INTERNET OF THINGS: THE BUSINESS PROSPECTS
As we have seen in the previous posts, the IoT business is in the boom, exploring new trends and possibilities constantly, and continuously evolving with technological advances. It gives rise to several legal questions, and the law is rapidly undergoing corresponding dynamic changes to adapt to the new demands created. When the extent of regulatory control and statutory requirement is spread over a plethora of areas such as Information Technology, privacy, commerce and business, IPR, etc., it becomes quintessential for a company to consult a lawyer before beginning with the business and its procedural requirements. In addition to that, the costs involved in any start up is immense, and would require investments from all people involved, and also formal or informal modes of borrowing. There is less prospect of being able to reduce the costs in terms of hardware/software, inventory, employee or similar requirements; but pre-emptive consultation from a lawyer can certainly help you mitigate the costs at least to some extent.
HOW PRE-EMPTIVE CONSULTATION DECREASES COST OF DOING BUSINESS
- Choice of Business Structure: The Indian legal scheme allows you to shape a business in several structures, like a One Person Company, Public Ltd Co, Private Ltd Co, Limited Liability Company (LLC), Limited Liability Partnership (LLP), Partnership firm, etc. The limitation (or not) of liability, the legal formalities involved, extent of Regulatory compliances, etc. would depend on the structure, and thus it is a major decision to be made while planning the business. A lawyer can guide you properly, advising you on the nature of each structure, and helping you choose a suitable one. This would help to get rid of confusion and possible unnecessary expenses thereon.
- Ensuring Pre-Commencement Compliances: Legal advice and guidance from a lawyer can help you make sure that all necessary Regulatory compliances have been met and the mandatory documents are well in place, before you commence with your IoT business. This would prevent occurrences of violations or breaches due to ignorance of law (which is not an excuse), and would in turn prevent chances of imposition of penalties.
- Contracts (Indian kanoon): Any Business endeavour, whether IoT or not, would need to enter into contractual relationships with several parties in course of business, whether it be consumers, shareholders, or other stakeholders. Proper drafting of these contracts is essential to limit the liability of the company in case of any breach of terms, or loss incurred to the other party; only proper drafting can possibly absolve or at least limit the liability to compensate the person in such case. Since IoT business tests waters of different matters such as IPR, IT, business, consumer laws, privacy laws, etc., it is very important to have carefully drafted contracts and agreements with each of the concerned parties.
- Equity Financing: Seeking equity financing for a business involves preparation of shareholder agreements and review of related documents, assessment of potential impact of such agreement on other contractual liabilities of the business, etc.
- Tax Liabilities: A lawyer can assess your business to ensure that your activities do not lead to any unnecessary tax liabilities, and thus minimise taxes; at the same time overseeing that you indeed pay the amount you are liable to pay. While it is perfectly legal to minimise tax liabilities, it is to be ensured that you don’t ignorantly evade taxes in any manner.
- Risk Appraisal: While entering into business contracts, transactions, or in making investment decisions, it is essential to properly evaluate the risks involved, and balance it with potential profits of a risky investment. A lawyer can properly evaluate a legal risk that may be inherent in a particular nature of investment or a transaction. For eg. a lawyer can reasonably predict whether a particular technology that you purport to buy for your IoT business is under risk of regulatory shackles owing to public safety concerns (like privacy or security); and help you prevent loss.
- Negotiations: Business transactions include a plethora of negotiations and deals with several stakeholders such as suppliers, financiers, banks, etc. In case of an IoT business, you would be required to negotiate with the manufacturers and Patent holders of a number of different technologies, and work out a deal to bring all this innovation under a single umbrella. A lawyer could help you negotiate well with the other stakeholders, incorporating favourable terms and conditions; at the same time preventing terms that would be unfavourable to you.
The benefits of cost-cutting, stated above, are only a few of the advantages that would accrue to a prospective business by way of pre-emptive consultation of a lawyer. The major premise of a lawyer’s role in business environment is that ensuring various regulatory compliances would prevent future liabilities and consequential penalties. The IoT domain is new and emerging to the business world, and contains lucrative prospects of growth and profits; being ventured into by many companies in the past few years. The help of a lawyer could afford you a s afer and cheaper entry and survival (and of course flourishing, we hope!) in the IoT domain.