of your business and allows you to take legal action against the person in case of trademark violation. It is advised to the entrepreneur to make their trademark registered as soon as it is possible.

FSSAI registration and license

FSSAI, also known as India's Food Safety and standard authority, is liable for confirming food products' safety and standardization globally. It looks for the manufacturing of the food, supply, storage, sales, and import to protect the welfare, safety, and health of the consumers. 

Import Export Code (DGFT)

An IEC, also known as Importer-Exporter Code, is a powerful enterprise title number that is compulsory for importing and exporting things to/from India. An enterprise doesn't have the right to import or export things without getting an IEC until it is expressly exempted. Yet, it is not compulsory to have an IEC for exporting services, except if the provider of that service is taking help under foreign trade policy.

BIS Certificate

The BIS certificate plays a vital role in the Indian market, and the entrepreneur cannot ignore its essence. Owning a BIS certificate for a startup means that the entrepreneur has been going through numerous tests and has been approved by BIS that your startup's product is free from toxic material. Buyers trust BIS as its foremost priority is to keep customers fit, protect from dangerous products, and act as a protection for the customers. The BIS certificate helps all startups make an enterprise profitable in the business market.

Shop Act

The Shop and Establishment Act varies from state to state. Yet, the overall conditions of the Act are similar everywhere. The Labour sector of all the states controls the Shop and Establishment Act. The Act governs all the shops and retail organizations working within the state. It is essential to get the certificate of Shop Act for the smooth flow of your startup.

GST Registration

Before starting a business, it is essential to understand the registration of GST for a startup. The GST, presented in 2017, seeks to help the company eliminate the problematic center and state tax strategies and change them with a simple and single law. After the enactment of the GST act, other indirect taxes, including excise duty, VAT, and service tax, have been removed. It means that business owner isn't required to pay taxes on taxes now. Registering less rated GST for your startup will increase the options for getting business loans.

NBFC

NBFCs have become essential for all enterprise services, such as credit and loan skills, money markets, planning for retirement, and merger and underwriting actions. Giving credit to the unorganized part and the borrowers at the local group is vital.

Drafting contracts and agreements

It can be quite challenging to run an enterprise as a start-up; therefore, the owner usually needs a person (usually a co-founder) to support the functions and expansion of the business. An attorney can help calculate how to balance the co-founders' rights, duties, benefits, and obligations favorably to all the co-founders and the enterprise.

Entrepreneurs can protect their enterprises by executing and negotiating relevant contracts at the desired time. Co-founders' contracts should be arranged and put into effect by owners before starting that company's operations. It will ensure that roles and responsibilities are clearly stated and have the following:

  • Useful solutions for co-founder leaves the enterprise.

  • Specifying the effect on a company.

  • Additional co-founders.

  • Stakeholders of that enterprise.

Taking the lawyer's assistance to understand the business's needs for the website terms and conditions, client or vendor contracts, and shareholder contracts can be useful for the business's growth.

Labor laws

Labor laws play an essential role in designing a sound legal system and framework that enables enhanced working connections between people. The law gives clarity to the employer and creates a system with results for activities that intrude on the rights of the employee. Also, it offers employees and employers a legal place to communicate work-related matters.

To resolve disputes, it is crucial to negotiate employment contracts carefully, as they are complex and precise. Lawyers can help people to understand the labor laws, such as cessation, pay and wages, and paid and unpaid training.

Employee rights are of the highest importance. Yet, due to a lack of public awareness of the matter and results of the labor or employment law, these rights may sometimes be violated inadvertently. In a clash, an attorney may even be able to mediate between the employee and the employer. They can also advise the owner on examining any wrong misconduct and provide compensation if needed.

Intellectual Property Laws

Startups are mostly built on invention and innovation. Therefore, it's necessary to protect the entrepreneur's intellectual property to restrict others from developing gain from the owner's enterprise. The following are the laws that forbid the unauthorized use of intellectual property:

  • The Designs Act of 1911.

  • The Copyright Act of 1950

  • The Trade and Merchandise Marks Act of 1958

  • The Patents Act of 1970

Entrepreneurs require the help of legal professionals to understand the best way to protect their ideas and creations. To avoid a case in which neither party can generate profit from the invention in question, attorneys can solve the matter in diverse ways, such as by selecting numerous parties who claim the right of the same design as joint creators.

Before choosing the logo and the brand identity, the owner should also confront the lawyers. So that they can assist the desired branding that you wish to have is available or not and how to take it to prevent being accused of stealing IP from an existing enterprise.

Data security and privacy

A Startup must have a strict legal system to comply with applicable laws. They also have to assess their rights and responsibilities regarding the contracts that they enter into. Moreover, IP rights are one of the main considerations for a business startup, as they are built on inventions and innovations. They must ensure to protect and enjoy their IP rights. An experienced lawyer can help an entrepreneur from the outset, such as with the formation of an enterprise, negotiations with investors and co-founders, keeping with labor laws, security from cases, and so on.

Conclusion

To sum up, it isn't compulsory to hire an attorney or a legal group for starting a startup, but at the same time having the right legal advisor by your side helps you concentrate better on the other parts of a startup. With sound legal advice, one can invest their money without worrying. It will save you from bigger risks arising out of any legal problem, which can lead to continuing legal cases and even the end of your startup.

While operating with an attorney is an upfront acquisition, it can give you both the short and long-term safety you need to focus solely on your enterprise. Working with them, you can also put your mind at ease and cover all your risks, from starting a startup to employment law keeping and contract checks. In RTC, we have a team of professional lawyers who are experts in advising you for startups. Get in touch with us today to get the best legal counsel for your business startup. You can call us at +919284293610 or email us at info@restthecase.com.

FAQs

How can you choose a lawyer for the business Startup?

It’s essential to do research before hiring a lawyer, just as you would when looking for a venture capitalist. You must ensure you feel comfortable with that lawyer and have complete faith in their ability to give your company’s needs and save it from any damage.

What is the meaning of Startup India? 

An experienced Startup lawyer can assist you with the registration process with the Department for Advancement of Industry & Internal Trade. “Startup India” is a lucrative program made by the Indian Government to create an environment helping the emergence of creative enterprises that may prompt long-term financial growth and job creation. The Startup India program aims to promote business by boosting the availability of bank financing for startups.

What are the legal problems that a Startup can face? 

A Startup can run into a wide range of legal issues. To exemplify, the lack of a solid working contract between founders can result in dilution of rights, infighting, etc. Other legal matters include not keeping with the required laws, losses because of not safeguarding the tax imports, IP rights, etc.

What are the licenses required by a business Startup?

The needs for types of business licenses for a Startup differ from sector to sector. The allocation of licenses is controlled by numerous laws and procedures that work with food safety, employment, labor, and environment, along with the FDI Policy, FEM Act, the RBI, and the SEBI.


Author Bio: Adv. Taranjit Singh is a distinguished advocate specializing in commercial and civil law. With over 15 years of legal experience, Adv. Taranjit brings a wealth of expertise in governance, advanced contracting, procurement, cyber security, and technology law.

For the past few years, Adv. Taranjit has served as an Independent Counsel at the Bombay High Court, where his legal expertise and unwavering dedication to his clients have earned him widespread respect and admiration in the legal community.

Link: https://restthecase.com/lawyer/details/58710