In the corporate realm, adherence to meetings, schedules, and timelines is imperative; failure to comply may result in reprimands or job termination. The prospect of launching a startup holds greater appeal than following directives from a superior, attracting numerous young graduates towards entrepreneurship. As these aspiring entrepreneurs endeavour to seize control of the market, the stark reality emerges from insights — only a limited number of startups manage to achieve significant success in this competitive landscape. For those harboring aspirations of business magnificence or currently navigating the growth phase, understanding the primary registration errors made by startups is crucial.
Furthermore, this article will delve into the registration mistakes that startups in India have committed, providing insights on how to avoid them.
Major Registration Mistakes by Startups and How to Address Them
Numerous new businesses emerge daily, but only a few manage to endure the competition. Despite possessing remarkable and innovative ideas, some of these startups encounter challenges and become stalled in their early stages, often attributed to registration errors.
Opting the Right Legal Structure
If you’re new to the business, we want to inform you that there are several business formats available for registering your venture and commencing your entrepreneurial journey. In the current scenario, you have the option to register your business as a Private Limited Company or a Sole Proprietorship firm. Careful consideration of the advantages and disadvantages of each entity is crucial. Before deciding on a business entity, you should introspect and determine which one suits your needs best.
Our Complianto Team can help you choose the right form of business suitable to your needs and search a business name with trademark availability.
Single Ownership of the Startups Business
Observing our surroundings, we notice numerous individuals managing their businesses independently. However, what often goes unnoticed is the intricate details of these businesses. It’s essential to recognize that, at some point, every business necessitates the involvement of more than one individual for its successful operation.
As your business progresses, it becomes imperative to bring in additional personnel to maintain control. Consider seeking advice from specialists who can provide insights into various aspects of your business.
Delaying the Launch of the Business Idea
Ensure you’re not one of those operating a business without proper registration. If you’ve developed a well-thought-out business plan and are actively working on it, don’t procrastinate registering it through the appropriate channels. Obtain legal protection for your business and all individuals involved without delay.
The growth of the business relies fundamentally on financial support. Exercise careful and astute judgment when selecting a business structure, ensuring it allows for effective management of capital and adept handling of unforeseen challenges during the expansion of your startup.
No Securing Your Intellectual Property/Copyright/Trademark
You might have heard about the allegations surrounding the potential theft of Facebook during its inception. There’s even a Hollywood movie dedicated to the subject. While the extent of truth in these claims remains uncertain, there are occasional reports and news suggesting the theft of ideas.
Would you be able to isolate the intellectual property or resources of your business?
Do you realise how to secure your idea and protect it?
There are essentially two types of resources: tangible and intangible. Tangible resources encompass assets like buildings, equipment, etc. On the other hand, intangible resources include unique product designs, domain names, labels, shapes, business logos, and distinctive ingredient combinations that bring your services and products to prominence in the market.
The concepts and intangible assets fall within the realm of intellectual property. Organizations should engage with a legal expert to safeguard their intangible resources by formally registering them through tangible protections like Patents, Copyrights (refer to https://copyright.gov.in/), and Trademarks.
Registration Mistake About the Non-disclosure Agreement with Vendors/Employees
You can always request anyone involved in the business to agree to the non-disclosure agreement. In situations where you involve someone or seek their assistance, it is essential to elucidate the details of the business.
In such cases, there exists a risk of someone stealing your idea.
Improper management of Taxes/statutory compliances in Startups
A well-acknowledged reality is that the Indian education system lacks instruction on essential topics such as taxes, crucial for everyone at some point. Upon initiating a business, handling tax-related duties becomes a distinct responsibility. It is consistently advisable to either hire someone internally or outsource the work to ensure timely completion. Before commencing a business, seeking guidance from a consulting firm is crucial, where professionals can educate you on the necessary registrations to be done in advance. This encompasses a range of registrations and licenses, including shop and establishment permits, GST registration, IEC (import-export code), professional tax, and EPF.
Major Registration Mistakes by Startups – Conclusion
Recognizing and rectifying the top registration mistakes, such as disregarding entity selection, insufficient trademark protection, inadequate documentation of agreements, failure to acquire necessary licenses and permits, and neglecting tax obligations, allows entrepreneurs to establish a robust foundation for their businesses. The registration process holds immense significance for startups, and avoiding common mistakes can yield invaluable benefits in terms of time, finances, and legal complications.
