Unfortunately, many startups are not aware of these rules.

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Should startups funnel their funds and investments into existing bank accounts or is it wiser to open separate ones? What other mistakes do startups in India make? Sharath Shyamasunder, Founder and CEO of The Startup Zone, who has extensive experience of working with over 5,000 startups, discusses these issues with EFY’s Mukul Yudhveer Singh.

Q. What are the most common mistakes made by startups in India?

AND. Most startups ignore legal compliance. Many founders, despite being highly skilled in technology and products, ignore legal and financial compliance. This is usually because they are too busy with products and do not keep track of the deadlines and compliances related to legal processes. Apart from those that need to be filed with the Registrar of Companies (RoC), there are many forms that startups usually do not fill out.

Q. What does this mean for them?

AND. They end up paying a lot of penalties. This often happens at the pre-revenue stage of the startup. In the long run, it also affects their ability to raise funds. Another common problem in the startup industry is trying to comply with legal and financial regulations without having a professional on the team or a reliable compliance partner. As a result, these startups spend a lot of time and money on incorrect filings.

Q. Can you provide an example of such an error?