Navigating the Startup Landscape: Essential Steps for Aspiring Entrepreneurs by Dr. Abhishek Sharma

Starting a business is an exciting journey, often fueled by a world-changing idea or a passion to build a legacy. However, turning that idea into a successful venture requires careful planning and execution, especially when it comes to legal and operational foundations. Abhishek Sharma, an expert from the legal industry, shared invaluable insights at a recent session organized by SSSIHL’s incubation center, emphasizing three core areas: choosing the right business entity, protecting your intellectual property, and complying with regulatory requirements.

1. Choosing the Right Business Entity: Your Foundation for Success

The first crucial step in most cases is to choose the right business entity. A business entity is a legally recognized organization formed to conduct business, defining its structure in the eyes of law, government, tax authorities, banks, and other stakeholders.

Why is a formal business entity necessary?

• Legal Recognition: It allows your business to be recognized separately from its owners, enabling it to enter contracts, open bank accounts, own property (including intellectual property), and engage in legal actions.
• Compliance & Governance: A formal entity ensures your operations align with Indian laws such as the Income Tax Act, Companies Act, GST laws, and labor laws.
• Access to Funding: Investors, banks, and government grants prefer registered business entities, making it easier to raise equity or debt.
• Continuity & Succession: A formal entity provides continuity for your business, allowing it to exist even after you are gone.
• Credibility: It builds credibility and brand reputation.

Common Business Entity Options

• Sole Proprietorship: Easy and inexpensive to start, with minimal paperwork and full control. However, it carries unlimited liability, has limited scalability, and is generally not investor-friendly.
• General Partnership: Simple to form and share responsibilities, but also involves unlimited liability and lacks separate legal status.
• Limited Liability Partnership (LLP): Offers limited liability, lower compliance, and is ideal for service-based businesses. However, equity capital is hard to raise and it’s less appealing to venture investors.
• Private Limited Company: Most preferred by investors, provides limited liability, perpetual succession, and access to benefits under Startup India. It does come with higher compliance and costs.
• One Person Company (OPC): Great for solo founders wanting limited liability. But it’s restricted to a single member and has limited fundraising potential.

Key takeaway: If you’re planning to scale or seek funding, a Private Limited Company is typically the most suitable structure.

2. Intellectual Property (IP) Protection: Safeguarding Your Innovation

Intellectual property is anything you create from your intellect — your product design, your brand, your content, or your invention.

Why IP Protection Matters

• It prevents duplication of your innovation or brand.
• It ensures you can monetize your creations effectively.
• It builds long-term business value and protects your competitive edge.

Examples of Intellectual Property

This includes inventions (like drones or smart devices), creative works (films, books, designs), trademarks (brand names like Nike or MTR), and product designs or packaging.

Types of IP Protection

• Patents: Protect new inventions that are novel, non-obvious, and industrially applicable. They grant exclusive rights for 20 years and must be filed early to avoid loss of novelty. India follows a “first to file” system.
• Trademarks: Protect your brand name, logo, and slogans to prevent copycats and maintain reputation.
• Copyrights: Cover artistic and literary works. Note that protection is for the expression, not the idea itself.
• Trade Secrets: Protect confidential business information not disclosed publicly.
• Designs: Protect the aesthetic design or shape of your products.

Strategic Advice on IP

While you may choose to freely distribute your work, if you intend to monetize it, you must take control of your intellectual property first. It is easier to give something away than to reclaim it once it’s gone. Given the time it takes to get patents, they should be filed as early as possible. If your business combines several IP elements, such as a brand, design, and invention, all should be protected simultaneously.

3. Regulatory Compliances: Staying on the Right Side of the Law

Beyond choosing a business structure and protecting your IP, complying with regulations is vital to running a legally sound operation.

Company Law Compliances

• Hold at least four board meetings per year
• Conduct an Annual General Meeting (AGM)
• File annual returns with the Registrar of Companies (ROC)
• Appoint an auditor within 30 days of incorporation

Startup India Compliances

• Complete DPIIT registration
• Submit annual proof of active operations
• File specific forms for tax exemptions

Tax Compliances

• Obtain PAN
• File Income Tax Returns yearly
• File TDS returns quarterly
• File GST returns (even nil returns, if applicable)

Labour Law Compliances

• Register for PF if employing more than 20 people
• Comply with Professional Tax regulations (varies by state)
• Register under ESI if salary thresholds are met
• Acquire Shops and Establishments license for physical premises

POSH Compliance (Prevention of Sexual Harassment)

Organizations with over 10 employees must form an internal committee, display anti-harassment policies, and conduct training to ensure workplace safety, especially for women.

Key Takeaways for Founders

• Plan legal and compliance steps early — don’t wait until you’re generating revenue.
• Choose a structure that supports your growth goals.
• File IP protection in parallel with product development.
• Seek expert help for legal, financial, and regulatory processes to stay focused on building your business.

Understanding these core startup elements helps build a strong foundation for long-term success. With foresight and the right guidance, entrepreneurs can avoid costly mistakes and navigate the business landscape with confidence.