A founder is the person who starts their own company. Starting a business comes with both pressure and happiness. You’re happy because you’re finally making one of your dreams a reality. On the other hand, you’re pressured to do everything perfectly and avoid mistakes as much as possible. The pressure is also related to the fact that you aren’t sure how the business will perform.
The success of a business depends on elements such as operations, research, financials, and customer service. Research begins even before the business starts. It involves looking up things such as laws that relate to your business. Without adhering to some of these laws, your business may be considered illegitimate and shut down before it even sprouts.
It’s therefore essential to know these laws and, with the help of an expert such as the Syndication Attorney, ensure your business is in line with the law. This article provides five basic laws that every start-up founder must know. Keep reading to learn more.
1. Business Formation Law
Starting a business means you already have an idea of what you want to work on and earn a living from. When choosing what business you want to start, it’s best to think about things like the practicality of your ideas, realistic profits to expect, and suitability.
Additionally, settling on the kind of business you want to start requires knowledge about business structures, as different companies have different systems.
Business structures depend on factors such as:
- The business’s aims and goals
- Vision and mission of the business, and
- Other long-term objectives
After settling on the type of business you want to start, the next crucial step is to register the name of your business. Not adhering to such a law could result in you paying fines before you start profiting from your company.
Therefore, take your time to determine the laws and requirements needed when starting a business to avoid inconveniences.
2. Business Licensing Law
Business licenses vary depending on the type of business. If you’re planning to start an e-commerce business, you need to have service tax registration, VAT registration, and professional tax licenses. Food-related businesses need health trade licenses, food safety licenses, the prevention of food adulteration act, and a certificate of environmental clearance.
Additionally, businesses that involve importing and exporting need licenses such as export and import code and factory license. However, the Shop and Establishment Act is a shared license that every business requires.
Therefore, it’s advisable to research all the licenses your business requires and prepare all the documents needed for licensing. If you operate a business without the required licenses, you risk losing it.
3. Tax And Accounting Laws
- Taxation Laws
Just like licenses, different businesses are obligated to different taxes. You need to research the type of taxes tied to the business you want to start. Also, taxation varies from state to state. Therefore, you must research and be informed about your state’s taxing system.
Having the correct information about taxation will help you avoid possible taxation violations, with consequences such as fines, tax bills, lawsuits, and imprisonment.
- Accounting Law
Accounting mainly involves recordkeeping. Start your recordkeeping by first knowing where your business funds are coming from. The funds can be in the form of self-financing or equity financing.
After starting your business, you need to be committed to maintaining account books that have intervals that are convenient for you. The intervals can be two weeks or monthly.
Bookkeeping helps improve your business’ performance as you’re able to analyse the costs incurred and find ways to cut the costs and increase profits.
4. Labour Laws
Regardless of the number of employees you plan to have in your business, you should be aware of relevant labour laws.
Labour laws relate to matters such as:
- Payment of wages act
- Minimum wages act
- Employee compensation act
- Maternity benefits act
- Trade unit act
- Payment of bonus act
- Industrial disputes act
- Employees’ provident funds and miscellaneous provisions act, and many more.
If your business is found guilty of violating any of these acts, you’ll have to face penal liabilities. You may also earn negative reviews.
5. Contractual Laws
Contracts are essential in every business, especially in projects. However, if not handled well, they can cause risks such as the other party turning against you.
The following elements are used to make contracts legit:
- The parties involved made the contract by free consent
- The contracts are for lawful considerations and have lawful objections
- They’re not declared void
In addition, it’s vital to clarify details such as working hours, salary to be paid, and type of work. Making such things clear helps with work relations as everyone knows what is expected of them.
When starting a business, it’s better to use non-disclosure agreements (NDA), especially when discussing business ideas. It’s always safer to protect your ideas at the start of your business, as you might not be sure who you’re dealing with. NDAs help avoid your company ideas being stolen by the people you shared it with.
Starting a business can be overwhelming, especially if you’re unsure how to do it. Lack of information about laws can cost you a lot even before you start enjoying the fruits of your labour. Knowing the laws discussed above can help you avoid making common mistakes people make. Therefore, before you start that business in mind, try to understand how these would laws apply.