19 Jun 2018, 10:56 — 7 min read
Summary: The importance of having all your legal documents in hand can not be overstated. For a Small & Medium Enterprise (SME) owner, this should be a priority as they set about building a business. Here are six things you can do to give your SME a better chance at success.
When you start a company or business it is important to have in hand every legal document that can help you in starting up. For each business, there are specific types of legal documentation one must have.
India is rapidly becoming a business-friendly country with many initiatives catering to the growth of small and medium enterprises (SMEs). Leverage this environment by doing all that you can from a legal standpoint to create a launchpad for growth. Here are the documents you can obtain:
The Micro, Small and Medium Enterprises Development Act, 2006 provides for facilitating the promotion and development of MSMEs. A registered Micro, Small and Medium Enterprise (MSME) is provided with a variety of benefits such as tax subsidies, reduced rate of interest, necessary government support, among other things. There are 3 types of MSMEs - micro, small and medium enterprises.
Micro Enterprises: These are the smallest entities. Micromanufacturing has an investment of less than INR 25 lakh in plant and machinery. Microservice enterprises have less than INR 10 lakh invested in equipment.
Small Enterprises: They have investment between INR 25 lakh and INR 5 crore invested in plant and machinery, while small service enterprises may have between INR 10 lakh and INR 2 crores invested in equipment.
Medium Enterprises: These enterprises have investment between INR 5 crore and INR 10 crores invested in plant and machinery, while small service enterprises may have between INR 2 crore and INR 5 crores invested in equipment.
2. GST Registration
GST registration is mandatory for every business whose annual turnover exceeds INR 20 lakhs. GST or Goods and Services Tax is a value-added tax and it is levied at all points in the supply chain with credit allowed for any tax paid on inputs acquired for use in making the supply. Therefore, it will be the end consumer who bears this tax as he is the last person/entity in the supply chain. GST has replaced the multiple layers of complex taxation currently existing in India. Under this GST regime, multiple VAT registration would not be necessary, as a single GST registration would be applicable across India.
3. Trademark Registration
Trademark is a graphically represented mark that is used to distinguish the goods or services of one company from others. A registered trademark provides legal protection and a unique identity to a business. In India, a trademark can be acquired within 3 days. The required documents are address proof and identity proof of the trademark owner, certificate of incorporation (if necessary) and a copy of trademark to be registered. Trademarks will allow your customers to distinguish your products or services from that of others. They are also seen as a guarantee of consistent quality.
4. Copyright Registration
A copyright is a legal right that grants the author of an original work the exclusive right for its use and distribution. In India, copyright protection is governed by the Copyright Act of 1957. Generally, copyright in an original work exists for a period of 60 years. The time period for obtaining registration of a copyright is 30 days from the date of filing of the copyright application. The application must be in the manner prescribed in First Schedule to the Copyright Rules, 1958 and must be accompanied by the required fee prescribed in Second Schedule to the Rules and must be signed by the applicant in whose favour a Vakalatnama or Power of Attorney has been executed.copyright registration is important as this gives the creator a diverse bundle of exclusive rights over his/her work and if someone were to challenge you and say that your work is theirs, having registered proof would be tangible evidence and enough to successfully sue.
5. Patent Registration
As a budding entrepreneur, it is very important to protect the innovative idea or invention which is at the heart of your business. That is the reason why patent registration is really important. A patent is legal and it will bind your ideas and your inventions to your name. Registration of patents provides an exclusive right to the patent holder which allows him to exclude others from using the invention for a period of 20 years. If the invention is patentable, an IP lawyer can help you get the relevant patents.
6. Importer Exporter Code (IEC)
If you're starting an import/export business in India the first requirement before you start your business is to obtain an IEC. Without an IEC, you cannot import or export. You don’t need to be a registered entity to apply for an IEC; you can apply even as an individual. The IEC does not apply to technology and services. IEC Code is a unique 10 digit code issued by DGFT – Director General of Foreign Trade, Ministry of Commerce, Government of India.
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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.
Posted byVakilsearch Staff
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8 Sep 2021, 11:56
1 Sep 2021, 10:30