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How to start an e-commerce business?

In past 10 years, there has been a huge boom of e-commerce companies in India, spearheaded by the likes of Flipkart. Legal compliances, lega structuring, documentation & due diligence are essential!
Written by:
Shivi Gupta
Published on
24-Jul-18

In past 10 years, there has been a huge boom of e-commerce companies in India. Spearheaded by the likes of Flipkart, the e-commerce in India has grown at a very high rate and is presently one of the biggest contributors to the economy. Each day we come across entrepreneurs who want to start an ecommerce business. If you’re one of these entrepreneurs, this guide is your holy book! 

There are two ways in which you can start an ecommerce business in India: 

  • Create your own ecommerce website.

  • Join an already existing ecommerce business.

If you do not want to start an ecommerce business like Flipkart, Amazon, Snapdeal, etc., but want to register as a seller on ecommerce websites, you must take the following legal actions: 

  • Choose a Legal Structure- Sole proprietorship, Company, Partnership, etc. 

  • Register under the Tax compliance.
  • Acquire a PAN card. In case of sole proprietorship, the PAN card of the owner is used.
  • Open a current account in a bank.
  • Register on the e-commerce website as a seller by uploading the relevant certificates and documents.

 

If the business creates its own e-commerce website to sell its products and services, then the following steps are involved in setting up an e-commerce business:

Choose the Legal Structure: To start an ecommerce business in India, the first step is to choose the right legal structure for the business. The legal structure depends upon different factors like persons involved, capital, and risk involved. There are 5 legal structures suitable to start an ecommerce business in India: 

  • Sole Proprietorship 
  • Private Limited Company
  • Partnership
  • Limited Liability Company or Partnership (LLC or LLP)
  • One Person Company 

Register the Business: The next step to start an ecommerce business is to register the finalised legal structure for the business. An entity can register its legal structure through the Ministry of Corporate Affairs or Registrar of Firms using the existing processes. Subsequently, it can also register on the Start-up India portal and mobile app as a “Start-up” to avail the benefits.

Get the Domain Name registered: The Domain name is the basic identification/name of the website which the user uses to access it. To start an ecommerce business, a unique domain name needs to be chosen for the business website which does not already exists. The domain name is registered as a trademark to protect it under the Intellectual Property Laws

Get a Privacy Policy for your ecommerce website: A privacy policy is a statement or a legal document that discloses the ways a person gathers, uses, discloses, and manages a customer or client's data. It is an important requirement to start an ecommerce business as it protects a client's private information. 

Get the Terms and Conditions Policy of Website: The Terms and Conditions Policy is an important legal document to start an ecommerce business in. It covers all the user and company covenants in order to restrict the liability of e-commerce website. These conditions are drafted to restrict the liability of the business and need to be personalised according to the type of activities the business is involved in.

Get the Vendor’s Agreement made: The e-commerce business also needs to prepare a vendor’s agreement. This agreement defines the relationship between the vendors their rights and duties and company’s right to act against the vendors in case of default. 

Choose a Payment Gateway: Since e-commerce websites accept money online, the business needs to get a secure payment gateway. Some Gateways like Paypal or Payumoney require no setup fee whereas some like Payu or Ccavenue require the setup fee. It is important to have a payment gateway in place before you start an ecommerce business.

Secure the website’s data: You have to ensure that the ecommerce website’s data, as well as the client’s personal information, is secure. For this purpose, data security agencies can be hired to protect the data and transactions that take place online. Before you start an ecommerce business, it is imperative to have 

It is imperative to consult a startup lawyer if you wish to start an ecommerce business in India. If you want to start an ecommerce business in India, you can hire the best startup lawyers from MyAdvo! Email us at info@myadvo.in or call now at 9811782573.