Legal understanding and statutory clarity are vital for doing any business. Unfortunately, most entrepreneurs in the early stages do not know or put enough effort into understanding the legal aspects very well. As a result, the business has to bear the brunt at the end of the day. So before starting any business, you must ask yourself the three given fundamental questions.
1. What kind of Registrations are required?
2. What kind of permits are necessary?
3. What kind of compliances are essential to be followed?
Let’s understand the points in-depth.
Types of permits
In the broad classification, there are generally two types of permits:
1. Generic Permit – Permits are necessary to run any business. GST registrations enable payments, industry-specific permits such as FSSAI, Udyog Aadhar registration to set up plant and machinery, etc. are some common permits. You better consult a lawyer for the exact permit you would require for your venture
2. Office Setup – It’s related to shops and establishment, compliance with your municipal laws, zones of your office location, etc.. Most often, entrepreneurs do not know that residential premises can’t be used for official purposes. It’s better not to research the laws by yourself. Engaging with a consultant, lawyer who deals in your area would be the best way to know the municipal laws and requirements
When you are done with company registration, you also need to ask your consultant or lawyer about the industry-specific permit or license. Suppose you are starting a street food chain business. You will need a food license from the Food safety and standard authority of India (FSSAI) to run your business.
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Types of registration
Now that you understand the various permits and licenses needed to start a business, the next step is to understand the multiple tax registrations required to be obtained to make sure that an entrepreneur can run his business smoothly.
From a start-up perspective, you may not be generating immediate revenues shortly, but It would be wrong to assume that you would not need any registration right away. From the tax perspective, the reality is different on the ground. For example, even if you open a bank account, you would need several documents. Let’s have a look at two necessary registrations that are required:
1. Permanent Account Number (PAN) – It is a unique identification number issued by the income tax department. Any entity that is eligible for income taxes will require a PAN to file an income tax return. You must have a PAN for your business from the start
2. Tax Deduction Account Number (TAN) – Having a TAN is also essential when you deduct taxes because you will be making payments to the various service providers. When you make payments to third parties, the tax has to be deducted at the source. You require to have a TAN when you subtract that payment and deposit it with the government
It must be in your priority list to have these tax registrations as early as possible after registering your company.
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There are other things as well, beyond permits and registrations, you need to take care of. Once your venture is incorporated, a set of compliances must be taken care of under the Companies Act, 2013, right from day zero. It’s crucial to understand all the compliances of your business in detail. Some of the compliances are:
1. Annual Compliances
2. Quarterly Compliances
3. Board Meetings that need to be held
4. Corporate compliances
5. E-business policy compliances
Hope, you are all now familiar with the legal requirements to start and run a company. All these may seem a herculean task to you, but they are of the utmost importance for running your company efficiently. It would be wise to consult a law firm or legal consultant to get clarity about legal matters.