1. Design for Online Sanctuary
Submitted by: Mukul Shastry
PGPX Class of 2015
To Prof. Anil Gupta
For partial completion of course
CINE

2. Synopsis Legal Issues which new start-ups face and how to tackle them
What should be the structure
Confidentiality and Employees
Online resources

3. Best Structure for Start up
Sole Proprietorship
General Partnership
LLP
Private Company

4. Pros Cons Sole Proprietorship
Business Losses can be offset with any other income thus giving tax advantages
Low cost, minimal compliance cost, best if you are just testing your business idea
You are fully liable for the business losses. Even your personal wealth will be privy in case of bankruptcy filing. You don’t have protection to ring-fence your personal wealth if business decision goes awry.
Doesn’t allow you the tax and other advantages which some other structure provide
Everything is part of your personal income tax
Suitable for: Business owners with very limited employees, such as consultants, professionals, who can handle legal risks on their own or have nothing much to ring-fence.

5. Pros Cons Partnership - General
Low cost, easy to form legal structure. Registration of partnership not mandatory but highly recommended.
Certain tax advantage which partnerships can bring.
Informational tax forms to be filled and benefits taken through personal taxation.
Liability is unlimited and thus exposes your personal wealth.
All the partners should be equally committed else one’s sluggishness will drag all resulting in complex human, emotional and even legal issues.
Suitable for: Business owners who because of need of finance or expertise cannot do without the alliance, and all are trustworthy guided with same philosophy.

6. Partnership – Limited Liability
Pros
Cons
Slightly costly to form than general partnership but far less compliance cost compared to Company.
Limits the liability to the extent you are committed to partnership and personal wealth is not dragged to settle partnership dues.
Taxation still personal and no advantages of partnership
Laws are evolving and therefore legal certainty has not reached as is the case with Company.
Suitable for: Business owners who wants to open a private company but want to give it a shot with LLP which has all the trapping of company with lesser compliance cost. Remember LLP is possible when the business is not highly scalable.

7. Pros Cons Private Company
One of the most comprehensive structures allow business to scale up
Different from owner have own taxation and accounting rules
Very successful in keeping private wealth safe
Allows the freedom to take debt or even venture capital/private equity
Getting finance, scalability etc. easy
Very costly and compliance cost heavy
Needs to recruit professionals such as lawyers , company secretaries, Chartered accountants etc. for professional conduct
Needs to have board of directors and abide by stringent legal requirements
Suitable for: Businesses which want to scale high and need professional financing and management.

8. Employees and Confidentiality
Initial Contacts are most important for a start up and since the employees are fluid, they come they go, it is possible that they may leak your contacts as well as trade secrets.

9. Online Resources http://www.entrepreneur.com/article/224976
Few Indian Law firms who works for young start ups
Corporate Legal Partners (
Novo Juris (