Introduction

Online business is a business or commercial transaction that includes sharing information across the internet. With the growing use of internet and online marketing, businessmen find it convenient to grow their business over internet and attract a large number of consumers. A successful online business requires correct blend of true marketing facts, creative and achievable ideas along with strong vigor and some legal requirements.

Basic requirements to start online business in India:

  • Identify the need of the customer.
  • Reviewing your product.
  • Effective planning is important. Engineer the product in such a way that it is easy to use it.
  • A proper funding is a major step in online business.
  • Select the type of business i.e. Partnership, Private Limited Company or Proprietorship.
  • Register the name of your e-commerce website.
  • Create an online store and mobile app.
  • Use of affecting marketing tools.
  • Analysis of the planning.
  • Feedback from consumers.

Now let’s have a look at how to get started with selling on two of the most popular online selling portals in India

A. Starting an online business on Amazon

Amazon business provides a platform for businessman to register their business online. Amazon then provides warehouse for products, fulfill the orders and also provides customer services. It enables for a businessman to act as a big corporation without actually being one. It is a hassle-free working zone that helps your business to get a wider reach.

Reference link to FAQ’s of Amazon for sellers- https://services.amazon.in/services/sell-on-amazon/faq.html

Requirements

Starting an online business would involve complying to all the legal formalities provided for the respective business. Some of the legal requirements are listed below:

I. Business setup

i) Sell as an Individual

If a person has an objective of selling goods at an online marketplace or open a web store of his own, it is preferred to register as a proprietor. An individual would require a current account in the name of the business for conducting online transactions. Registering business will help to integrate the site through a recognized gateway.

Proprietorship provides dazzle free work and keeps the confusions clear with the laws and, registered business more trust from customers.

ii) Sell as a company, partnership or LLP

Starting an online enterprise as a private company or Limited Liability Partnership (LLP) is a better option as it has a limited liability protection. A company also allows for equity funding, which is an important criterion for a start-up venture.

To open a private limited company, one must approve its name, registered office, minimum 2 directors with Director Identification Number (DIN) and a minimum authorized capital of Rs. 1 lakh.

II. GST registration

A GST registration is mandatory if you are starting an online business.

III. Bank account

While starting an online business, it is mandatory to open a bank account in the name of the business which would be an essential payment gateway for the online business.

IV.Payment gateway

Payment gateway providers allow the website to accept credit card, debit card, net banking, internet banking payments from multiple banks. Therefore, one gateway is sufficient for multiple forms of online payments.     

V.Legal Requirements

For every businessman, to protect himself from any fraud it is necessary to create proper legal documentation like terms and conditions, legal document and private policy based on the nature of business.

If the business is setup on an online platform, the terms and legal document/ seller’s agreement is provided by the online marketplace. Before entering into any such agreement, the seller must read the terms and conditions of the agreement thoroughly so that he can abide by them.

1) List of acceptable Business licenses

Registering your business on Amazon would require a GSTIN Number and GST Registration certificate as an addition.

Identification Proof require different documents and certificates depending on the type of business entity you ought to have.

 For partnership firm, private company, public company, the following documents are accepted:

  • Cheque with printed business name or stamp if business entity on cheque.
  • A business card
  • ‘Proof of employment’ letter from company with company’s name and address mentioned on it.
  • Pay slip
  • GST certificate of business
  • Certificate of incorporation of business
  • PAN of business
  • Partnership deed
  • Any other document which has the business name mentioned on it.

For sole proprietorship- in addition to the above document PAN card, drivers license or passport of the businessman is accepted.

Reference link- https://www.amazon.in/gp/help/customer/display.html/ref=hp_left_v4_sib?ie=UTF8&nodeId=202117520

2) Taxes

Compliance of the tax liability is necessary for any type if business. Whether you prefer any gateway of payment like net banking or Cash on Delivery, adherence to the Tax Laws is essential. With the tax laws, compliance to the Goods and Services Tax is a must.

i) GST Compliance

E commerce has a major impact on GST. Government has provided special provisions to be followed by online service providers.

An online seller must file following GST returns as per the applicable timeline.

  • GSTR 3B Return– To be filed monthly by all sellers
  • GSTR 1 Return- To be filed monthly or quarterly, depending upon the turnover
  • GSTR 9 Return– To be filed annually

ii) Tax collected at source

Online supplier has to mandatorily deduct TCS @ 1% of the net value of goods supplied.

iii) Place of supply

GST of goods/services will be taxed at the place where the goods are delivered.

iv) Other legal compliances to be considered

  • If your business has used any special logo/ design or has a different way of producing goods or services, then it is necessary to get Intellectual Property Right Protection so that your logo or your technique cannot be copied by any other person.
  • Due diligence of cyber law must be followed by online startups. The cyber law in India has become stricter and privacy protection, data protection, data security, cyber-security, confidentiality maintenance has become a must to ensure.
  • The legal requirements relating to starting an online business also concern with fulfilling of certain other laws like The Contract Act, The Indian Penal Code, Labor Laws, and compliance if the banking and financial norms in India.

B. Starting an online business on Flipkart

Flipkart being the largest online marketplace in India, helps you to group your business and reach a greater audience. Flipkart lists the following reasons which provide good start to the businessmen-

  • Lowest cost of doing business
  • Ease of doing business
  • Highest growth rate
  • Most approachable online marketplace

Who can sell on Flipkart?

Anyone who sells new and genuine products can become a seller on Flipkart. Any person wanting to get registered must have the following documents-

  • GSTIN
  • PAN card (personal PAN for proprietorship and business PAN for company/ partnership)
  • GSTIN / TIN number
  • Bank account and KYC documents including address proof, cancelled cheque.
  • Minimum one unique product to sell.

How do you sell on Flipkart?

  • Register yourself as a seller on Flipkart.
  • List the products under specific product category.
  • Once you receive an order, pack the products and mark as ‘Ready to dispatch’. The Flipkart logistic partner will pick it up and deliver to the customer.
  • Once order is successfully dispatched, the payment will be settled in 7-15 business days.

Documents required to sell on Flipkart.

  • GSTIN
  • PAN Card (personal PAN for proprietorship and business PAN for company/ partnership)
  • GSTIN / TIN number
  • Back account and KYC Documents including address proof and cancelled cheque.

Reference link to FAQ’s of Flipkart for sellers- https://seller.flipkart.com/slp/faqs

(The author is a CA in practice at Delhi and can be contacted at: E-mail: abhinandansethia90@gmail.com, Mobile: +91-9811741451)

Author Bio

Qualification: CA in Practice
Company: Abhinandan Sethia & Associates
Location: west delhi, New Delhi, IN
Member Since: 26 May 2018 | Total Posts: 25
I am a Practicing Chartered Accountant with over 4 years of professional service experience. My professional services experience include specialization in #GST compliance, #Risk based Internal Audits, #Risk Management, #business process reviews, #Fraud Investigations etc. among other services across View Full Profile

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