Episode 1 (1)

The episode is about business structures and the importance of registering a business. The guest, Shritya Seth, discusses his background and the services provided by his company, LegalWiz.in. He explains that the right time to register a business is when you are serious about pursuing it as a career. He also mentions the advantages of registering a business, such as being able to claim pre-incorporation expenses. Shritya discusses different business structures available in India, including limited liability structures like private limited companies and limited liability partnerships, and unlimited liability structures like proprietorships and partnerships. He mentions that these structures may have different names and nuances in other countries, but the principles are similar. The episode ends with a promise to discuss these points in more detail in future episodes. Hey, do click follow button on the platform where you are listening to get notification for the next episode There are some OPCs that we are opening on a regular basis, there is definitely more awareness amongst people So we've seen inquiries to open OPCs primarily, you know, when an entrepreneur is a solo entrepreneur But they definitely need a structure and more importantly the protection over the unlimited liability This is episode number one of MSME talk which sheds light on business structures Welcome back to MSME talk podcast MSME talk podcast is for micro, small, medium enterprises startups and entrepreneurs in which we discuss with industry experts and Experienced entrepreneurs on specific value addition guidance and solve queries to help build long-lasting business Shritya Seth is a proven veteran in legal tech and digital commerce industry with 15 years of formative Diverse and immersive experience based across various industries and geographies Founded LegalWiz.in in 2015, a legal tech venture that has served 5,000 plus startups and MSMEs for keeping their businesses compliant with law With a wide range of services including new business registration, IP protection, legal drafting, accounting and GST compliance, etc That are fulfilled through a blend of professional expertise and state-of-the-art technology LegalWiz.in has instituted a remarkable success in making business professional services accessible to MSMEs He also provides pro bono support to various incubation centers and startup ecosystem at large Through his mentorship to fellow startup entrepreneurs and students He holds an ambient corporate finance from Santiago, California and has worked with progressive companies like Qualcomm, Qofera, LegalZoom and Casemate Shritya holds a vision to make top quality professional services more accessible to startups and MSMEs In today's episode we will discuss about business structures and how to choose the one to start your business When to formally register your business? Where to take required professional services for your business without much hassle? Also understanding the aspects of changing business structures from one type to another for existing businesses and a lot more So do stick till the end Let me welcome Shritya Seth for this episode on business structures A very warm welcome Shritya to the show Thank you so much Shritya for having me and definitely my pleasure to be on the show Great. So we are very keen to hear about your background journey and services of your company Absolutely. So thanks again for having me and you have really kind of captured, you know A lot of essence of what I have done so far. So I'll be very brief on again My name is Shritya and I currently lead a company called LegalViz.in Prior to starting LegalViz for quite some time I was back in the US and working with a legal tech giant called LegalZoom.com When I came back to India in around 2013 There was one very prominent, you know Sort of problem that I faced when I started my own entrepreneurial journey and that was around You know procurement of legal and other professional services and how the industry was very fragmented at the same time It was not too much true with the cost but to do a little bit more with the transparency and affordability of the services So that is when really thought that a LegalZoom kind of model Which I really had an experience with could be replicated in India for entrepreneurs who are you know Starting either the first generation as a first generation entrepreneur or you know Somebody who is a little more tech savvy and want to kind of get things done in a faster and more transparent way So that's our journey of LegalViz. As we speak of the journey, we are about 5,000 customers strong so far Service almost every single state and most of the major cities of India that we claim our customers in and some of the customers have Really scaled well, you know during the journey with us and and become from a nascent state startups to a very successful company And so so we really pride ourselves in kind of becoming, you know Professional services partner to entrepreneurial journeys of thousands and and hoping to create many more awesome kind of Standardization you are bringing in a completely fragmented industry where there was no benchmark and here you are bringing it a platform Where you don't need to call up ten people to get a reference You can just go to the website and get trusted partner for the legal compliance services for the business Okay, so Shrijay moving ahead, when is the right time to register a business? So typically when you kind of get out of in in my personal opinion when you get out of a business activity or a commercial Activity being a hobby project or something that you think of a more serious as a as a venture or the career that you would Want to pursue I think that is a very ideal time to actually get a business registered a lot of people You know do wait for the business to be significant before, you know, they actually go in the incorporation process Sometimes it is also attached with you know, the perceptional Aspects of it being very complex or it being very expensive I would I would contradict a little bit on that and really say that you know There are several good advantages including, you know Your ability to claim the expenses that you have made before you actually incorporated a business as a pre-incorporation businesses Expenses, right? So these are some of the smaller aspects and if you spend a lot of time and money and resources To even ideate and kind of make the MVP so even at that point of time if you have a registered business you can claim those as an expenses and when your business starts Making the revenue you can offset those expenses against the revenues and so on so forth So also it kind of gives you an identity as a business and so it becomes easier to kind of you know Do an outreach reach out to potential clients with a lot more confidence than actually being you know a solo person pursuing a dream kind of adds to that identity and so really good time to start a business is when you are Serious about pursuing that as a career option as opposed to a hobby You know side gig I think that definitely counts for it to be an incorporated business So basically when you are getting serious about your work To scale it up then it makes sense to think about business structures make sense for you and do so In fact, you know a stranger. We typically ask hat in the end of the show You have already started By telling our listeners that whatever expenses you are making You can claim all of them after registration of the company or the structure which you decide Absolutely, and in some cases you can also then claim those as a pre incorporation expenses, but that definitely has guidelines around it If you have not started Your business venture and you are looking for that. Please ensure whatever expenses you are making it keep all the Documents related to it say which you can claim it later on. Absolutely. So moving on to the next point Please tell Which all factors are available to start a business? so there are several, you know structures that are available in India and And even at a global scale in different countries, but specifically talking of India Primarily, you know, I would Bifurcate the structures in two different Categories one are what we call a limited liability. The other one is where the founders or the owners have unlimited liability So within the limited liability structure you have, you know more of a credibility Corporate ish structures like a private limited company a one-person company or an LLP or better known as a limited liability partnership On the unlimited liability front you largely have proprietorship Which is a solo entrepreneur driven business or you have partnerships, which could be registered or unregistered Then you know There are several businesses which are typically not for-profit businesses and you also have an option of creating a section 8 company and so on So forth, but largely talking of a for-profit business I think proprietorship partnership limited liability partnership and a company formation Which comes in a regular private limited company or in a OPC or one person company format Those are your typical structures or go-to structures. Obviously, there are then public limited companies and so now are these structures Which you have just mentioned available only in India or they are the same as across the country? So there's some differences in some different structures. We can see in other countries So every country has its own, you know legal applicability and so the structures don't really remain You know exactly the same but more or less they kind of are governed with the same, you know sort of principles So if I would talk about, you know countries like us which are very popular to incorporate businesses, you know at a global scale You have an option of let's say an LLC as compared to a corporation which could be a C Corp or an S Corp You know, so so it really I mean there are different names Also, the nuances are a little different but largely every country will have One more than many options available to pick and choose from so that an entrepreneur can really decide a structure Which fits his or her best-case scenarios and the expectations out of the business is that they are going to run Right. So to kind of answer that shortly different countries do have different structures that are available Typically there are comparable to other structures in other countries and and they largely cover all these scenarios like the taxation applicability or the limited liability protection or You know the management rights and arm's-length distance between the management and ownership and so on so forth So I'm sure in this podcast we are going to discuss, you know, those points in more detail, you know as we go forward Yes, definitely So if someone is doing business in India Then he or she thinks of taking the business abroad. So do they really need to do changes in their structure? It largely depends on what kind of structure they are currently in, right? A lot of new-age structures like a private limited company or an LLP They do provide, you know, a lot of flexibilities in terms of onboarding foreign investors or taking the businesses abroad So making an international trade per se you might not want to kind of change the structure if your existing structure allows that within a reasonable boundary. Also at the same time sometimes it is also beneficial depending on case-by-case to register a separate business in the country that you are going to get maximum trade from, right? That definitely, you know, has other nuances which are involved to, you know, the business structures management, for example You have one company being a primary company and then you have a holding company versus subsidiary company and you deal with a transfer pricing mechanism and so on so forth, which is a little more technical and nuanced So probably, you know, getting deeper into it could be another session in its own. Definitely I mean it really kind of varies case-by-case and largely if it is a small to medium scale business that is, you know, doing business or conducting business abroad or overseas It doesn't really require to open another company or open another formation in the other country. Can you tell us criteria which an entrepreneur should have absolute clarity before selecting the specific structure? Absolutely. So as I said, you know different structures that are available to form a business All those formation types have their own nuances, right? And there are It is not that one is superior over the other it is rather you would want to pick what fits your requirements the best, right? So at a very high level some of the things that I would personally keep in mind Is one whether I'm a solo entrepreneur or I have more people Who are going to be partners or shareholders or owners of the particular business, right? obviously limited liability is a big advantage and it also comes at it on its own cost of compliances and so on so forth, but Whether a business has what is the risk appetite that you have and what is the you know risk involved in that business? So that really kind of defines your risk appetite or risk awareness and and for that reason you might want to pick for Options which limit your personal, you know liabilities for a business loss and and or not there could also be requirements around statutory compliances and audits and so on so forth and so What is your general volume of business and what is your appetite in terms of either spending or resource wise? To kind of keep the business compliant with law or do you want a structure which is very lean? And you don't really have to kind of you know, worry about a lot of compliances. That could be another thing Also, whether this business is going to get in existence Perpetually and you want the business to be running even after your death or your non-existence so perpetuity in existence versus non-perpetuity is also something that you would you know want to Kind of think of apart from that Let's say your investors where they are coming from whether there is a foreign participation or not What are the taxation advantages every structure has its own? nuanced tax, you know requirements and Advantages and disadvantages so taxation is another aspect that you would want to kind of keep in mind so these are some of the very high level, you know sort of Thoughts and ideas around while you are trying to pick a right structure for you what you should actually Look into or at least have clarity in your mind about the objectives and outcomes that you want out of a particular structure Someone who is starting some food business while there's someone who's starting a play school Based on these criteria the structure of the business would also differ Absolutely, it will and i'll give you a practical example over it for for example I'm a i'm a services company and and let's say my by definition My business is largely driven by you know Two or multiple people who come in the capacity of a partner and they have a defined roles and responsibilities You know at the same time it it being a professional services, uh, you know business. Let's say it really has You know a lot of defined format in terms of who is expected what in terms of responsibility? I think an llp structure could work better in that case as compared to for example my business by nature Let's say it's an online business It is intended to scale uh, it will at some point of time attract outside capital in terms of equity or net participation you know, I want to keep an arm's length distance between my ownership and the management of the Of the organization right in those kind of cases or I want to issue employee stock options You know if if my business Is about these kind of things, uh, then a private limited company could be a better structure So obviously the type of business the kind of risk that is involved in the business or the kind of you know Stakeholdership that is involved in the business the kind of capital that you are going to bring in all of those things, right? Typically kind of are attached to the type of business activity that you are going to do and so definitely, you know The business activity itself also becomes a driving factor to what sort of structure could really work for you. Well So after an entrepreneur has decided the criteria for the selection process Now, can you just tell us in detail structure wise more information to our listeners based on which decisions can be made to select the structure? Absolutely. So, you know in line with what we have been discussing the taxation advantages or disadvantages the limited liability all of those factors kind of weigh in So i'll just take uh, you know quick five minutes to explain put that in more In a better context of which kind of structures are more apt for what kind of outcomes, right? So talking of that the first thing definitely is whether your business is very risky, right? And you don't want to really inherit that risk to your personal assets As long as it is a legit business Business risk or loss right then you you should ideally go for a limited liability structures Which are either a company formation or an llp as a structure that is available in india Uh, if you would think that your business does not really have any risk, right? Uh in that case and and then you are content with your business You don't really want to you know kind of hyper grow or hyper scale it with a lot of risk being involved In that case, obviously, you know a proprietorship or a partnership could work better because it also comes with a much lesser compliances Uh as compared to a private limited companies, so that could be one, you know sort of criteria the second, you know obviously in line the powers of limited liability of also comes with a Greater responsibility and the responsibility in terms of keeping the company or an llp compliant with law, right? So the compliance requirements are much heavier over there uh and so obviously when the compliance requirements are heavier than The spending or the resource allocation or the efforts that you want to Kind of put or you have to put into compliance Is also much heavier, right? So whether your business is worth that much of an effort or not to kind of put it in perspective a limited liability partnership Would have an annual compliance view versus a private limited company would also have an annual compliance view apart from that It would also need a statutory audit, even though the business does not make a single penny Uh, right. So all these kind of compliances are much heavier as compared to a proprietorship There is no separate it return even to be filed the entire income really kind of lumps into your personal income Income tax return and so so it is as lean as you can go, right? And so that's another criteria, uh apart from that. It also depends on how many members you have in a structure So if you're a solo entrepreneur, you don't want to share your ownership to anybody, right? Then in a unlimited liability you have a proprietorship as an option in a limited liability You have a structure called an opc or a one-person company Wherein a single person owns a hundred percent stake in a private limited company You could generally have anywhere from two all the way to 200, uh shareholders Which would exclude your employees and granted esop options in a limited liability partnership Again, you start with two people in a particular partnership. You start with two and end at end at 50 So how many number of members that are there also becomes one of the defining? Sort of criteria apart from that obviously your statutory audit requirements and and other compliances that we talked about Uh, if you want an external funding, right whether that is in terms of debt, uh, like a bank loan They usually you know prefer a private limited company or an llp as a more credible You know option because it goes through a compliance cycle And so the robustness of finances and accounting data management and financial controls are thought to be much better So that might be a favorable option in that case if you want to go for An external round of funding through an equity. Let's say a private equity or a venture capitalist in that case you know becoming a private limited company or an llp becomes your only options available and the reason is because Uh, nobody would really invest against a limited part of ownership, but an unlimited liability to inherit, right? so most if not all of the investments that that are equity-based, uh financing happen in a private limited company or an llp format a private limited company to be more beneficial in that case because Obviously in that you have you know an arm's length distance between your management and the ownership of the company Wherein the ownership is defined by the share capital which are highly transferable as compared to your management is defined by the board of directors So, you know, you own let's say one share of reliance industries. You are an owner of the company But at the same time you don't have any managerial right because you don't make it to the board of directors so those kind of things which also brings me to my next point, which is Obviously, you know the entrepreneur's idea about the distance that they want to create from management as compared to the ownership of the of the business and If they want to really kind of separate those functions out very cleanly then private limited company becomes a great option for them Apart from that foreign participation is also another major criteria So if you have a foreign equity participation, it is typically allowed in a private limited company in an llp format So a proprietorship or a partnership firm cannot accept the foreign Participation then taxation becomes a major criteria, right? so as I said, uh proprietorship is a very lean function your taxation really is Calculated based on your personal idea which kind of goes by the slab system As you may have in in your personal income tax return as compared to that a limited liability partnership in a regular partnership They are taxed at present at about 30 percent From the first penny that you make as profits as compared to that private limited companies do enjoy certain benefits and if you fall under the corporate, you know taxation bracket you can Think of your taxation range to be anywhere around 20 to 23 percent including, uh, you know the cess and all so Private limited company as compared to a limited liability company Definitely is a is a better taxation structure at this point of time in india apart from that Statutory compliance is the level of effort and the pricing attached to keeping the business compliant also becomes the major factors depending on all these kind of factors that are Coming in play together and what is the most advantageous, you know structure that checks off on most of the Criteria that you have and definitely all of the criteria that you must have Should should really be your pick then then to kind of go further. Obviously, there are opportunities to Convert the structure from one to the other which is again a layer Added in terms of complexities and effort So I would really you know kind of encourage entrepreneurs to pick the structure that really gives them a long-term good Benefit and a foundation to build the business on Okay, so timeline perspective Which is the fastest? Proprietorship is as lean as you can get and so If you register for a gsc number or if you register for an msme certification, you can start a proprietorship right away Right. So proprietorship is very very very lean private limited company. Typically In india, we have seen about 12 to 15 days turnaround and and so as in llp a partnership can be drafted very quickly You can draft a partnership deed get it registered or even as an optional Way out you might not want to get a registered partnership deed and just kind of have an unregistered partnership So that can also be started as quickly as a proprietorship So so depending on the structure anywhere from one to two days all the way to 15 days is what typically it takes To start a business in india where private limited company and llp being on a higher side In all practicality is said and done you can you can wrap up the process in In 10 to 15 business days which includes let's say procuring your pan number your tan number or tax assessment number Your digital signatures for the directors. So your director's identification number and digital signatures your certificate of incorporation and everything So it is rather a little step by step and lengthier process as compared to opening a proprietorship, which you can practically open You know on the fly So Vijay your company has made some processes in which time can be saved Absolutely. So since we work at at a larger scale, you know, obviously there are a lot of things which are standardized Uh, so typically when you have a practitioner with solo practitioner working towards opening your private limited company Obviously, you know, they take up the processes one after the other in our case Obviously your department lies these processes and we've identified what is a dependency and what is a bottleneck in the process? So multiple processes as many as 10 different processes that needs to be done to register a private limited company For example to start with, you know, reserving your name, which is a run or reserve your unique name process Then procuring a DIN and then procuring a DST for the directors and drafting of an MOA and AOA Then filling out the incorporation form and obtaining a certificate of incorporation In the first month compliance is filing of an INC-20A form an appointment of an auditor so all of these different processes are standardized and figured out for Which process has a dependency on the others, right? and so that is how we typically tend to also save time as well as save costs because obviously Your resources were specialized in certain skills and and they take care of the certain functions So you're bringing the things on scale and hence printing down the cost. Absolutely Can these services and the process registration etc be done by self? Or can be online be done or do they really need to go through a professional? And also through physical presence is required Can anyone start from scratch to complete process by not stepping out of the house in current scenario? Absolutely. Absolutely. And that is where the companies like LegalWiz really make a mark in the industry Is all our processes are 100% online And so you don't really need to step out of the house to be able to incorporate a business or even to keep it compliant To kind of answer the second half of the question whether you need a professional or not in certain cases You definitely need the professional signatures to be attached. You will need help of a professional in a case scenario Even if you don't need, you know by the virtue of law I would still suggest to go by a professional help and the primary reason is because This is going to set the fundamentals and the basis of your business's incorporation existence, right? And so what kind of things that you include in your memorandum of association and articles of association Are going to largely define what kind of activities? Are in scope and what kind of activities are not in scope are illegal for your business to do and so forth So so to kind of come up with or to get away with all of these nuanced situations in a better way You know, it is rather than reinventing the wheel and obtaining all those knowledge, you know on your own and and Spending hundreds of hours, you know to learn and still stand a chance to make a mistake I think why to reinvent the wheel and rather, you know, pay somebody a fraction of an amount and procure a service Which is more expertise driven. So so I very highly recommend going with a Professional whether it is your local chartered accountant or company secretaries lawyers or companies like legal viz and so on so forth So shreya does number of employees or The customer base or the business turnover is one of the criteria for the selection process of the business structure Largely not and sometimes yes So there is no restriction per se by the by the law, right? And you can have as many you know clients in an llp as you do in your private limited company You can have you know scalability turnover a lot of different things Why I say partly yes is also because every structure is Is defined with keeping in mind certain of certain boundaries, right? So if you have a proprietorship and you can scale as much as you You would want to at some point of time you would also start finding reservations from your clients Especially if you are bidding for tenders with a bigger company, right? They would always have this restriction because they also want to make sure That who we are dealing with as a supplier also has a more structured and streamlined business and they are compliant You know at the highest levels and standards of the law and that's why they would prefer And rather sometimes put in the eligibility criteria for the business to be a private limited company or an llp At least uh, so in that sense, yes, but otherwise, I don't really think there is the sky is the boundary and So Let's take a quick break MSMEs and startups are looking for various kinds of support and upgrade. Are you a product service provider? expert advisor Consultant mentor for MSMEs and startups do reach out to MSME talk to list your business check the link in the description So Should entrepreneurs start with a lean structure like proprietorship and then later on converting to a lsp or a company with the growth of their business Or they start with a company only from the beginning It really depends it is definitely not a compulsion to start as a company because you should also understand that that will Attract a lot of costing in terms of compliances and other things and not just about the money But it also will consume a lot of resources and time, right? And also it has higher penalties Around non-compliance. So all of these things should be kept in mind again Having said that you should have a long-term vision and how quickly are you going to achieve that? so if you are starting a proprietorship today and in a year you have to convert that to or in a In a year and a half you have to convert that into a private limited company I would rather suggest start with a private limited company, right? So ideally you should not really kind of change your structures every now and then it is not practically possible as well but given that if you really think that your business has scaled beyond the Offerings that your current structure is providing you can always opt for an option to upgrade that to structured Formation type and there is nothing wrong in that But at the same time you should not really think that oh, let me start very lean and then in a year I'll change that to a private limited company because eventually you will end up spending more time and more resources in conversion process So you might want to kind of save yourself from that I've seen some attraction for one director company among your clients since it's a new concept which has recently come up not very old So there are some OPCs that we are, you know opening on a regular basis There is definitely more awareness amongst people and so we've seen inquiries to open OPCs primarily, you know When an entrepreneur is a solo entrepreneur, but they definitely need a structure and more importantly the protection over the unlimited liability sole proprietorship do tend to now open up as An OPC or a one-person company having said that A lot of times we also do offer or we rather do suggest these people To rather opt for a private limited company structure and have somebody as a very minority stakeholder may that be somebody from your you know close friends and family group or or something like that and the reason is because to convert an OPC into a private limited company is is another task in its own and and that definitely also have a lot of regulatory requirements Around it including you know the time frame that it has to be In an OPC format before it can get converted into a private limited company So having said that let's say you start an OPC and you suddenly get the offer for investment, which you would not want to Reject and and it is a very lucrative offer You might get trapped into your OPC format and you are as an OPC You cannot onboard another shareholder because by the virtue of it being an OPC You have to have only one shareholder in that company And so so for these reasons we rather sometimes advise You know our clients to go with a regular private limited company structure as well Or go with that rather than an OPC If they are anticipating any of these kind of business activities that are that are in near future So so definitely but yeah, there is there is it's a great flexibility and and more importantly It's it's also an opportunity for solo entrepreneurs to go in a more, you know structured and corporate-ish You know sort of setup as compared to sole proprietorship being very loosely driven by by law Shreya, could you just help us to know which company structure is most popular and your company received the maximum request for? Fair, so Tripti talking about our company specifically the highest amount of incorporations that happen is into a private limited company Now again, you know, I'll take this information in the weighing that our company also is primarily focused Towards startups and MSME segment and largely the startups driven market is also You know very ambitious on raising funds and so on so forth So that is perhaps one reason why we are very heavy on private limited company if you look at the national scale, obviously, there are so many conventional small scale businesses that Open up on a daily basis as a proprietorship or a partnership So overall looking at the global or rather the national quantum, I would probably say Proprietorship and partnerships are still you know chosen to be the structures of choice for small businesses and and you know Really small businesses in the market that we largely function which is startup driven innovation driven MSME driven growth driven That is where we find private limited company to be the most popular option So there are two scenarios here shreya. I'll just give you a background one scenario is where entrepreneur is having multiple businesses And other scenario is where the entrepreneur wants to receive the capital So they are existing businesses for these two entrepreneurs. What guidance should be given for the structure change? fair enough So if you are a proprietorship and you want to convert it into a private limited company Let's say a proprietorship by default is a one person owned Business right in a private limited company. You have to have minimum two shareholders to start with right? So you have to introduce another shareholder and another director into into the company the conversion definitely can happen and The complexity really depends on what kind of activities have been done in the proprietorship How will you know the finances in the books of accounts being maintained and audited and all those sort of things, right? so so complexity is very subjective in that to kind of give you a short answer to that is It is always possible to move on from one structure to the other structure, right? For a private limited company as I told that memorandum of association you have a clause For the business activity, right? So anything that you do beyond that is not necessarily qualified to be a legit business activity Within that particular company and so what happens is if you have multiple businesses Which are very diverse in nature you might hit some restrictions in terms of these kind of clauses Where it becomes an out of scope activity and so at that point of you might be forced to have Multiple different companies or different businesses to carry out very diverse set of activities Which are not really related or fall under the same kind of category or or general or broader definition, right? So so those kind of challenges you will always You know, you'll always face the second about the raising of capital. Obviously. Nobody would want to fund A proprietorship or a partnership wherein you have unlimited risk So if the proprietorship or partnership makes a huge loss, right? The loss also kind of goes back to the personal assets being hold by The proprietor or the partner of the company or partner of the of the partnership firm, right? So typically the investments definitely Do happen in a limited liability structure which is an LLP or a private limited company So at that point of time funding is coming in They would definitely force you to convert your partnership into an LLP or convert a partnership into a private limited company that can be handled the easily obviously, you know provided that the Previously running business does not have a lot of complexities that are involved in that It is fairly manageable to convert that from one structure to the other What could be the timeline if someone want to convert from proprietorship to company? Uh, it really depends on the volume of business that's been done in the previous previous Uh, you know structure and and what is the complexity and stuff But let's say if it is a very small business and not a lot of activities being done You can probably kind of be mystic to wrap up the entire process within a month here There was a query one of the suggestion came to that entrepreneur is don't transfer the business start a new company That is a faster process. Now here the challenge is if the person starts a new company The legacy of business of the past years will not show Exactly. So that is what the challenge is, right? And and so if you have a very close group of you know set of customers can be individually Communicated that okay now we have started a new company and share invoicing will happen from the new company And we are transferring it over to this this new business for whatsoever reasons It is still manageable right at the same time if if that's not the case, right? And obviously you have to kind of transfer over the legacy, right? So if you if you think of opening a new company, it's a new bank account So it's it's all together a new identity in its own, right? so those issues of carry forwarding the legacy and in some cases also carried carrying forwarding the Um the branding and the goodwill aspect of it also might become a little challenging apart from that Obviously, it's effort wise it is always easier to start fresh as compared to bring over the burden of of the historical and so so if these challenges are not really challenges for Uh any business then obviously starting up a new business can always make sense So it really depends case by case, you know, whether whether that's possible or not Also in some cases, I would just want to add that a lot of government private contract or tenders also Have requirements of prior experience prior turnover or the minimum turnover So if you are starting it fresh, then definitely you don't have that to carry forward And so you may also get disqualified on on those business opportunities And so that is also one another thing to kind of keep in mind if you are really kind of opting for starting a fresh option Let's take a quick break Hey, I'm a semi-talk is nurse Hope you have not missed subscribing to our newsletter for the latest new blog podcast updates Check the link in the description. We don't spam your inbox And hence we do have one of the highest rate of newsletter opening in the industry So There are various government schemes which provides benefits to msme Is there any regulatory deployment from government side that the business structure has to be in particular form? Yes, so there are two very prevalent schemes that are available uh to procure, uh, you know these benefits one is definitely Uh, you know getting a registration under the msmes act Uh, right which you can do, uh, and you can check out the information on msme.gov.in which is uh, the msme portal msme Certification gets you eligible for a lot of different benefits including You know intellectual property protection your credit Assurance and availability at a at a lower rates and so on so forth Also, there are a lot of msme programs that would connect you to the larger Part and aspects of the industry and even in foreign trade and msme in itself or udyogadar in itself Is a great certification to hold it also gives you certain advantages in terms of your accounts receivable And so under the msmes act if your account receivable for an msme has gone beyond I believe 90 days Then there is an expedited process to recover that so there are all those kind of benefits that are available Startup india, this is a flagship program of dpiit is another wing which is trying to promote Entrepreneurship at large and innovation and invention Driven entrepreneurship in india so you can check out the website startupindia.cov.in Which is definitely a huge pool of resources some of the Criterias in in terms of the structures that we are discussing If you want to be a startup india registered entity, then you have to have Either a either a private limited company an llp or a registered partnership to be able to qualify Apart from that there are other Qualification criterias that your business doesn't have to be more than 10 plus years In existence it doesn't have to be separation of an existing business and those kind of things and obviously it has to Be innovation driven. It has to be employment driven. It has to be a wealth creation driven business So these are some of the criterias But but there are there are great benefits of being qualified as startups including a further benefit that you get out of Section 80 isc which is three years of consecutive tax exemption in 10 years of your startup journey That's a rare exemption to get obviously not every startup is tax exempt But at least if you are a startup, you can be eligible to apply for the tax exemption So that's a that's a primary criteria of that apart from that there are also other advantages in procuring Intellectual property and assistance in funding and so proprietorships can be an msme, but it cannot be a startup So you can't register yourself in a startup? So msme by default is a micro small and medium enterprises. So it covers a wider Range of businesses as compared to startup which is for a very specific purpose, which is about the innovation and invention and scalability Which all professionals are required at the beginning of the business incorporation registration What could be the various other you know ways and methods to get a trusted resources? And which all services we can manage by say taking a lockout for once in a while Or we need someone who we need to hire for a retainership So strictly talking about the legal and compliance domain, right? Primarily there are three or four kind of profiles that one looks out for For a scalable business one is your chartered accountant. The other one is your company secretary One is a lawyer and one is a tax practitioner Now a lot of professionals kind of come as a combined flavor for example your chartered accountant may also do your tax planning and it really depends on the size of the business and the scalability and the And the complexity involved you might not need all of these professionals at any any given point of time, right? ideally what I would suggest that As a small and medium scale businesses, you should always have somebody who does your books of accounts on a very regular basis Right, so you definitely need an accountant Accounting function can very easily be outsourced as well So you don't if your business volume is not so big you might not want to hire a full-time accountant You can simply outsource that to local chartered accountancy firm or a local accounting service provider companies like legal ways Are always always available to rescue in the early stage of the business I would rather suggest entrepreneurs to have the profiles in-house Which will have to do with maintaining the core expertise and value proposition of your business, right? So let's suppose you are an online services business or you're or you are an online, you know seller through your proprietary Proprietary website you must have at least one person who understands the technology, right? and so apart from that tech building can be outsourced but at the same time you must have an internal resource that kind of Takes care or it has the most important function of your existence Uh in control for you, right a lot of ancillary services like your accounting tax planning bookkeeping search engine optimization All of these kind of things in early stage while you don't need to consume a full-time profile to it It is always best to be outsourced because you have two major Benefits with that one you definitely end up saving cost you don't have to pay for the full time Second you also get an expertise and and otherwise what typically people try and make things work out Is they hire one profile and they start fitting that profile into multiple roles And that is where disasters happen, right and so rather you would hire multiple agencies or multiple people Who have specialized expertise and they don't have to be paid for full time But you kind of leverage the expertise in the fractional, you know amount and time that you pay for so I think that's a wiser way So moving toward the last section of the show We would like to hear from you three top most things which you would recommend as guiding principles to entrepreneurs If I think about it three major principles to any Business, I think the first thing first is a people-centric approach and which very commonly is Misunderstood to be a customer-centric approach, right? Ideally if you are a good leader in my opinion You will take care of your employees so in turn they further take care of their customers and that is That is a larger value of being people-centric as opposed to being a customer-centric where you always keep blaming your employees for not Servicing the customers in the right way, which I think is a pathetic approach to be with I very genuinely believe that I mean my customers are only as happy as my employees are and so that's definitely one the second one very much in line with is You start empowering people with responsibilities And at the same time you make them accountable for achieving that So ideally I wouldn't want to dictate a lot of things rather would want to provide opportunity to people Who would uplift their profiles? And do things which are above and beyond their regular capacities and push their boundaries And it is okay to make mistakes in that as long as they are not repeated mistakes So empowerment and accountability is I think the second biggest principle and the third is integrity in my opinion is Is very important for any business, especially the businesses now who invest a lot in acquiring customers it becomes The most critical thing to succeed is to retain that customer and how you can retain the customer Is when you incentivize or when you excite them to come back to your website or to your portal or to your shop every time and again and buy new things with you and that will only happen if you have an approach of integrity and working in the best capacity to You know solve their problems rather than how to you know, figure out make more money out of it So I think those are the three very guiding principles that I typically try to follow Hopefully I do follow and the next one we would like to know any three legal hygiene for entrepreneurs as a recommendation Um, so three legal hygienes I will this is uh really interesting because I genuinely think that the business has to be very strong legally on three fronts. One is how you start the business Second is how you manage the business and third is how you protect your business the third one definitely is Underrated but probably the most important right? So when I say how to start the business we largely covered that in our conversation you know about the structures and what makes the best structure for your Second is how you manage the business which has to do with Keeping it compliant with law and really getting out of the mentality that it is complex or it is costly or it is Difficult to deal with professionals. It is not really so and and that is why a lot of companies like ours are really making A very meaningful effort to make this consumption of law go very easy Very transparent very accessible in a lot of different ways kind of democratize it, right? The third thing and which is probably the most important thing is how to protect your business, right and And that you should really think of because this environment is very competitive legally if you You have a lot of different tools to kind of protect your business You should make the best use of that and and primarily I would want listeners to kind of think In two different directions one is how you protect your intellectual property Either through trademarks patents copyrights design so on so forth And second you protect the existence of the business and the know-how of the business Which is rather through contracts and agreements, right? So you have your non-disclosure agreement. You have your co-founders agreement. You have your employment agreement or contract You have your non-compete agreements You have your slas or the service level agreements and all these contracts and agreements what they really do Is they define very clearly the scope of work and the boundaries that one or the other party cannot cross? Without getting into the jeopardy or getting into the legal consequences And so I think these are three sort of hygiene if you keep these hygiene clean and neat I think your business is you know, legally You have shared a lot of things today and covered a couple of aspects Someone who is starting in the beginning of the business can get a lot of clarity And also someone who is in the business can just get to hear questions Which we have covered where if they are facing certain challenges in the current structures and I would say you are really doing a great job by bringing the businesses of legal and compliances and those things in a new age format By digitizing them and making it more standard and democratic Absolutely, i'm so glad to have this conversation and definitely, you know It helps reach us to newer audiences and and we can make a bigger impact to the legal industry Pleasure to have you on the show Thanks a lot Tripti, thanks for having me today and definitely appreciate the gesture Through this episode, I hope you would have got some answers to your queries and guidance for way forward Do share your learnings from the episode your feedbacks and solutions If you are an entrepreneur and have questions from experts Or any particular topic or profile of expert you want to hear Or if you are an industry expert with MSME as a target audience do reach out to us Our link is given in description And at last please do subscribe to MSME Talk podcast and don't forget to share the podcast link with your friends family and network Take care. Goodbye Happy to share MSME Talk podcast and the speed ranking chart Of 10th country in the epic podcast country level entrepreneurship category If you are an expert or provide product or services to small businesses MSMEs and startups reach out to us to discuss Showcase opportunity on MSME Talk content details given in description