LEGAL , SOCIAL AND FINANCIAL ISSUES FACED BY THE ENTREPRENEURS OF INDIA

By Rochak Goel 1111627

Legal Issues
There are numerous legal issues to think about when it comes to starting or buying a small business. There are important legal requirements associated with registrations, permits and licenses, an entrepreneur will need to meet all the laws for operating a business in the community. Regulations vary by industry, state and locality, but every business needs one or more federal, state or local licenses or permits to operate. A lot of paperwork is involved and the process of these paperwork and licensing is very long as compared to that with other developing countries.

Regulatory Considerations
Certain businesses are subject to restrictions on the legal form the enterprise must take. Some businesses, particularly the learned professions, may not be practiced in the form of a regular corporation, but are restricted to the modified ''professional corporation'' format. By contrast, some businesses may be operated only as corporations. In addition to general and specific regulations on a business's activity, there may exist legal obstacles to certain individuals engaging in a particular business. An example is state permit or license requirements that restrict who may engage in a particular activity based on certain educational or other background requirements. Some licensing requirements are aimed at preventing those with criminal or otherwise ''undesirable'' histories from participating in some activities. Often, even if a licensing statute does not specifically call for good character in an applicant, a licensing official may have implied discretion to investigate an applicant's character and to deny the license on that basis.

Federal Requirements
With the exception of sole proprietors, most business types must apply for an Employer Identification Number (EIN) regardless of whether they have

employees. Additionally, if you provide health insurance for your employees, you may need a National Standard Employer Identifier (NSEI) for your electronic health transactions. Most businesses do not require a federal license or permit. However, if one is engaged in one of the following activities, one should contact the responsible federal agency to determine the requirements for doing business:
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Investment advising Drug manufacturing Preparation of meat products Broadcasting Ground transportation Selling Alcohol, tobacco or firearms Federal registration of intellectual property, including patents, trademarks, trade names and copyright, provide business owners with exclusive use of intellectual property in the United States as well as in a large number of foreign countries.

State Requirements
Many types of businesses need to obtain some type of business or professional license or permit from a state government. While business licensing requirements vary from state to state, some of the more common types are listed below:
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Business licenses. A state business license is the main document required for tax purposes and conducting other basic business functions. Many states have established small business assistance agencies to help small businesses comply with state requirements. Occupations and professions. State licenses are frequently required for occupations as varied as building contractors, physicians, appraisers, accountants, real estate agents, private investigators, funeral directors, hairdressers and auto mechanics. Prior to opening a business, be sure that you know what the licensing requirements are for your particular occupation and that you have complied with all of them. Contact the state board governing your particular occupation for information as to licensing requirements. Certain occupations also require that you provide regular proof of "continuing education," to ensure that you keep up with changes in your occupational field. Licenses based on products sold. Some state licensing requirements are based on the product sold. For example, most states require special licenses to sell liquor, lottery tickets, gasoline or firearms. Tax registration. If the state in which you operate has a state income tax, you'll have to register and obtain an employer identification number from your state

Department of Revenue or Treasury Department. If you're engaging in retail sales, you will need to obtain a sales tax license.
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Trade name registration. If your business will only be operated in your local community, registering your company name with the state may be sufficient. Employer registrations. If you have any employees, you'll probably be required to make unemployment insurance contributions.

Local Requirements
Nearly all businesses need a county or city license. This is a general license that grants one , as the business owner, the privilege of legally operating a business within a certain city or county jurisdiction. Fees are typically low and these kinds of licenses are easy to obtain, though application procedures may vary. Local permit requirements vary as well. Failure to have the proper permits may prevent business from opening, force it to shutdown, and one may have to pay fines .

Additional Information on Legal Requirements

All states have business licensing offices that provide information on the legal requirements for operating a business in that state. In addition, one can seek help from your state's chamber of commerce, trade associations, or lawyers serving your business, profession or industry to overcome by complying with the legal requirements.

Social Issues

In the last 12 years, India's economy has grown at an average annual rate of about 7 percent, reducing poverty by 10 percent. However, 40 percent of the world's poor still live in India, and 28 percent of the country's population continues to live below the poverty line. More than one third live on less than a dollar a day, and 80 percent live on less than two dollars a day. India's recent economic growth has been attributed to the service industry, but 60 percent of the workforce remains in agriculture. The rate of increasing disparity between the haves and the have-nots, is hard to miss in tech centers like Bangalore, Chennai and Delhi. Technology professionals are returning, having made their millions in the US. They are driving expensive cars and living in luxury apartments. Cities are growing in all directions. Farmlands are being acquired to build luxury townships, golf courses, five star hotels, spas and clubs. Poor farmers get paid off, and are forced to move further away from the city. And while global leaders and businessmen wax eloquent about Indias growing status as an IT superpower, everyone turns a blind eye to the majority of the population untouched by the economic growth. And the scenario is not too different in smaller cities. Nagpur is a bustling metropolis in the heart of India, in a region known as Vidarbha. There are signs of economic boom everywhere in the city shopping arcades, multiplexes, pubs, and luxury clubs. Yet, right outside the city, farmers are committing suicide due to their inability to repay debts as small as $100. In the last five years, almost two thousand farmers in the region have killed themselves. Hyderabad is the capital city of the state of Andhra Pradesh. In the last decade, Hyderabad has established itself as a worthy successor to Bangalore. Companies like Microsoft, Wipro, Infosys, GE, HSBC have all made their presence felt in the city. Bill Gates, Bill Clinton, Jack Welch and a host of other global biggies have visited the city and proclaimed their confidence in its play in the global world. Yet, a continuing drought and a lack of government support has led to 4500 farmer suicides in the last 7 years in the state of Andhra Pradesh.

A socio-economic structure as lopsided as this is bound to collapse sooner or later. And some horrific incidents in the recent past signal the appearance of cracks in the Indian structure. It is quite obvious that Indias recent economic growth has not trickled down to the bottom. The majority of the population has been sitting by the sidelines watching the buildings grow taller and the roads get wider. Whats concerning is that there doesnt seem to be any concerted government effort to rectify the situation. For the poor, a severe lack of basic health, education and training opportunities mean that not only are they in a miserable condition today, there isnt much hope for the future either. It is only a matter of time when they barter their spades for knives, in a desperate attempt to liberate themselves from the throes of poverty. A country with such an unequal distribution of opportunities and wealth can never promise long-term security and stability. Any individual or establishment that symbolizes this economic and social disparity will be under threat. India wishes to become an economic superpower. But, if India wants what it wishes, these glaring social and economic problems must be addressed directly and earnestly. And until, these problems are addressed, no company setting up base in India can feel truly secure.

While, the government must own primary responsibility for social upliftment, the answer to Indias woes probably lies in a public-private partnership towards addressing Indias deprived poor. Its happening in pockets. Companies like the Tata Group have ingrained social responsibility in their DNA. Azim Premji Foundation, promoted by the Wipro Chairman, is working with state governments to improve grassroots level education in rural India. Whats probably now needed is for all private enterprises and government bodies to collaborate, to create a larger, more meaningful, nationwide impact.

Corporations should not view it purely from a philanthropic perspective. A bigger pool of educated and employable population will mean availability of better quality human resources. And a stable society creates a far more secure environment to do business in. Cleansing the environment where you are running your operations definitely makes better long term business sense. And the sooner corporations realize this, the better it is for everyone.

The notion of the Corporate Social Entrepreneurship (CSE) primarily relates to the field of corporate social responsibility. It is thus relevant to both practitioners and scholars of business and management and more specifically to the fields of business ethics; organisational behaviour. Moreover, due to the concept's associations with ideas about agency, this also means that this topic connects with moral philosophy. Such complexity reflects the interdisciplinary nature of the field of corporate social responsibility.

Putting two and two together the challenging social issue for an entrepreneur is to maintain a balance between the profitability of business and the social ufliftment of the society for long term survival.

Financial Issues
Most of the financial problems are in small scale industries or enterprises and the most Indian Entrepreneurs are in unorganised sector and in small scale . Being in Small scale they cannot reach out for finance in the capital markets .that is they dont have reach to public money via shares , debentures , bonds etc. They also have problems in extracting finance from the banks as being in unorganised sector they lack proper documentations and collateral security. Henceforth , they depend on unorganised sector for finance costing high interest rates. The main sources of capital for them is very limited ,restricted to Themselves , friends and relatives. The cash flow crunch management is also a vital financial issue today.