Legal Compliance: 5 Basic Law Categories for Start-ups and Small Businesses

Your idea validated by experts & well-wishers and converted into a business model. And now, you are ready to launch your own start-up. The early stages of setting up a new business will be time consuming for the founders – developing the product/service, building the team, structuring the company, attracting investments, key partnerships and marketing plans. Amid all this, essential activity, legal compliance related activities takes a back seat leading to legal and financial woes in the long run. Hence, it is equally important and critical that you understand the legal basics and to help you be legally compliant at the initial stages, we have compiled FIVE basic legal categories required for start-ups and small businesses.

  1. Company Formation & Compliance

While starting up, first thing to be finalized is the legal format of your start-up.  Will it be a Limited Liability Company or Private Limited Company or Partnership Firm? However, there are pros & cons in every format. Choose your format based on factors like the business objectives, nature of business, long term goals, etc. There are various incorporation requirements that you need to complete while setting up your business and also ensure periodical compliances, more specifically, with the Registrar of Companies (RoC).

  1. Taxation & Accounting

Accounting and Taxation are another vital legal basics must for you as an entrepreneur. Taxation is both Direct and Indirect. With regard to indirect taxation, a lot has changed with the rollout of Goods and Services Tax (GST) a unified tax structure. You have to make periodical online filings along with payments. On the direct tax side, Income Tax returns, Tax Deduction at Source (TDS) and payment of the same are your annual tasks.

  1. Dispute Resolution & Contract Laws

As you start, you are to have various form of relationships with multiple businesses and individuals – co-founders, employees, customers, vendors, investors, etc. You need to formalize these relationships to ensure clarity and reduced uncertainties.  When you are signing an agreement or contract both parties are agreeing to certain conditions and at times the same can quickly turn into disagreements and result into a dispute. You have to have some knowledge on the contract laws that will help you in dispute resolution.

  1. Intellectual Property

First and foremost, owning Intellectual Property Right will be the USP of your products or services and it will help creating a high entry barrier for your business. This will have a positive and substantial impact in your marketing. In fact, owning an Intellectual Property is an asset and carries commercial value. It will also help you a lot while fund raising. You should remember that assessing IP is not just about protecting the work you are doing, but it also to check if someone else has an IP for similar work.

  1. Labour laws

When you are established as a company and have hired people to work for your organization, you are subject to several labour laws regardless of the size of the organization or number of employees. However, with regards to labour laws, start-ups registered under the Start-up India initiative can complete a self-declaration (for nine labour laws) within one year from the date of incorporation in order and get an exemption from labour inspection.

The existing dynamic statutory environ has made knowledge and compliance to applicable laws a challenge for entrepreneurs particularly those at the nurturing stages. It is best to outsource a legal counsel to advice and oversee your legal compliance tasks to ensure impeccable compliance in an economical way.

Need legal compliance services for your business? LexHive Consultants has a boutique of services that can help you be legally compliant!

GST Return Filing

At last, we are all set to rollout Goods and Services Taxes (GST), considered as biggest tax reforms in the recent past. The implementation date for the same is July 01. Every transaction has to be reported from the seller to recipient of any single goods and services. An extensive IT system has been deployed by the Government to cope up with huge influx of data, called the GSTN (Goods and Service Tax Network) that will house all the information of sellers and buyers together, collaborate the details submitted and even maintain 3 registers for future reference and anytime reconciliation. A robust reporting structure has been put in place. Let’s understand the various types of GST returns, forms and the process of filing.


The return filing of normal taxpayers starts with this form. The taxpayer records the outward supplies of goods and services. To be done by 10th of the succeeding month, this form has details such as GSTIN, Name, Annual Turnover, Filing Period, Taxable Outward, Tax Liability and Tax paid.


This return is available on the 11th of the succeeding month to recipients for validation. The validation can be done upto 15th of that particular month.


This form is of all inward supplies of goods and services as approved by the recipient and auto populated with details of GSTR-2A. It has details such as, GSTIN, Name, Filing Period, Inward Supplies, Debit/Credit Notes, TDS/TCS Credits, Tax Liability and Tax paid. The final date is 15th of the succeeding month.


The return shall be auto-populated after filing of GSTR-2 on the 15th of the succeeding month. The supplier shall have the choice to accept or reject the changes made by the recipient. Following such acceptance, the GSTR-1 shall be revised to such extent.


This return is auto prepared by 20th of the succeeding month. It will have the details of all outward as well as inward supplies of goods and services as furnished in GSTR-1 and GSTR-2. After considering both the details, GSTN will determine the input tax credit availability or the amount of tax payable. It will have details, such as, GSTIN, Name, Filing Period, Total turnover, Taxable & Non-Taxable Turnover and Inter & Intra State Supplies/Receipts,


This is the annual return, which the taxpayer has to file by 31st December of the upcoming financial year. It is nothing but the accumulation of all 12 monthly GSTR-3 of the taxpayer. It would also include the amount of tax paid during the year, including details of exports or imports.

Apart from the above, there are exclusive returns for composition tax payers, non-resident tax payers and e-commerce portals.

Any business, manufacturer, trader or service provider, has to file these mandatory returns. While, the automation is an attempt towards process simplification, it may also complicate matters for businesses without requisite resources.

LexHive Consultants help in computing payments and ensuring on-time payments & return filings.

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