Essential Legal Services for Startups

Author name: Rajneesh Kumar

Created date: 19-04-2023

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After Startup registration, it?s necessary to ensure that a startup company adheres to all relevant laws, regulations, and industry standards in order to operate legally and responsibly. Compliance is a critical aspect of running a startup, as failure to comply with applicable rules and regulations can result in legal, financial, and reputational risks. Seeking professional help can be beneficial for startups, especially when it comes to navigating complex legal, financial, and operational aspects of starting and growing as a business. Here are some key parameters of startup compliance that are typically important for most startups:

?         Legal structure: Startup Registration or Business Registration can be registered as a registered partnership firm, company, or limited liability partnership (LLP), so they have to meet the compliance according to their legal structure.

?         Various business registrations: Depending on the nature of the Business Registration and location, it may need to obtain various licenses and permits at the state, national or international levels. These may include general business licenses like GST registration, PF ESIC Registration, IEC code registration or MSME registrations etc.

?         Legal Compliances: Business Registration or Startup Registration or have to comply with Tax laws and regulations, after getting registered with various authorities startup have to comply with the registrations on periodic basis like GST returns, MCA filings, TDS returns, Professional Tax returns, PF ESIC returns etc.

Startups, especially those in their early stages, often face financial challenges and complications that necessitate skilled financial management. Legal services can be extremely advantageous to startups since they allow them to function freely without worrying about their compliance. It is difficult for startups to meet the legal criteria to follow the initial statute. Here is list of some important Legal services that and startup can expect from a professional:-

1.      Financial Reporting Services:  Financial reporting is an important requirement for startups as it helps to provide its financial status of the company throughout the year. Financial reporting also includes accounting which provides businesses with the tools and information necessary for effective financial management. By maintaining accurate and up-to-date financial records, startups can track their financial transactions, monitor their cash flow, and make informed financial decisions based on reliable financial information. Accounting provides startup businesses with accurate and up-to-date financial information that enables effective financial management. It helps businesses track their income, expenses, assets, liabilities, and equity, and provides insights into their financial health, performance, and cash flow as this information is crucial for making informed financial decisions, setting financial goals, and planning for the future.

2.      Auditing & Assurance: - Auditing and assurance services are critical for businesses and organizations to ensure the accuracy, reliability, and integrity of their financial information. After the business registration, Audit and assurance services provide an independent and objective assessment of a company's financial statements. This helps ensure that the financial statements are prepared in accordance with applicable accounting standards and present a true and fair view of the startup's financial position, performance, and cash flows. Reliable financial statements are crucial for decision making, stakeholder confidence, and compliance with laws and regulations. There are various types of audits like statutory audit, internal audit, stock audit and management audit etc.

3.      Professional Consultancy services: - Professional startup consultancy in India are specialized services offered by experts or financial or legal professionals in a particular field or industry to assist individuals or companies in solving complex problems, making strategic decisions, or improving their performance. These services can be provided by professional individuals or firms and cover a wide range of areas such as management, finance, marketing, legal, and human resources. These consultants typically work with clients on a project basis, providing a specific set of services to help them achieve their goals. These services can include things like research and analysis, strategy development, process improvement, project management, training and development, and implementation support. Consultancy services can benefit organizations in many ways, including improving efficiency, reducing costs, increasing revenue, enhancing customer satisfaction, and mitigating risks. The consultants bring expertise and experience to the

4.      Taxation services- Tax compliances are very important requirement after Business Registration nowadays as it refers to the process of adhering to the rules and regulations set by the government regarding the payment of taxes. It involves fulfilling the legal obligations related to tax, such as filing tax returns, paying taxes on time, and maintaining accurate records. Tax compliance is essential for individuals and businesses to avoid penalties, fines, and legal consequences. In India any business has to follow two types of tax compliances, first Income tax and second GST (Goods and Services Tax) compliance. GST is a value-added tax that is levied on the supply of goods and services across India. It is a comprehensive tax system that replaced several indirect taxes such as excise duty, service tax, and value-added tax apart from GST compliance a startup needs to file its income tax return (ITR) of income earned during a particular financial year and they have to pay tax accordingly.

5.      MCA compliances: - When a Startup Consultancy in India startup registered as a company or LLP they have to comply with various legal and regulatory requirements that companies in India must fulfill under the Companies Act, 2013 and other relevant laws. It is essential for companies to comply with all the MCA regulations to avoid penalties and legal action. To ensure compliance, companies can hire a compliance expert to manage their MCA compliances as every affairs of startup needed to be reported in Register of companies if they are registered as LLP or Company. There are various MCA compliances to be fulfilled by startups on yearly basis like filing form 11 and 8 in case of LLP and Form AOC-4, MGT-7A and DIR-3 KYC in case of companies so it is necessary to ensure that startups must comply with all the legal compliances.

6.      Other business registrations: - A startup also has to obtain some additional business registration depending on their business structure and requirements, such as FSSAI registration if they are in the food industry or IEC code if they are engaged in international business. Startups must also register for several forms of registrations based on their geographical location, such as professional taxes, shop and establishment registration, startup consultancy in India. So it's difficult to determine which specific sorts of registration are required for any startup. However, the above mentioned services are the basic services that any startup may obtain from any expert and are required to startup on a regular basis.