Huge sums of money are invested in technology, software, and other related initiatives every year. Investments allow you to put your ideas into action, but today’s entrepreneurs are prone to making blunders that put their whole investment at risk. As a consequence, we’ve developed a list of the most typical registration missteps that might threaten the viability of a firm.

The most common reasons for a start-up o fail are the lack of cash and the lack of management. However, it is recommended that if you do not adhere to the country’s legal formalities and criteria, the start-up firm may collapse. As a result, in this post, we’ve listed common faults or legal blunders made by Indian start-up enterprises that need to be avoided if you don’t want your business to fail.

  • Not deciding on the right business structure:

It’s not just about deciding on a business structure, which can be a sole proprietorship, a partnership, a corporation, an LLP, or any other structure, but it’s also about deciding on a structure with a prior plan for time-bound compliances, statutory responsibilities, and legal duties that the entrepreneur will be required to meet after deciding on a legal structure.

Even if the firm is still in its early stages, choosing the wrong entity form might leave the entrepreneur with a long list of compliances to follow. Entrance via an easy-to-register entity type, on the other hand, will create competitiveness and may even lead to the entry of more rivals. Choose a legal structure for your business with the help of a profession tax consultant, based on your business needs and the associated expenses and compliances.

  • Ignoring the important registration processes

Start-ups sometimes lack the necessary expertise or staff who are familiar with company legal challenges. Entrepreneurs who have no prior understanding of the registration requirements imposed by various government legislations neglect this issue. In India, authorities verify for compliance/registration of start-ups with all applicable regulatory rules, such as securities laws, employment laws, labor laws, income tax laws, state laws, and so on. As a result, entrepreneurs must concentrate on completing all ancillary registrations in addition to the core registration of their business as a legal entity.

  • Employees are not considered assets.

If you want to grow your business, you’ll need talented people on your team. How would you attract this talent while keeping it untainted? You must provide the best motivators and address emotional and mental health issues at work.

Companies are now holding a variety of engaging and fascinating training workshops and compelling lectures to keep employees fit and stress-free in the workplace. Indeed, workers are made members of ESOPs (Employment Stock Option Plans), and along these lines, employees feel responsible for their job and make every effort to align their efforts with corporate objectives.

  • Documentation that is precise

A company’s most valuable asset is always its documents. Any registration document, such as a MOA or AOA, or any other registration document, such as a joint venture or partnership agreement, should always be created and submitted before specialists to ensure that they are valid. It is advantageous for a company entity to conduct due diligence on all legal standards, relevant paperwork, declarations, and government compliance requirements before applying for registration under any particular statute.

  • Not forming a partnership and failing to create a partnership deed

If you’ve formed a partnership firm as a startup, you’ll need to register it or create a partnership deed so that your partnership firm has a proper corporate structure and all terms and conditions are laid out and recorded with the registrar of firms so that any legal or business-related conflict can be handled properly and accurately. Furthermore, creating a partnership business online would help a startup obtain recognition in India.

  • Not making a list of upcoming costs

Registering with a specific entity type or under a specific law will not only bind the business to regular compliance costs, but will also add to the cost of hiring legal experts, forming advisory boards, and other documentation costs, all of which will put additional strain on the Startup’s limited income in the early years. So, before selecting for any registration, develop a clear plan of action that matches the estimated cost, expenditures of incorporation, investment, and compliance to be built.

  • Defying the requirement for agreements

A company’s agreed-upon MOA or AOA, director policy documents, partnership agreements, liquidity agreements, insolvency and bankruptcy documents, incubation agreements, employee agreements, intellectual property agreements, and so on must all be in place in the event of a business conflict.

Most entrepreneurs overlook the need of drafting statutory agreements for their startup business. Agreements developed and filed with the government help businesses run more smoothly and save entrepreneurs from lengthy legal battles. Contact ourTax expert to learn about all the legal agreements you’ll need for your company. So, if you enter a formal registration under any legislation, be sure to check for the creation of associated agreements to protect your company from legal penalties.’

  • Not protecting Intellectual Property

Do you realize how critical it is to obtain legal protection for your intellectual property? It is critical to obtain such protection since the output of your brain might be used for profit by others, resulting in the loss of economic prospects as well as financial loss.

Aside from tangible assets such as buildings, many intangible assets are acquired and created over the life of a corporation. It might be your domain name, corporate logo, distinctive product design, form, or a unique blend of components that distinguishes your product from the competition. Intellectual property refers to things like ideas, logos, and innovations. It’s a word that refers to who owns the rights to a creative concept’s development. It’s also an intangible asset that you created specifically for your products or services. Companies should take precautions to protect their intellectual properties by registering them under different IP protections such as patents, trademarks, and copyright.

  • Ignoring Taxes

Remember that there are authorities at both the federal and state levels that create laws, policies, and govern corporate activities. Every company must register with the appropriate authorities. Many business owners overlook the application of some registrations, resulting in hefty fines and penalties. Let’s have a look at a few of the government documents.

Establishment license: For your company site, including your registered office, you must get a shop or establishment license.

Import Export Code (IEC): Only IEC registration allows you to conduct import and export transactions.

GST registration is required for enterprises that sell goods and services.

Professional tax: You must pay this tax whether you are self-employed or work for an employer. If your employer collects it, it can be deducted.

  • Delay in starting a company

If you have a business strategy that is actionable, register it under the relevant framework and obtain legal protection. Delaying the start of your company might be a mistake you want to avoid. It can also postpone the rewards that you are going to enjoy, so if you have a business strategy that is actionable, you should get started right away.

Avoid these typical registration missteps if you’re just getting started with your new business in Chennai. For a business to function smoothly and for the long term, it is required to register the company, decide on a partnership agreement, and make certain fundamental yet crucial decisions. Using the assistance of Phoenix Tax- one of the best Tax consulants in Chennai before registering a business might also help to speed up the procedure without any mistakes.