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Tax and Legal Issues for Startups

This article will tell you about various tax and legal issues for Startups that may be faced while starting a startup venture.

Google might have re-directed you here as you have decided to be on your own and on the verge of starting up a new venture. This might be your first shot at entrepreneurship and you are contemplating the various factors or challenges you might face in the long run.  Well, you are on the right track and we are here to detail you on the various tax and legal issues that could act be road blocks for your startup venture. legal issues for startups

Firstly, you need to choose the appropriate legal structure apart from registering and obtaining a license for your business. Declare your net worth and consult a tax and legal consultant if dealing with T&L is not your cup of tea. Apart from these pay your business taxes on renewing the insurance on time. Never run uncovered! These are the basics for every startup.

Here goes the top tax and legal issues for Startups

Recruitment problems

Along with  a gush of fresh air, new hires also bring along some potential hazards if their recruitment is not governed by pre-defined policies. He should be issued with an offer letter can be conditional or final.  The offer letter should contain the policies that would govern the employee and his cost to company, designation, components of CTC and leave policies. Resignation or retention policies should be well laid.  Some startups only to save cost, hire resources with an imperceptible agreement and pay a monthly remuneration in exchange of the work done. This attracts legal fines and criminal liabilities and is not at all healthy for startups.

Safeguarding patent and copyright issues

Also known as IP (Intellectual Property).  Many startups create the mistake of not creating a robust policy to safeguard their intellectual property. Or simply patents. For example, if you are an application developing firm. Once you have developed any particular application you should apply for the patent and copyright on your Intellectual property. So that once published the same is not misused. On the other hand, few startups use free stuff from the web or third parties without giving due credits to its creator. Any intellectual property needs to handled professionally and effectively. Any misuse can lead to legal obligations.

Issues from Debentures

Certain tax issues also surface for startups pertaining to the debentures. It is quite obvious that a starter would need a loan to cope up with its startup expenses. So they borrow money from various financial institutions and is liable to pay a certain interest on the borrowed sum. Few startups illegally try to evade tax by playing around with the debentures and if they are non-convertible in nature even (by brittany at tf online). Now if they are unable to pay the interest which is off-course a handsome amount of money they try to play around with the debentures to evade taxes and if by any chance they are non-convertible, the lender cannot convert them to equity shares and end up incurring huge loss. These issues can be extremely challenging for the growth of a startup business.

Background check for employees

The prime objective of a startup is to get work done quickly. In doing that , most of the time they don’t execute an appropriate background verification and criminal check before hiring the resources. This could be extremely hazardous and might lead to various legal issues. This acts as a blemish to the reputation of the company and might lead to a cancellation of the business license.


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