Company registration for Online Sellers in India

E-commerce Industry or online selling is the new market in India. Ecommerce businesses in India grow at a rate of 40% per annum, with the ease of the internet which is increasing its reach to every part of the country. The e-commerce industry is the fastest growing industry in the world. In the current scenario, it is very helpful for new entrepreneurs to build a business through online mediums.

E-commerce means online transactions which are related to goods and services whether it’s buying or selling of goods and services or transferring money for completing sales.
For Eg: – Placing orders on Amazon, Flipkart, etc. Lots of start-ups and businesses are looking for opportunities to bring their products and services to an online platform to expand their businesses and to approach globally.

Why do Online Businesses require Legal Registrations?

• Legal Entity proof for payment Gateway: – E- Commerce Company require a payment gateway to use debit/credit card wallets UPI, etc. These payment gateway companies like Paypal, Razorpay etc. demand an e commerce company a legal entity proof as to reduce the risk of fraud companies.
• Bank Account opening: – Current bank account is must for any business to provide the invoice to the consumer on its own brand name so there also legal proof is required for the entity.
• Building Trust: – Now for a successful long run business trust building or building goodwill is key element. So, if the company get registered legally then consumers trust the company. It also helps in protecting the brand and also protect from government noncompliance notice.
• Raising Funds/loans: – In the long run businesses require funds to continue the business operations which they take from banks or investors. Legal Registration will give benefits to the entity in raising fund or taking loan from bank.

Steps for Company registration for online sellers

• Decide Business model of E commerce: –
  The model of the business is on the basis of the market segment in which you are targeting. There are four types of business models which are discussed as follows:

• Business to Business (B2B)
  This type of business provides products or services from one business to another business.B2B transactions mostly have a longer sales cycle, higher-order value, and more frequent purchases. In 2020, close to half of B2B buyers are nearly double the amount from 2012. As the youth enter the age of making business transactions, B2B selling in the online space is becoming more important.

• Business to Customers (B2C)
  B2C businesses mean to sell products and services to the end-user i.e customer. The B2C model is the most common business model, so there are many unique approaches under this model. The business transaction for B2C purchases is for a much shorter period than a business-to-business (B2B) purchase, especially for lower value items.

• Customer to Business (C2B)
  C2B businesses mean that individuals will sell products and services to companies. In this e-commerce model, a site can allow customers to post the work they want to be completed and have businesses bid for the opportunity. Affiliate marketing services are one of the examples of C2B models. In this approach, customers have the power to name their price or have businesses directly compete to meet their needs.

• Customer to Customer (C2C)
  C2C models connect customers also called an online marketplace connects consumers to exchange goods and services and typically make their money by charging transaction or listing fees.

• Decide Business Structure
  Depending upon the business structure you decide, will dictate the legal and tax requirements you need to meet. These are the following business structures: –

• Sole Proprietor: –
  It is the most convenient and easiest way to set up a business as in sole proprietorship there is less compliance, lower cost of documents. The tax is paid accordingly to the individual rates and not as per the corporate tax rate.

• Private Limited company
  It is easy to form and has separate legal entities. It can be formed with a very minimum capital of Rs. 1000. Share Allotment to investors in an easy process with a private limited company. One more advantage is of collecting profits and paying losses in the name of the company.
• Turnover of One Person Company is restricted to 2 crores and also shares cannot be listed.

• Limited Liability partnership (LLP)
  LLP registration has some restrictions in terms of foreign direct investments (FDI) and transfer of shares which investors do not prefer. Its liability has limitation to an extent of its share capital.

• Bank account Opening
  Opening a current bank account is important for starting an E-commerce company. Documents required to open private limited company: –
  • Memorandum of association (MOA)
  • Articles of Association (AOA)
  • PAN Card and director details
  • Certificate of incorporation
  • Board resolution of directors to open account

• GST Registration
  The taxes are applicable to all or any businesses that are selling goods and services. Being in an e-commerce business, an owner has to apply for GST Registration as soon as they start operations, or soon after you register your business. If you sell on any marketplaces like Amazon, eBay, Flipkart you must possess a GST registration else you may not be eligible to sell on these platforms. Therefore, GST Registration is additionally one of all the mandatory requirements for online sellers.

• Trademark Registration
  The online business seller has to make sure that they aren’t violating anyone else’s material possession while protecting their own. Therefore, they ought to make sure that the name that the business owner chooses to control or to sell under isn’t too kind of like anyone else’s name. After successfully decoding the business name, it’s recommended that the owner gets a Trademark Registration for the identical. Hence, they’d also make sure the authenticity of the brands being sold on the web portal. The sale of faux items would always cause legal notices for owners of the opposite brand.

Other licenses and permits for online business: –

• Resale certificate
• Business license
• Business name registration
• Certificate of occupancy

Website Creation: Virtual auditor to your help in legal and website app development

Designing a site is no easy task, a professional has to be on board to design a website. A large number of people do not have the knowledge and skills to design a website. So, professional guidance is important for coding web portals.

• Payment Gateway for web portals: –
  It is the most important step of company registration for online sellers. A payment gateway company means there is a platform that provides the service of accepting payments by the buyers through debit/credit cards, wallets, and UPI, etc. Documents required for getting payment gateway are
  • AOA
  • MOA
  • CIN
  • Website terms of use
  • Website Privacy policy
  • Refund Policy
  • Pan card of business
  • Bank Account in name of company

Some of the popular payment gateways are Instamojo, Razorpay, PayU.

Conclusion

Online Selling or E-commerce platforms have a great future ahead. Young Entrepreneurs are mostly focusing on online selling. The government of India is also promoting it in its digital India Campaign. The use of the internet is also increasing in the country due to cheap data which is also boosting the E-commerce industry much faster. It is a million-dollar worth opportunity that will also help to make the country a digital economy.