10 Essential Legal Tips for Securing Your Business in Bangladesh

Is your business legally safe? Many people consider business to be a very simple and common matter. Running a business is not only about strategy and operations — it’s also about complying with the legal framework that ensures sustainability and protection. Ignoring legal obligations can lead to fines, penalties, or even closure of the business.

Here are 10 essential legal tips every entrepreneur must follow to keep their business safe.

1️⃣ ⚖️ Determine the Legal Structure of Your Business

The first step in starting a business is to determine the legal structure, that is, what type of legal structure you will use to start a business. The general structures can be divided into 2 (two) categories:

Organizations with Unlimited Liability:

• Sole Proprietorship (An organization run by one person)
• Partnership (An organization jointly owned by 2 ≤ 20 people)

Organizations with Limited Liability :

• Private Limited Company– LTD (An organization owned by 2 ≤ 50 shareholders)
• Public Limited Company-PLC (An organization owned by 3 to unlimited shareholders)
• One Person Company– OPC (An organization owned by only one natural person, with the paid-up capital limit Minimum 25 Lac, Maximum 5 Crore )

📌 Choosing the right structure is essential because it determines your legal obligations, taxation system, Financial Statement Audit and protects your ownership rights.

2️⃣ 📝Register Your Business Properly

Every business must obtain a Trade License from the City Corporation, Municipality, or Union Parishad. This will include the name of the business, address, type of product, and owner details. This is the legal recognition of a business, and a business without a trade license can lead to legal problems.

Check whether any special licenses are required for your business

Also, it is important to check whether any special licenses are required for your business. For example, a drug license may be required for selling medical products. Moreover, a business must obtain an IRC (Import Registration Certificate) and ERC (Export Registration Certificate) for import and export. For Manufacturing, a business also needs to obtain Fire Licenses, Environmental clearance & Factory Registration Certificate. In the case of licenses, it must be ensured that each license is renewed within the right time every year.

📌 Renew all licenses annually to avoid penalties.

3️⃣ 📑Ensure Tax and VAT Compliance

Compliance to Income Tax Act 2023

According to Income Tax Act 2023, it is mandatory to get a Tax Identification Number (TIN) and filing income tax returns in every year, based on the income of a business.

It is also important to deduct Tax at source (TDS) from the salaries, office rent and other office or business expenses at time of payment to vendor according to TDS Rules published by NBR. All TDS amount shall be deposited to Government Treasury within specific time limit.

A company usually has to file the following returns every year to comply with income tax. Namely:

• Company Income Tax Return (1 time in a year)
• Withholding Tax Return (4 times in a year)

Compliance to Value Added Tax & Supplementary Duty Act 2012:

According to Value Added Tax & Supplementary Duty Act 2012, it is mandatory to get a Business Identification Number (BIN) and filing VAT Returns in every month, based on the Turnover of a business.

VAT is a tax levied on each business transaction i.e. both sales and expenditure and it is also important to deduct VAT at source (VDS) from specific payments mentioned in VDS Guidelines published by NBR. All payable VAT amount shall be deposited to Government Treasury before submitting the VAT Return.

📌 When paying tax and VAT, it must be taken care that bank statements and other documents are kept safe. Because, if the organization has to face any financial litigation for any reason, then the necessary papers can be presented. Maintain accurate financial records to avoid future legal disputes.

4️⃣🤝Execute Contracts in Proper Way

A business contract defines the responsibilities and rights of the various parties, and each contract must be written, clear, and legally binding. For example, rental agreements, partnership agreements, supplier agreements, customer agreements, and employee employment agreements should all be written contracts.

The responsibilities of the parties and their terms and conditions must be discussed in detail in the contract, so that neither party is left out of any legal obligation. In particular, the partnership agreement should clearly state the business structure, profit and loss sharing, and the duties and responsibilities of the partners. Again, it is not enough to notarize the partnership agreement through a notary public like a normal contract. In certain circumstances, it may also be necessary to register this agreement with the Registrar of Joint Stock Companies and Firms (RJSC) office, which ensures the legal validity and protection of the business.

In addition, every clause in every contract, such as employee contracts, partnership agreements, purchase and sale agreements, rental agreements, etc., must be carefully considered so that the entrepreneur does not face any losses later. It is also important to ensure that each contract is executed with a specific stamp.

📌 Always notarize and, where applicable, register agreements with RJSC.

5️⃣ 👷Comply with Labor Laws

It is necessary for every organization to ensure the rights of employees according to labor laws. According to Bangladesh Labor Law, employees must be provided with proper salary structure, leave, and other benefits. Their responsibilities, salary, leave, security measures, and other conditions should be clearly mentioned in the appointment letter of employees. Provident fund, gratuity, maternity leave, weekly leave—these things should be given to employees according to Bangladesh Labor Law. In case of dismissal of an employee, the law should be followed regarding his dues, compensation, and sending notices.

📌 Respecting employee rights builds trust and avoids lawsuits.

6️⃣ ™️ Protect Brand & Intellectual Property

Trademark registration is very important for protecting your business brand. With trademark registration, no one else can use your company’s brand or logo, and by registering a trademark, you can protect your brand, name, logo, or business’s special mark. If your business has a new invention or creative work, then you should copyright or patent it. This protects the intellectual property of your business and no one else can misuse your invention or creative work.

📌 Intellectual property protection prevents unauthorized use of your brand.

7️⃣ 🛒 Follow Consumer Protection Laws

Ensure product quality, truthful advertising, after-sales service, and a fair refund or replacement policy to protect customer rights. Correct information about the product should be ensured in advertisements or promotions so that the customer does not fall victim to fraud. If a product is of poor quality, it should be replaced or returned. Treating customers properly and ensuring their safety will increase the reputation of the business.

📌 Customer trust = long-term business growth.

8️⃣ 🏢 Secure Your Business with Insurance Coverage

Get insurance to cover business risks. Getting insurance is very important for businesses. Fire insurance, life insurance to protect business assets, employees, and other business insurance can help you to cover business risks. By getting insurance, your organization is protected against employees, assets, and organizational activities. In particular, the insurance company will provide assistance if the business’s movable or immovable property is damaged due to fire or accident.

📌 Insurance ensures compensation during accidents, fire, or unexpected events.

9️⃣ 🔍 Establish a Legal Culture in Your Business

Create a natural legal framework for the organization you lead so that no one else can exploit any loopholes to harm the organization. Even then, if for some reason a violation of the law occurs, the main responsibility of the organization is to find out the clear reason for the legal violation. Then, explain the relevant reason in the light of the law, that is, whether there is any protection for this “relevant reason” or “occurring violation” in the law and if so, present it to the appropriate authority within a specified time. In this case, an organization can do the following two things.

• Regularly monitor laws and regulations that are important for running a business. Participate in seminars, workshops, or webinars to stay informed about new laws or regulations.
• Create a legal manual so that all parties to your business are accustomed to following legal procedures regularly. By following these steps, you can be sure to protect your organization from legal risks and achieve long-term success. In these cases, it is advisable to stay in touch with a skilled professional.

📌 Awareness protects your business from unexpected legal risks.

🔟 📑 Conduct Regular Legal Audits

Regular legal reviews are necessary to protect the business from facing legal risks. The main task of this legal audit is to regularly review and check whether the legal status of your organization, terms of work, contracts, tax status and licenses or all documents are up-to-date.

📌Regular legal reviews and audits will ensure that your business is complying with all laws and regulations and whether there are any legal risks.

🏁 A successful business requires more than innovation and profit-making. Legal compliance is the backbone that keeps your company safe from lawsuits, penalties, and disputes. By following these 10 legal tips, you can secure your business and ensure sustainable growth.

Seeking the advice of an professional accountant, auditor, lawyer or tax consultant can be helpful in this. In this case, only professional accountant, auditor, lawyer or tax consultant can handle all the matters properly.

✍️ Author:
Gias Uddin CAP, ITP
🛡 Professional Accountant, Income Tax Lawyer
📲 01734-008136 (WhatsApp)