Calling All the Members of Feedom Club, Lets Get Legally Right.

Dear friends,Welcome to the ‘Freedom Club’, as I call it, not because you are free from the clutches of your scary boss, as in some cases, but because you have chosen to become an entrepreneur to follow your vision. I call it the freedom club since you are now free to follow and shape your vision which you have in the manner you want. This is why I call entrepreneurs as the growth drivers of economy.

Being an entrepreneur is not easy though, as many of you would have started experiencing it already. However, let me warn you, the going is going to be very tough. But then who said being an entrepreneur is for the light hearted. No, am not trying to dissuade you from being an entrepreneur and starting up your own venture, or starting up to shape your vision, as I would put it. I am only wanting to bring across a point that being an entrepreneur would entail great deal of planning, seeing the unseen, eye for detail and following your instincts.

All of you would have done your research prior to embarking on this journey. Am not going to repeat what you have already read, heard, thought of, advised of, darned of etc. etc. In this write up am only going to set out some of the basic legal models one could adopt for starting a venture.

For any enterprise a basic model of operation is very essential. Getting the right model requires good amount of thought process especially forwarding thinking, as in, where would do see your venture 2 years from now. Such issues will lead you to select one of the models. You can of course change the model if necessary later.

You could consider incorporating a private limited company, form a public (public company does not mean listed company, however a listed does necessarily mean a public company) or form a partnership, or incorporate a limited liability partnership, or start up as a sole proprietor, start an NGO (by forming a registered society or a trust), a non-profit company for charitable purposes (CSR ventures could think of this!). Each of the models have their own pros and cons with respect to the operationality, governance, checks and balances, taxation issues, flexibility to infuse funds by various means by giving an equity stake in the venture or the sorts.

Regularly I would be writing on each of these models to give you guys a flavor of what each model is all about. However, I would strongly advice each one of you to please complete your basic documentation, like incorporating a company etc., getting bank accounts in place, rubber stamps etc. Most importantly get a shops and establishments license (gumasta, as many jurisdictions call it), which would you get from the local municipal offices, other applicable local licenses, income tax registrations, permanent account numbers and others depending on your nature of business. Provident fund and other employee social welfare registrations (if you are employing 20 or more employees on your rolls).

In the coming weeks we will discuss more on the often ignored legal aspects of running a venture.

If there is any specific issue you would want to have some information about, discuss,please feel to drop in a mail at [email protected].

Abhishek Khare, BCL (Oxon), Partner, Khare Legal Chambers LLP, Advocates