How to Start e-Commerce Business in India

how to start e-commerce business

E-commerce has revolutionized the online marketing techniques, In this article, We shall discuss the license and registration requirement for starting up the e-commerce business and How to Start e-Commerce Business in India?

What is E-commerce business? is Starting an E-commerce business is a good idea in 2018?

With the success of e-commerce Business portals like Flipkart, Snapdeal, Amazon, etc. and e-payment sites like PayTm, Freecharge, etc., e-commerce has gained immense popularity among the burgeoning population of buyers and entrepreneurs in India.  The e-commerce industry[1] is forming the backbone of the Indian economic system, with a huge potential to grow in the coming years. The expanding reach of the Internet, the ready availability of the smartphones/ tablets, and the low maintenance cost of the various online sites, among other reasons, have created the ideal environment for the flourishing of online businesses. A recent survey shows that the e-commerce business in India is likely to grow at an astounding rate of 40 percent each year. These are encouraging signs for budding entrepreneurs who want to establish their businesses online. The convenience factor plays a crucial role in tilting the scales for e-commerce. People no longer want to wait in queues or face the inconveniences of traffic jams to shop.

E-commerce has revolutionized online marketing techniques. More and more companies are entering into the segment of e-commerce with the help of search engine optimization tools, search engine marketing, affiliate marketing, pay per click marketing and other such related online techniques. With more diversification of the payment methods, customers feel it extremely convenient to sit back at home, sip a cup of coffee and get their work done online!

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In this enabling and flourishing market, however, it is imperative to follow the approved procedures for registering a company to avoid/prevent legal hassles in the future. Any company that wants to accept online payments must set itself up as a registered entity so that a secured payment gateway can be established on the website. One must adhere to the provisions of the Shops and Establishment Act to have the payment gateway for an online store. The Act is also applicable for setting up a physical shop and for employing people.

There are different categories of registration, namely Sole Proprietorship, and Private Limited/Public Company/Limited Liability Partnership (LLP). The choice depends upon the scale of operations as well as the size of the business. Among the available options, Sole Proprietorship is the most convenient and hassle-free pick. It has numerous benefits such as relaxed legal compliance, lower documentation costs, a higher degree of freedom, low-set up cost and taxation at individual rates. An individual can use one’s personal PAN card for taxation purposes, and for filing income tax returns. A bank account in the name of the company is required.

A more complex but comprehensive way to register a company is under the Private Limited/Public Company/ LLP category. All transactions have to be through a current account in the name of the company for tracking all profits and losses. The amount of documentation for this category might seem overwhelming in the beginning, but they are necessary for scaling up the business and for managing larger turnovers. Although the number of procedures and formalities are quite high, these options are the preferred one for those who want to go out strong.

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The Indian States have different policies on taxes and registration. Again, each of these taxes depends upon the nature of services and the scale of annual turnover. GST Registration will require selling on the E.commerce marketplace or Selling on own website. Professional Tax Registration is required if an employer wishes to hire the services of one or more full-time professionals.

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