Company IncorporationLegal Advice

Should You Register Your Company Right Away?

Starting a business can be a rewarding, exciting, and fulfilling experience. However, entrepreneurs tend to look at everything as a race early on, leading them to make rash decisions. Hence, the success of a start-up comes down to adequate research, thought, and appropriate planning. 

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When you are building a startup, everything can seem like a race. A race to create a minimum viable product, identify a good business model, and find a good co-founder. Consequently, even what needn’t be done too early looks like a priority. 

Entrepreneurs often make rushed and rash decisions to incorporate without thinking of all the implications of such an action. Incorporating or registering your company too fast is one such hasty decision made by business owners. So, how should entrepreneurs approach the legal aspect of running a business? Here’s a look at everything you need to know about when to incorporate your start-up for maximum flexibility.

Need for Planning and Research

Company registration is an integral part of building your business. However, it also brings with it several responsibilities and compliance requirements. As a result, when done too early, it could unnecessarily land founders in trouble due to excessive compliance norms. 

Hence, entrepreneurs should ensure they do the required research and planning before making any decision. In many cases, waiting for a few months or years can provide them with benefits that quick incorporation would deny. 

REGIETR YOUR COMPANY

Keep it Simple at the Beginning

Before registering your company, you need to know why you’re doing it and how it can help you. When it comes to startups, the primary reason for company registration is raising funds or capital. However, if you feel pressured to incorporate because you have promised early employees equity, there are separate agreements that can help you with that. So, until you’ve created a product good enough to show and market to investors, there’s no need to formalise your business as a company.

All you really need this early in your business journey is a basic agreement. Such agreements can outline the roles and responsibilities of the founders. Additionally, it may also contain clauses regarding the ownership of intellectual property created by them. At early stages, having such details on paper is more integral than formal registration. 

However, to create such agreements, founders and employees will have to have some difficult conversations. They will have to go over various scenarios and highlight all the possible outcomes to prevent legal issues and repercussions moving forward. Having such discussions will help clear the road for the future and will help improve overall communication. 

Companies such as Housing and Redbus, which had founders leave the business, could have greatly benefitted from having such an agreement. Hence, entrepreneurs need to ensure such agreements and discussions are happening. These can go on to help the business much more than a mere incorporation certificate. 

Register When You Need To

Company registration seems necessary when you’ve started to earn revenues or require sales tax registration in your business’s name. In other cases, you might find it useful when you start planning fundraisers or seeding rounds. Most investors and angels will invest in your company only after going through your incorporation certificate. Hence, companies will need to register themselves formally when they start looking for external investment. 

When you’re in this position, the benefits of registering as a company will always outweigh the disadvantages. You may have to spend time and money on compliances, but you will find it beneficial to do so to utilise the credibility that a private limited structure brings. Additionally, incorporation will enable businesses to hire with greater ease as highly qualified individuals might check your legal status before joining your venture. 

Similarly, you can also open a current account in your business’s name to avail credit, if necessary, using your registration certificate. Incorporation will also improve your trustworthiness among vendors, customers, and other stakeholders. If that isn’t convincing enough, private limited companies also enjoy tax advantages and their members have limited liability. As a result, registering your company can help protect your personal assets and wealth from business debts.

How Vakilsearch Can Help

Once you decide to incorporate your company, there are various licenses, permits, and documentation you must complete. While you can apply for those online by yourself, most entrepreneurs tend to take the help of professional services. Legal service providers, such as Vakilsearch, can help simplify the process and prevent unnecessary delays and hassles. 

Our team of legal experts will collect the required information and advise you on what type of business structure to choose. We will also apply for incorporation on your behalf to ensure you receive the registration as soon as possible. Start the business of your dreams without any hiccups and delays with Vakilsearch by your side!

 

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