Legal Aspects Of Business In India | Let's Talk Legal 2

Legal Aspects Of Business In India | Let’s Talk Legal

While India is booming with startup businesses, it has become important for each of the entrepreneurs and professionals to have a basic understanding of the legal aspects of business.

Legal aspects of business

There can be various legal formalities in a business than you can think of. More certifications a business can have, more trusts it can build among its customers.

While starting a business you will need to go to various offices and then come back to just get the information. But who has this much of time.

We have done the work for you. Go through the list below and learn about all legal aspects of a business.

Business Registration 

The first step is to register your business. According to the business structure, you need to formulate the application process.

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Private Company

The limited number of shareholders in a company calls for a private company. This form of company restricts shareholders to 200 and more than 200 shareholders, it becomes a public company.

Steps to register for private company:

  • Obtain a digital signature certificate by applying online in two days.
  • Apply for the director’s identification number
  • Get the approval of the company name
  • Apply through form SPICe to incorporate a company electronically.
  • Then apply for MOA and AOA by form e-AOA (inc 33) and e-MOA (inc34)
  • Pan and Tan application can be done through form SPICe

Documents required:

For indian directors

  • Affidavit by subscribers of the company on a stamp paper to shareholders.
  • Copy of utility bills that are not older than 2 months.
  • Proof of address ( lease agreement or purchase documents)
  • NOC from the owner of the property

For foreign directors

  • Passport
  • Address proof

Public Company

Where there is more than 200 number of shareholders in a company, it becomes mandatory to register for a public company.

Steps to register:

  • Apply for a digital signature certificate of any one director.
  • Get directors identification number
  • Apply for selection of the name of the company and get it approved 
  • Apply for object clause of the company that mentions the objective of the company.
  • Apply to ROC with all the documents
  • Get the approval from ROC.
  • Pay for the fees.
  • Now you should obtain for a certificate of commencement of business 

Documents required:

  • Director Identification Number of all the directors
  • Digital Signature Certificate of the directors
  • Memorandum of Association 
  • Articles of association 
  • Proof of identity
  • Proof of address
  • PAN number
  • Bills of the office
  • NOC from the business place landlord

*Documents are required from directors and shareholders if the company.

One Person Company

Where one director is accompanied by one member, then this kind of company is known as a one-person company. 

Steps to register:

  • Apply for a digital signature certificate accompanied with mentioned documents.
  • Then apply for director identification number through form SPICe
  • Apply for approval of the name of the company
  • Prepare MOA and AOA of the company
  • Fill all the above documents with the ministry of corporate affairs
  • Approval of the commencement of the company after paying fees.

Documents required:

  • Address proof
  • Identity proof
  • PAN card
  • Photographs
  • Proof of business place
  • Email id
  • Contact number
  • Affidavit and consent of directors 
  • Form inc-9 and DIR -2
  • Form SPICe AOA and SPICe MOA
  • Form 49A and 49B

Sole Proprietorship

These are the documents required to register for a sole proprietorship firm:

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  • Pan Card
  • Aadhaar Card
  • Bank Account 
  • Proof of Office

*Proof of office can be a lease agreement or purchase documents. 

There is no specific form introduced by government to register as a sole proprietorship. If you have acquired the above documents then you are ready to start a business.

Partnership

When there is more than one owner than business can be a form of partnership. It calls for maintaining a partnership deed.

Partnership deed plays an important part in dictating the rights, duties, liabilities and roles of owners.

Here is the following list that is incorporated in partnership deed:

  • Capital contributed by the partners
  • Profit sharing ratio of partners
  • Date of commencement of business
  • Name and address of the business
  • Nature of business
  • Interest on capital
  • Interest on drawings
  • Drawings and loans by partners
  • Salaries or commissions by each partner
  • Adjustments for death/retirement/admission of a partner
  • Other adjustments by partners

Documents required to register:

  • Application for registration of partnership firm (Form 1)
  • Specimen of Affidavit
  • Certified original copy of Partnership Deed
  • Proof of principal place of business (lease agreement or purchase documents)

Steps to register:

Registering for a partnership firm is an optional process under the partnership act 1932. To run your business systematically, it is recommended to register for partnership firm.

You can present the above documents to the registrar of companies according to your area. If he is satisfied then registration will be done.

SSI Unit Registration

The government has simplified the process for small scale industries to register easily through SSI unit registration. It is same as MSME registrations.

Eligibility criteria:

For manufacturing units

  • Investment of 25 lakhs in plant and machinery is termed as micro enterprises.
  • Investment of 5 crore in plant and machinery is termed as small enterprises.
  • Investment of 10 crore in plant and machinery is termed as medium enterprises.

For service units:

  • Investment of 10 lakhs in plant and machinery is termed as micro enterprises.
  • Investment of 2 crore in plant and machinery is termed as small enterprises.
  • Investment of 5 crore in plant and machinery is termed as medium enterprises.

Steps to register:

  • Provisional registration can be obtained by applying online. It is helpful to get loans and it is valid for five years.
  • Commencement of business, you can start the business by getting provisional registration.
  • Permanent registration can be obtained after commencement of business. If the unit qualifies the above criteria then registration can be obtained.

Documents required:

  • Business Address Proof
  • Copies of Sale Bill and Purchase Bill
  • Partnership Deed or MoA and AoA
  • Copy of Licenses and Bills of Machinery Purchased
  • Aadhar number
  • Industry name and Address
  • Bank account details
  • Invoices of purchased machinery 
  • Copies of sales and purchase bills with original copies

Apply directly through this link for all the business registrations according to business structure.

Tax Registration 

After registering your business, the income from business gets taxed. To pay for these taxes, you need to apply for tax registrations.

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GST Registration 

It is the amended tax registration process which us systematic and flexible online process.

Steps to register:

  • Directly go to get a website and click on the register now button.
  • Enter your details in part A and click on proceed
  • Then you will receive an OTP, enter it and click in continue.
  • You will get a temporary reference number 
  • Again go to the GST website and click on register now.
  • Then enter TRN number by selecting ten and click in proceed.
  • You will receive an OTP, enter it and click on proceed.
  • Then you will have to fill details in part B. Submit the documents mentioned below and click on proceed.
  • Now go to the verification page and submit an application using digital signature certificate or resign or EVC.
  • You will get the application reference number (ARN)  and use it to check to get application status.

Documents required:

  • Photographs
  • Proof of place of business
  • Bank account details
  • Authorization form
  • Constitution of taxpayers

Business Tax Returns

You need to file for income tax returns according to the specified rules applied by the government. The first step is to check if you have mandatory compliance to apply for returns it not.

Steps to register:

  • Visit e-filing website
  • Register yourself through new registration 
  • Login with tour registered user id and password
  • After logging in, click on e-file tab and income tax return option.
  • Select the assessment year and relevant form ITR 1 or ITR 4.
  • Prepare the returns and verify them through aadhaar or EVC method or sending a copy by post.
  • Then click on continue
  • Fill the details and submit the form
  • Then sign the form by digital signature
  • You can verify your return within 120 days
  • You will get confirmation once return is uploaded
  • The department will verify it

*You should contact a chartered accountant to complete the process without any difficulties.

Documents required:

  • Pan card
  • Adhaar card
  • Income tax returns
  • Email id
  • Permanent contact number

Additional Licenses

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Liquor License

It is specifically required by those businesses who provide alcohol at their business place.

Steps to register:

  • Know if you need on a license that is consumed on the place of business or off-license that is for consumption not in place of business.
  • Every state has it’s own rules in reference to liquor laws. Go to your state website.
  • Apply for the liquor license from their website
  • Attach below-mentioned documents
  • Pay the fees
  • You will get approval or in case of difficulty contact on the number mentioned on the website.

Documents required:

  • ID proof 
  • Residence proof 
  • Age proof
  • Supporting document from statutory body
  • Aadhar Card
  • Notary attested Affidavit.
  • Passport size photograph.
  • Copy of Income tax.
  • Contact number

Trademark Registration 

It is basically an authority provided to your brand name so that it can not be used by any other company.

Steps to register:

  • Choose a trademark from the 45 lists of trademarks provided by the government
  • Ensure that it us unique and not similar to already registered ones.
  • Fill an application through form -1 for one trademark or TM-A for multiple trademarks.
  • Fill the details of the trademark and upload its picture.
  • You will get confirmation within 15 to 20 days, if done online.
  • Check it’s status through allotment number provided at the time of application submission.
  • Then after it’s approval you will get a trademark registration certificate. Approval takes 18 to 24 months.

Document required:

  • Copy if the logo
  • Identity proof
  • Form-48
  • Address proof

Fire Safety Clearance

Sure safety license is a necessary license, especially for major industries. You need to go to your state website to learn about fire safety licenses.

Apply online from the state website and attach the below-mentioned documents. 

Documents required:

  • NOC from your state fire officer
  • Two sets of fire plans, elevation plan, and section plan of the building.
  • Photocopy of ownership of place of business 
  • Approved layout plan and order copy for each floor by the competent authority.
  • Approved building plan & order / copy of Gram Panchayat NOC.
  • Service plan & parking and circulation plan
  • Qualification certificate of fire consultant 

Trading Licenses

These licenses are required in order to trade freely in the market. These licenses will allow avoiding any interference in the trading.

Trade License

Steps to register:

  • Go to the local municipality office and get the application form or visit your state website to get the same form.
  • Submit the form with the mentioned documents
  • The officer will approve the license or will ask for relevant documents

Documents required:

Shop and Establishment act License

Steps to register:

  • Send all the mentioned documents with application form to local officer
  • Get your document verified from the municipal authorities
  • Pay the fees
  • It will take around 7 to 10 days to complete the process.

Document required:

  • Aadhar Card / Voter Id / Driving License / PAN
  • Photographs
  • Photo of  Shop along with Owner 
  • Rent Agreement or purchase documents 
  • Electricity Bill not older than 6 months
  • Details of employees

Specific Licenses

These licenses are required specifically for particular businesses. FSSAI license is required by a food business and import-export license is generally required by manufacturing industries or those who are importing and exporting.

FSSAI License

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Steps to register:

  • Go to the FSSAI registration website
  • Fill form A and submit it online
  • It is accepted or rejected within 7 days.
  • If accepted you will get the FSSAI certification

Documents required:

  • Form B – completed and signed
  • Photo Identity of food business
  • Proof of possession of premises (Lease Agreement or purchase documents )
  • Partnership Deed / Certificate of Incorporation / Articles of Association 
  • List of food products 
  • Food safety management plan

Conclusion

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You should contact the municipality of your state to get an understanding of any other certifications required by your business.

Here is a TIP# The licenses and registration should be done according to the legal structure of business and demand of the laws governed. 

Hope you found this article helpful.

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