Whatever we commit to do, we should obey the laws and follow the legalities. Even Though it restricts our acts it gives power & stability to our operations. That is the significance of laws and legalities.

STARTUPS are also required to obey legalities. It is a serious matter to understand the legal formalities regarding a startup before initiating one.

1. Startup Registration

The registration is the first phase which can be done online & offline.The process is of two steps:Incorporation of Startup & Registration under the Startup India Program.

Startup Incorporation:This includes DSC(Digital Signature Certificate & DIN(Directory Identity Number).

Registration under Startup India Program:There can be 4 basic ownership models:

  • Proprietorship: No special registration or Taxation. You will be the sole owner & the Taxable person. Even Though you can earn a foreign investment you are not able to transfer the ownership of your company.
  • Partnership: A partnership firm will have 2 individuals to initiate it and no special registration is needed. After 5 years of incorporation, such a firm cannot be mentioned as a startup.
  • Private Limited Company: Under the Companies Act 2013 a Private Limited Company can have 200 employees with at least 2 directors. For a private limited company, there are some more legal procedures & beneficial.
  • Limited Liability Company: Under the Ministry of Corporate Affairs, LLP must have at least 2 partners & should be registered under the LLP Act 2008.LLP is the most preferable one due to its operational flexibility, fewer compliances, and other benefits.

2. Legalities for the Authorities

Initially a startup will have a co-founder who should obey some set of equity ownership, initial investments and the roles and responsibilities mentioned in the Co-Founder agreement. Such a Legal format specifying all the guidelines can provide a clear idea to the co-founder about his functionalities. The guidelines should be made considering the Partnership Regulations and Firm Operations.

3. Intellectual Property Rights

Startup is an intellectual creation,that is,a product is created or a service is performed with your intellect.Thus it is valuable to secure them.

IP Rights for software refers to protecting the source code and final product. But the reality is that you cannot file a patent request for software alone in India but you get it on the software-hardware combination,i.e, hardware can be patented, and thus software can only be protected with the combination of its hardware.
Again, the User Interface can be patented according to its unique pattern.

There are many other legal documents to be maintained other than the basic ones mentioned above. Legal procedures are a serious matter for consideration. Getting expert assistance is always a better option.

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