5 Company Registration Mistakes You Should Avoid While Registering A Startup In India - Legalo

5 Company Registration Mistakes You Should Avoid While Registering A Startup In India

Starting a business is an exciting process but it is important to have a clear and complete understanding about several pitfalls and mistakes that startups should avoid to stay on the path of growth. If you want to make it big in the world of business, it is important to learn from the mistakes committed by other startup entrepreneurs.

Let us read about the 5 Company Registration mistakes you should avoid while registering a startup in India.

1. Choosing Wrong Legal Structure For Business

An Indian business entity can be registered under different formats. A business can be started as a one-person company (OPC), Private Limited Company (PLC), Limited Liability Partnership Firm (LLP), Sole Proprietorship Firm, or General Partnership Firm. It is important to note that the structure of each business entity has its own share of pros and cons.

The decision you make in the context of entity type may put limitations with regard to the infusion of fresh capital, the number of people who may join as co-owners, etc. Therefore, you should make yourself familiar with salient features of different entity structures before registering a startup in India.

2. Not Safeguarding Intellectual Property

It is a hard reality that ideas get stolen and there have been many instances wherein the product of someone’s intellect was exploited by others, resulting in loss of business opportunities and even financial embarrassment. During the lifespan of an organization, a series of intangible assets are created and procured. The list may include unique product design, company logo, domain name, label, and a unique combination of ingredients or components that differentiate your product or service from others in the market. These designs, logos, ideas, etc. are collectively known as intellectual property.

Intellectual property is a legal term that denotes the ownership of the creation of a unique artistic idea. It can be described as an intangible business asset that has created exclusively for a product or service. Organizations must make a point to inventory their intellectual property and seek protection legally by getting the intellectual property registered under different forms of protection such as Copyrights, Patents, and Trademarks.

3. Poor Incentives For Employees

For the growth of every business, attracting and retaining talented and out-of-the-box thinkers are important. Today, organizations are offering Employee Stock Option Plan (ESOP) to employees so they get the feel of ownership and contribute more towards the achievement of organizational goals.

4. Poor Fund Requirement Analysis

Funds are the backbone of every organization and it is important to carefully choose a structure that accommodates the infusion of capital without complexities.

5. Ignorance About Applicable Tax & Other Government Registration

There are different State and Central level authorities in India that formulate and regulate company registration and startup registration policies and business operations. These State and Central level authorities in India require company registration under different legislations like Professional Tax Act and Establishments Act.

Usually, entrepreneurs lack awareness and understanding about the applicability of specific registrations and end up paying hefty penalties and fines for non-compliance.

There are several government registrations such as:

Avoid making these company registration mistakes and move ahead with startup registration by choosing Legalo, India’s most trusted tax, business, accounting, and legal services partner. Legalo offers you the complete value for money with no hidden charges and complete transparency. It has teams of experienced and specialized Chartered Accountants and Company Secretaries who advice you and provide tailormade solutions to you at every step of registering a startup.


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