India’s startup and SME ecosystem is booming, with thousands of new businesses registered every month. But behind the energy and opportunity lies a complex legal framework that every founder and entrepreneur must understand to succeed.

Whether you’re a solo entrepreneur or building a funded startup, knowing the legal basics of doing business in India is critical to stay compliant, avoid penalties, and build trust with partners and investors.

In this blog, we’ll break down the essential legal steps and compliance rules you need to know to start and run a business in India in 2024.

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✅ 1. Choosing the Right Business Structure

Before anything else, you must decide how your business will be registered. Common structures include:

📘 Sole Proprietorship

• Easiest to start, ideal for freelancers or very small businesses

• No legal separation between individual and business

• No mandatory audit

📗 Partnership Firm

• Best for two or more founders sharing ownership

• Governed by the Indian Partnership Act, 1932

• Not recommended for high-growth startups

📕 Private Limited Company (Pvt. Ltd.)

• Most popular for startups

• Separate legal identity, limited liability, eligible for funding

• Regulated under the Companies Act, 2013

📙 LLP (Limited Liability Partnership)

• Hybrid model — combines benefits of a company and partnership

• Ideal for service firms, consultants, or startups not seeking equity funding

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✅ 2. Business Registration & Approvals

Depending on your structure, you’ll need to register with:

• MCA (Ministry of Corporate Affairs): For Pvt Ltd, LLP

• Local Municipal Authority: For trade licenses and shops & establishment registration

• Startup India Portal: To access government schemes, tax exemptions, and funding support

Most companies register online via the MCA portal using SPICe+ form.

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✅ 3. PAN, TAN, and GST

• PAN (Permanent Account Number): Mandatory for all business structures

• TAN (Tax Deduction Account Number): Required if your business deducts TDS

• GST Registration: Mandatory if your turnover exceeds ₹20 lakh (services) or ₹40 lakh (goods); also required if you’re selling across states or online

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✅ 4. Key Compliances Every Business Must Follow

❗ Missing deadlines can lead to penalties, interest, or legal notices.

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✅ 5. Employment Laws to Be Aware Of

If you plan to hire employees, ensure compliance with:

• Minimum wages (set by state)

• Offer letters and employment contracts

• EPF (Employees’ Provident Fund)

• ESI (Employee State Insurance) for salary under ₹21,000/month

• Gratuity (if you have more than 10 employees and 5+ years in operation)

Also consider drafting:

• A formal leave policy

• NDAs and IP assignment clauses

• Sexual Harassment (POSH) policy

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✅ 6. Contracts & Agreements

No matter how well you know your partners or clients, get everything in writing. Common agreements include:

• Co-founder agreement

• Vendor/supplier contracts

• Service-level agreements (SLAs)

• Non-disclosure agreements (NDAs)

• Investment/shareholder agreements

Use professional legal templates and seek advice when raising funds or offering equity.

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✅ 7. IP Registration (Brand Protection)

Protect your brand early:

• Register your trademark (logo/name/slogan)

• Consider copyrights for original content or software

• Use patents if you’ve developed unique tech or innovation

IP can also increase your company’s valuation and investor trust.

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🧠 Final Thoughts

Legal knowledge might not feel exciting, but it’s essential to build a sustainable business in India. Investing time in understanding these basics will save you from costly mistakes and help you grow with confidence.