Company Registration for online business in India is governed by Companies Act, 2013. In a recent survey in June, India is the 2nd highest internet user in the world.[1] As number of internet user are increasing day by day, future of e-commerce business in India appears to be very bright. The growth of any business is being driven by greater customer choice and improved convenience which E-commerce is providing to all its customers.
Like any other company, registration is essential for the establishment of any online business. So, let’s see how to register an online (E-commerce) business in India.
Before going for registration of any online business, first you have to choose a business model as later part of registration depends upon this. So, there are two types of business models:
- Sell your own products on Own Portal: – In this model, entrepreneurs sell their own products through their website or online portal. They work as manufacture or trading unit. For this, first of all, you need is VAT Registration which is an indirect tax and varies with each state.
- Selling as Marketplace Model: – In this model, entrepreneurs work as a marketplace model. They register sellers on their own portal and provide payment gateways and logistics services to sellers. Examples are Amazon, Flipkart etc. For this, first of all, you need is Service Tax Registration. This type of tax registration is usually for the startups.
Business registration is important for an online venture for getting a payment gateway and for invoicing. Registering an e-commerce company is not very different from regular companies. It does not require any unique license or registration. It is just like any other trading or retailing firm, you just have to get your firm registered, this may be as an individual proprietorship or partnership or a Pvt. Ltd company.
There are various options available for Online E-commerce Business Registration:-
- Proprietorship Registration: – It is a single person business registration. It is a very simple way to register the business. Proprietorship Registration has to take following steps:-
- Take Service Tax or VAT (Depends on the business model you choose).
- Take Chartered Accountant Authorization Certificate regarding nature of the business.
- Documents Required for the Proprietorship Registration:-
- PAN Card and Aadhaar Card of the Partners
- Voter ID Card & Driving License
- Passport Size Photographs
- Rent Agreement or Electricity Bills
- Security Amount or Guarantor ( In the Case of VAT Registration)
Procedure for registration of an E-commerce business
Step 1: You have to obtain theDirectors Identification Number (DIN);
Step 2: After that, you have to apply for the Digital Signature of Directors of the proposed Private Limited Company (Pvt. Ltd.)
Step 3: Then you have to apply for unique company’s name to the respective Registrar of Company (ROC).
Step 4: Once you get the confirmation of the name, you have to fill up an application for company’s registration to same ROC of the state, where the company’s headquarter is situated. Simultaneously, also get ready with all legal documents like Memorandum of Association and Article of Association, identity proof and residential proof of the Stakeholders.
Step 5: Now you have to apply for VAT at the Commercial Tax Office, which is followed by professional tax at the profession tax office
Step 6: You also need to apply for Provident Fund (PF) with the respective Provident Fund Organization. You also need to submit the essential documents of the employees in this process.
Step 7: Now get register with the employees’ state insurance corporation for medical insurance of the employees.
Step 8: Once these are approved, you can then apply for company incorporation.
Apart from the proprietorship registration, other popular registration options are also available.
Other Registration options
- Partnership Registration: – Partnership Firm is ideal for those startups where the partners are also doing the part time jobs. For this type of registration, partners need Partnership Deed and Basic Documents like PAN/Aadhaar card/Driving License and Rent Agreement or NOC etc.
- Private Limited Company: – Private Limited Company is most popular business formation for startups in India because private limited companies do not need minimum capital requirements i.e. 1 lakh Rupees. Private Limited Company is ideal for the business which wants to raise the funds from the investor. In the Private Limited Company an entrepreneur also enjoy the features of limited liability firm which is not possible in the case of Proprietorship Firm or Partnership Firm.
- Limited Liability Partnership: – LLP is mixture concept of Partnership Firm and Private Limited Company and the owner can enjoy features of both. Hence it is the best option for any startups in India. But LLP owners cannot raise funds easily from the angel investors or VC Firms.
- One Person Company: – One Person Company is ideal for the startups as it has only one founder or owner. It is same as a private limited company and liability are also limited and you can enjoy all the features of a company.
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