Business basics : Contracts or no contracts

One of the most important social structures that entrepreneurs need to deal with is the Justice framework ! It is pretty much the human over-ride or backup for the social concept of fairness and trust. Every day we hear of stories about how trust built up great companies, while the same trust is broken for little, corrupt gain in other spheres of life. So here is a take on how entrepreneurs should make use of this framework call justice

  • The first thing to do for any entrepreneur is to get a CA and Lawyer as his friend ! They are a valuable asset at all times possible be it filing taxes, creating a company, ESOPs and so on … The friend aspect is to make sure that you build a longer term relationship which should benefit both the parties.
  • Always get a company or LLP registered, most people seem to neglect this aspect. In this age when you can start an LLP online, I see no harm in spending small money to get a real legal entity in place. Companies come and go, but its most important to show that you are a legal entity here to stay [plus, it makes getting a bank account really easy]
  • Try signing an NDA with most parties, it is a show of good faith and creates a positive atmosphere for interaction. To be honest, non-competes and NDAs are weak in India .. rarely does any company enforce them as well. Though, longer term its a great habit when you want to become a global company !
  • Always sign contracts, no matter how small the contract value it is important to have some proof that you had started to do some work ! It is agreed that most startups are built up on trust, but you should not cut corners on legalities.

These are some easy tips to keep in mind, business should come first and not emotional trust. In such situations, instinct can actually become regret ! So all the entrepreneurs out there, keep working and signing those contract ….

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