Top registration mistakes by startups in India

Top registration mistakes by startups in India

Company formation & registration

Vakilsearch Staff

Vakilsearch Staff

257 week ago — 7 min read

Background: While starting a business is exciting, there are several mistakes and pitfalls that startups must avoid to stay firmly on the path of growth. In their previous article Vakilsearch shared the different types of funding for Indian startups. Here they list out the the mistakes startups should avoid in the initial stages of business.


The idea of having own business is exciting. A lot of young graduates have already stepped into entrepreneurship. Entrepreneurs are taking control of the market. Be that as it may, when we take a look at insights, not all new companies make it big in business. If you have a plan to make it big in business or are currently in the growing stage, at this point you should learn from the mistakes made by other startup entrepreneurs. Additionally, in this article we will investigate the registration mistakes committed by startups in India.

If you have a plan to make it big in business or are currently in the growing stage, at this point you should learn from the mistakes made by other startup entrepreneurs.


Registration mistakes by startups and how to address them?

There are a lot of new businesses mushrooming each day; yet, there are only a few that can sustain the competition. Furthermore, occasionally, it is seen, despite having an incredible and novel idea, these new businesses get stuck at their early stages itself. Their disappointment in the initial stages can be due to registration mistakes.

How to opt for the right legal structure for your business?

In case you are new to business, you should know that there are a number of business formats, under which you can register your business to begin your entrepreneurial venture. You can register your business as a Private Limited Company or Sole Proprietorship firm.

You should pick the entity cautiously, keeping their advantages and disadvantages in mind. Choose the most suitable business entity before starting your venture.


Also read: How to form your own startup: A legal perspective


Single ownership of the business

Many individuals run their business all alone. Each business at some point or another requires the assistance of more than one individual for the fruitful working of the business. As your business advances, you have to get more individuals to keep things going. You might need to consult specialists in regards to various facets of the business.


Not regarding employees as assets

To develop your business, you need capable individuals on your team.  You have to offer the most ideal motivators and deal with emotional and mental health at work.

Presently, companies hold various engaging and exciting training workshops and persuasive seminars to keep the employees fit and stress-free in the working environment. Indeed, even workers are made a part of ESOPs (Employment Stock Option Plan). With such measures employees sense the responsibility for work and attempt to put their best foot forward to align with business objectives.

Do not delay in the launch of the business

Hope you are not somebody who is running a business without registering it. In case you have a field-tested strategy and have begun taking a shot at it, do not postpone getting it registered under the reasonable system and acquire the legitimate insurance for your business and all individuals engaged with the business.

Do you how much finances your startup needs to push a stride forward? Financial support is fundamental to the development of the business. You should be extremely cautious and unpretentious in picking the business structure, where you could deal with the capital and handle the unexpected difficulties on the way of your startup expansion.


Have you effectively secured your intellectual property?

Have caught wind of the claims made in regards to the possibility of the idea of Facebook being stolen at the time of its launch? Indeed, there is even a Hollywood motion picture made on it. We do not know how much truth wins, yet, there are reports, news, and so on of ideas being stolen every now and then.

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 fundamentally two sorts of resources, tangible and intangible resources. Tangible resources include resources like building, gear, and so forth. On the other hand, unique product design, the domain name, label, shape, business logo, a unique blend of fixings which makes your services and products come to light in the market are classified as intangible resources.

These ideas and intangible resources fall under the category of intellectual property.

Organisations must contact a legal specialist to secure their intangible resources by registering them under material assurances, for example, Patents, Copyrights, and Trademarks.

Also read: Safeguard your business' Intellectual Property assets


Registration mistake about the non-disclosure agreement

You can generally ask whoever is engaged with the business to consent to the non-disclosure agreement. There are situations when you are including somebody or taking their assistance, you have to clarify the subtleties of the business. In such cases, there may be a danger of theft of your idea.


Also read: Key elements of a non-disclosure agreement


Registration mistake about managing the taxes

It is a known fact, our Indian education system does not teach about the taxes and other aspects of it, which is essential for everyone to learn.

When you start a business, managing duties is a different responsibility in itself. It is recommended to appoint someone either in-house or outsource your legal and compliance work to complete it on schedule. Before beginning a business you should counsel a firm, where individuals could teach you with respect to how registration should be done in advance. There are quite a lot of registrations and licenses, for example, shop and establishment permit, GST registration, IEC (import-export out code), Professional tax, EPF.

Avoiding registration mistakes can be beneficial for you and your business.


Also read: 5 legal tips for startups


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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.  


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