Startup India Registration

Know the Legalities to Start an Online Business in India

calendar29 Sep, 2021
timeReading Time: 4 Minutes
Start an online business

Online business is booming at present & it is changing the landscape of traditional businesses across the world. The ever-increasing dominance of the web-based business model has compelled the government to impose some legal implications on the same. In the write-up, you will come across the different legal aspects which are mandatory to start an online business in India.

Legalities to Be Followed To Start an Online Business in India

Here is the definitive roadmap for establishing a legally viable online business in India:

OPC for an apt business structure

The most common structures available to startups are partnership firms, sole proprietorship, LLP, Private limited company, OPC, etc. Each of these business structures has its pros and cons; hence, select them accordingly by taking the following parameters into account:

  • Tax liabilities you want to address
  • Scope of your operation
  • Management structure
  • Degree of Compliances

Also, the choice you make related to what type of business form is suitable for your startup will affect how much you pay in taxes, the degree of risk to your personal assets (your home, your personal saving) & even your ability to procure funds from venture capitalists[1] or angel investors. So the business structure you select is a very critical decision that must be taken under the supervision of the field experts.

To commence a company, there are various things you must address. The company should have a legally viable name, registered office address, relevant officials in every department, a minimum number of capitals, etc.

When all such requisites are fulfilled, the company can operate as a legalized entity. The clients usually prefer dealing with businesses having a valid business structure. Therefore, it is the most valued legal requisite to start a company that proposed to have an online footprint.

Register under GST and open the current account

GST registration is another vital factor to start an online business. In the case of goods selling, you have to maintain the norms of the GST taxation regime. Another indispensable legal requirement is the opening of a bank account. When an LLP or private company is established, it is less tedious to open a bank account in the name of the registered firm. A bank account is required in the web-based marketplace for payment gateway & other relevant undertakings.

Avail suitable Business insurance

You will also need to avail comprehensive insurance policy to safeguard your business against unexpected events. Several options are professional liability, general liability, commercial liability, product liability, & home-based insurance. Examine those & identity the one that offers the best fit for your business.

Integrate Payment gateway on your portal

Payment gateway is a digital doorway for conducting secure payment transactions with the customers against the services or products offered to them. The payment gateway acts as a secure payment framework that allows end-users to pay through several different modes such as net banking, debit cards, credit cards etc. Payment gateway is essential for conducting online business regardless of the marketplace you wish to target.

Secure your IPR Assets

It is pivotal to secure your IPR assets (such as business name, logo, design, taglines, etc.) if you have an intention to run an online business in longer run. The IPR assets also play a vital role in solidifying your market presence overtimes. Once compromised, there is no way you can revive them if they lack suitable protection.  Therefore, register your assets under relevant IPR laws as soon as you step into a business domain. Connect with CorpBiz for more professional advice.

Incorporate Age Restriction Norm to Relevant Products Category

It requires you to adhere to the Children’s Online Privacy Protection Act (COPPA) on your online storefront. The COPPA has underpinned a long list of norms, among them; the most vital is not to accumulate information from an individual aged under 13. Also, incorporate age restriction norm to some restricted items.

Jot Down the List of Prohibitive items as per FTP

All shipping businesses abide by some shipping restrictions. Generally, restricted items have a wider market reach. Just have a glance over the Foreign Trade Policy (FTP) before shipping commodities abroad.  Some of the common products are prohibited under FTP includes:

List of Prohibitive items

Significance of Proper Documentation for online businesses in India

Another vital legal requirement is the legal contracts & documentation of your business. It will enable you to safeguard the business and let you undertake activities without legal hassles. The document part may entail several provisions and privacy policy etc. It will also let your business effectively retaliate the third-party disputes that are baseless. Any dealing in the business landscape is baseless without proper documentation, whether it is a matter of selling out a company or acquiring a new one. 

Conclusion

Almost all type of business in India has to comply with certain legal implications, and web-based businesses are no different here. If you wish to start an online business in a hassle-free manner, follow the aforementioned blueprint without skipping any of the steps.

Read our article:Startup India Seed Fund Scheme: Objectives, Guidelines, and Eligibility Criteria

Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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