5 Poor Mistakes to Avoid During Business Registration

Running a business smoothly requires a business registration that establishes a legal identity for the business. Registering a business is very important in the contemporary landscape as it can help you avail plenty of benefits available for business corporations. One of the most important reasons why you should register your business is because it helps to create a unique identity for your company, separate from the proprietor.

Registering a business helps a great deal in case of legal challenges by safeguarding the founding members and other stakeholders. Entrepreneurs might not be well aware of the business registration process and they tend to commit some poor mistakes. One can easily overcome these challenges by hiring a company registration consultant.

Let’s delve deeper into such mistakes that you should avoid During Business Registration

• Opting for a wrong legal structure for the business 

This is one of the most common mistakes that new entrepreneurs commit when it comes to registering the business. There are different types of business legal structures that have varied benefits. These legal structures differ based on the country where you are getting your business registered. In India, there are various types of legal structures available for a business including Private Limited Company (PLC), Sole Proprietorship, General Partnership Firm, Limited Liability Partnership Firm (LLP), etc.  Each business structure has its own set of merits and demerits. One should weigh the pros and cons before choosing a particular business structure. 

• Not protecting Intellectual property 

They may heavily engross new businesses in their core business functions. They are not very concerned about the intellectual properties associated with a business. When people cannot safeguard intellectual properties, the core ideas get stolen, and the competition in the market increases. Most tech businesses heavily invest in R&D teams, which helps them generate new ideas and technologies that help grow their business. Not getting the legal intellectual property rights for these ideas and technologies can lead to exploitation of the same. If you based your business on a unique idea or technology, you must safeguard its intellectual property rights to reduce competition and exploitation. 

• Absence of shareholder’s agreement in the application 

This is one of the most common mistakes committed by first-time business owners while registering a business. People primarily focus on increasing the revenue, attracting new investors, and growing the business. They forget to add the shareholder’s agreement in the application of registration. Shareholder’s agreement is one of the most important documents needed for any type of business registration when over one person is involved in establishing and running the business. A shareholder’s agreement describes the arrangement between the shareholders in a company. It also sheds light on how a company should be operated and describes the rights and obligations of the shareholders. You can easily hire a company registration consultant to create a shareholder’s agreement while registering a business. 

• Wrong description of the business 

A business must have a clear idea of how different shareholders will benefit from a business, the terms and conditions for different shareholders, voting rights, etc. It is crucial to consider all these aspects before registering a business to avoid future conflicts among the shareholders. It is necessary to create a thorough business description that will contain all these details to avoid any legal obstacles in the future in case a conflict arises. One should always hire a business registration consultant in case they are unsure about any of this. 

• Low awareness of local business laws and tax obligations 

The contemporary corporate landscape is far more complex than it was a few decades ago. The increase in globalization has further added to these complications, as businesses need to follow the local laws and tax norms in different countries. What’s most important for a business is understanding the local laws and tax obligations associated with the country of origin.  

Conclusion 

Registering a business today is easier than ever, but the corporate world’s growing complexities have posed new challenges for business owners. Entrepreneurs need to have a thorough understanding of legal structures, intellectual property rights, shareholder’s agreements, tax obligations, local laws, etc. One can simplify these complexities by hiring a reliable company registration consultant.