Legal steps to start a business in Kerala

The passionate entrepreneurs are likely to drive successful startups, and they mainly aim to build unique solutions that deliver to the patron's delight. But you must be wondering how to start a business in Kerala; well, to begin with, you need to align with some legal steps and build unique solutions that align with the customer's delight.

Kerala is considered one of the current favourite startup hubs today, with more and more entrepreneurs looking forward to setting their base in Kerala. This is because the government provides proper support to entrepreneurs who have great ideas and want to start something new. However, starting a business is not a cakewalk as it does take considerable effort.

No doubt, it is vital to have a strong focus on the customers and your target audience, but at the same time, you need to have an excellent understanding of the laws and regulations that are required to run the business smoothly. Be it formalising the agreement or safeguarding your intellectual property, and you need to be aware of the latest laws governing the target market.

Ideally, several startups and businesses are encouraged in Kerala as per several State and Central government policies. But the new entrepreneurs need to be aware of the legal steps required to incorporate a business. Nevertheless, thanks to favourable economic policies offered by the Chief Minister for starting new companies, several entrepreneurs are moving to the state now.

Hence, if you are a budding entrepreneur looking forward to starting a business in Kerala and feeling clueless about the whole procedure, don't worry, as we have got you covered. In this thread, we have covered all the points which will help.

Some of the legal steps for starting a business

1. Finalising a business structure and founder's agreement:

You need to be clear about nature and business type. The founders need to add a business type like the ones mentioned below. It is essential to have some clarity initially, which will be crucial to the overall goals and objectives. All the business types have their own set of legal requirements and regulations. Hence businesses should be aware of these before starting any business.

2. Choose a Business Entity

If you plan to start a business in Kerala, you need to understand the type of entity you would want to have. Some of the types of entity types are:

Limited Liability Partnership (LLP)
Private Limited
Public Limited
Sole Proprietorship
Partnership
One Person Company (OPC)

You don't need to go for a private limited company if you are starting your business, but forming a little private firm can be pretty expensive. You need to pay some government fees around 25000 INR while paying INR 5000 to 10000 to your chartered account. Hence for the registration process, you need to spend at least 20000. Above all, one of the most vital legal steps to start a business is to keep all your accounts ready and updated with the annual year. The tax return needs to be filed every year. You need a registration certificate if you plan to do business abroad.

Additionally, you need to register your company in Kerala as per the Companies Act of India. You need at least two partners if you want to start a Private Limited Company or Limited Liability Partnership (LLP). A one-person company is ideal for you if you are going to run your company alone.

To register your company in Kerala, you can head to the registrar on the 1st Floor, Company Law Bhavan, BMC Road, Thrikkakara PO Kakkanad, Kochi, Kerala State. Even if you are starting an online business, you also need to align with legal steps to starting an online business.

3. Apply for business licenses:

Licenses are likely to be an integral part of any business. But the charges are likely to vary from company to firm. One of the best ways to start your business is to know the applicable licenses for your business. If you want to avoid costly battles, you must have a business license. Ideally, business licenses tend to play a crucial role in running a business in India. On the flip side, registration of the company is ideally a legal process of listing your business with the registrar officially. The shop and Establishment Act is one of the most common licenses that apply to almost all companies. It is helpful to all faculties where business, trade, or profession is carried out.

4. Understanding the taxing laws:

Taxes tend to be expected for almost all business types, and there are several varieties of taxes, including state and central tax. For some businesses, the local tax is also applicable. Different companies and operating sectors tend to attract various taxes. Currently, the government of India has launched the 'Startup India' campaign to promote multiple startups. It has introduced several exemptions and holidays for the startups.

5. Aligning with the labour laws:

Almost all companies need to adhere to the labour laws, no matter if they are big or small. The company is subjected to many labour laws when companies are working under it. For example, rules are likely to be subjected to gratuity, minimum wages, and PF payments. To learn about labour laws, you can quickly consult with a lawyer. Some labour laws are:

The Payment of Gratuity Act, 1972.
The Contract Labour (Regulation and Abolition) Act, 1970
The Industrial Disputes Act, 1947
The Trade Unit Act, 1926

Conclusion

Therefore, it is always good if you know these steps before you finalise your decision as it is necessary to follow all the legal steps to start a business in Kerala. A legal expert can help you open a firm meeting all the requirements set by the Indian government.

Also read:

1) Where to Get a Small Business License?
2) Legal Rights of Every Business Owner
3) What Are The Legal Requirements For Your Business Registration?
4) Ease of Doing Business in India -The Challenges & Opportunities
5) OkCredit: All you need to know about OkCredit & how it works.

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FAQs

Q. What does DSC stand for?

Ans. DSC - Digital Signature Certificate is considered a digital equivalence of the documents, including certificates and papers. It is a mandate to file these forms electronically with the right department. In terms of company registration of the private company, one of the directors required.

Q. What is considered an authorised capital, and what should be the minimum authorised capital needed to register for the company?

Ans. In registering a private company, the company promoters need to decide an amount, the 'Authorised Capital', and the share value they will be getting when they invest in a company. The registered or authorised capital is known to be the maximum ceiling limit of capital. It is the amount up to which a company can issue the shares and collect money from the shareholders. The authorised capital can get enhanced just by passing a resolution at the shareholder meeting.

The minimum amount of authorised capital of a private company is 1,00,000 INR. The Ministry of Corporate Affairs charges a fee of 5,000 INR to allot the minimum authorised capital.

Q. For a registered company, is it mandatory to keep all of their company documents in an electronic form?

Ans. In the earlier times, of course, it was not a rule. However, with the commencement of technology and the internet, it is now incorporated as a rule. As per the rule, no 27 of the companies - Management & Administration 2014, the rule claims that any listed company or a company that currently has more than 1000 shareholders will be mandatorily required to maintain records online. On the other hand, every company is required to maintain statutory records in the form of registers or minutes throughout the continuation of the company.

Q. How to check whether the company has been registered or not?

Ans. It is very easy to check whether your company has been registered or not. Just follow these steps:

You can navigate to the MCA website.
On the website, go to the 'MCA Services' tab. There will be a drop-down option; from there, click on either LLP Master data or view the company
You will be asked to enter the CIN number of the company, enter the CAPTCHA code and then click on enter.

Once this is done, you can view the status of your company's registration process.