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Understand the legalities of Kick-Starting your own venture with Disha Dugar

Prosperous startups are driven by passionate entrepreneurs who are determined to create unique solutions that deliver customer satisfaction. While it is very important to have a sharp attention on customers and the market, it is equally critical to have a decent understanding of the basic laws, rules, and regulations before you decide to kick-start your startup.

In the Founder’s Meet organized by StartupLanes, Ms. Disha Dugar addresses this topic. She is the founder of CLAP LLP and began her entrepreneurial journey in 2014. Her firm offers legal consulting to entrepreneurs planning to launch their startups or expand their existing companies. In her session, she talks about the initial steps that you need to take for launching your startup.

Business Structure and Founder’s Agreement: The first thing you need to do is formalizing a business structure and making a founder’s agreement. In India, you can incorporate your business under one of the several types of businesses like Sole Proprietorship, Private Limited, Public Limited, Partnership, or a Limited Liability Partnership. If you’re starting with a small capital, Dugar suggests starting with Sole-Proprietorship, or a Limited Liability Partnership if you’re launching the startup with 2 or more others.

Business License: The next and most crucial step in establishing your venture is applying for a business license. Several licenses will be applicable for the business depending on its nature and size. In case of a lack of relevant licenses, several lawsuits can be filed against you.

Understanding taxation and Accounting Laws: Every business has to pay taxes in some form or the other. However, with the Startup India Initiative launched by the government, startups can be exempted from paying taxes for a period of 3 years if they fulfill all the required conditions.

Labor Laws: The next important thing to keep in mind is adhering to the labor laws. A less number of employees does not give you a free pass on labor laws. You have to strictly adhere to laws regarding minimum wages, gratuity, PF, weekly holidays, maternity benefits, sexual harassment, payment of bonus, etc.

Protection of Intellectual Property: Intellectual property (IP) refers to the ownership of an idea or design by the person who came up with it. You have to ensure the protection of your intellectual property. If you want to use a logo for your brand, you have to trademark it first. Trademarking does not depend on how much you use that logo but on how early you use it.

Contract Management: Another important step in launching your own venture is ensuring effective contract management. You need to have proper contracts in place, whether it is for employees or interns. You also need to sign a Non-Disclosure Agreement (NDA) with your clients.

Winding up of business: If for any reason you are forced to shut down your startup or sell it, you should be familiar with the winding-up process. This could be done in 3 ways– through the Fasttrack Exit Mode, through a court or tribunal, and through voluntary liquidation. For startups, Disha suggests opting for the Fasttrack Exit Mode because it is the fastest, the easiest, and the cheapest process.

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