The startup culture is full of people who try to, want to but are not able to get their business up from scratch. The reason for this is, a number of entrepreneurs don’t know the process of taking their venture from point A to point B. The point A is this brilliant idea they have and B is the consequent, fantasized state where the venture is established, secure and profitable.
The transition from A to B is really tough, full of anxiety and really overwhelming. Below are some tips which will help you in building your startup from the ground up.
1. When should you start?
The concept of right time troubles almost all entrepreneurs. They keep waiting for the special moment or a signal from Mother Nature which actually doesn’t show up. The right time approaches the moment you get your trademark registered. It is one of the initial steps you take. After you get your logo and brand trademarked, there is no one who can misuse the name or the mark, which is the most important thing to safeguard your company’s assets.
You must execute a thorough trademark search which basically makes assures that the mark, name or logo you are planning to apply for, has not been taken yet.
2. When should you register your Company?
Registering a company ensures that while pursuing activities related to the startup, you should be acting as an agent of the company. Obligations and liabilities should, therefore, be in the company and must not affect your personal assets. As soon as the company starts to enter the agreements with other companies or people, you should apply for Company Registration. Funding, ownership adjustments, payments etc are agreements.
3. What is the best structure for you on the basis of a number of owners?
For instance, if you have eyes for owning the entire venture and you have an entire introductory investment planned for the business, One Person Company or sole proprietorship structure should be endorsed.
Au contraire, if you require people to bring in investments for the venture and the business should have two or more owners, it is advantageous if you go for Private Limited Company, Limited Liability Partnership, Hindu Undivided Family or Partnership Firm.
4. Are you willing to endure the liability of the business?
Structures like HUF, partnership and sole proprietor firm have an unlimited liability i.e., in the case of default in the loans or funds, the entire sum of money will be retrieved from you and the partners or members in the profit sharing ratio. This structure carries a high risk to personal assets.
5. What rate of Income Tax are you willing to pay?
The applicable Income Tax to HUF and sole proprietorship is the normal rate. In the case of sole proprietorship, the individual’s income is clubbed with the business income. However, in the case of entities like a partnership, the flat tax rate of 30% is levied.
6. Are you planning to get money from the investors?
It is really tough to get investments from the Venture Capitalists if the company is not registered. Private Limited Company and Limited Liability Partnership are more counted on when it comes to raising investments.