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The Indian digital commerce industry is anticipated to grow at a CAGR of 20.22%, reaching a value of INR 4,289.64 billion. The abundance of easy-to-use website builders and the expanding digital culture have made the eCommerce universe accessible to everyone, from neighborhood shops to home-based artists.

This blog gives readers a clear picture of the company formation in India for an eCommerce store, including how to set up their online store, how to comprehend the online store’s business strategy, tax registration, and other guidelines. 

What Is An eCommerce Business And How Are They Different From Physical Stores?

E-commerce is a business model to sell and buy goods and services over the internet. Setting up an eCommerce company in India only requires a fraction of the resources required to set up a physical business. 

There are a few legal requirements for starting an e-commerce company, such as GST registration and online business registration. But we will get to that later. First, you need to perceive the eCommerce business model. 

The most significant difference between starting an eCommerce business and a physical business is that you can create a storefront even without company registration. Today, building a website has become much easier, and you can start prototyping your business model by selling across social media like Facebook and Instagram and creating a website. Once you grasp the process, you can get to the next step of incorporating your business. 

Understanding A Business Model And How To Proceed With Your Plan 

There are fundamentally two categories of e-commerce businesses: becoming a seller on marketplaces like Amazon or Flipkart or creating your own site. 

If you are looking to become an Amazon or Flipkart seller, then you will get a specific set of guidelines for business registration from each site. Basically, you will need a GST number, a PAN number, and a business bank account. This is a great start for small-to-medium retailers because it takes much less effort and the process is transparent and safe. 

Starting your own e-commerce website comes with freedom as well as certain challenges. While you can feature your brand more independently, marketing and brand awareness are frequently a mountainous effort. Comparatively, it is easier to get higher conversions through Amazon listings. 

And the best part is that you can do both. As a reputed CA firm in Kolkata, we recommended young eCommerce startup owners to start with Fulfillment by Amazon (FBA) and other similar programs. because there are plenty of resources like logistics, product delivery, and inventory management that can be made much simpler and more cost-effective. You can build your own site and social media pages at your own pace.

eCommerce Company Formation in India: A Step by Step Guide 

The next step, after establishing a business model, is to carry on with your eCommerce company formation in India. Here is a fact check: regardless of whether you operate an online store or a physical location, all businesses need a business license. You must apply to get a business license and comply with the company audit, keeping your track record clear of tax liabilities. 

Step 1: Business Registration

There are several options for company registrations that include one-person company, sole proprietorship, limited liability company, private limited, and limited liability partnership.

As a highly regarded accounting & taxation service provider in Kolkata, we advise eCommerce businesses to choose a private limited company over an LLP or a one-person business for the reasons listed below:

  • limited protection against liability.
  • Having a transferable company means that your company’s assets are valued separately.
  • You could have private equity investors or equity partners.

By 2022, a private limited company can be created with an authorized capital of Rs. 1 lakh, regardless of the capital input, and then have that capital enhanced as more money is deposited in the form of bank loans or private equity.

Step 2: Configure the Payment Gateway

You need to set up a payment gateway for your customers to be able to pay you online using credit cards, debit cards, eWallets, net banking, and also cash on delivery. The more options you have, the better. The payment gateway setup determines a few tax registration liabilities. 

Step 3: Get a Business License

A license under the Shops and Establishment Act and the Goods and Service Tax (GST) is initially required for eCommerce businesses. Even though, as of 2022, you won’t need to pay GST till the revenue exceeds Rs. 20 Lac,

Step 4: Establish a Business Bank Account

Every company formation in India requires opening a bank account to receive the proceeds of sales. The process is much easier for private limited companies. All they need to do is walk into a preferred bank, submit the certificate of incorporation, PAN card, and memorandum articles, and it is done. For other types of entities, there are slight changes in the process. 

How Can MPVD CA Firm in Kolkata Assist You With the Formation of Your eCommerce Company in India?

We can help you from end to end to incorporate your e-commerce startup in India. Whether you are looking to establish a business model or need guidance as to what kind of company registration you should choose, From tax advisory to assistance with company audit prerequisites, All the nuances of company formation we can handle with a smile! Get in touch with our experts to find out more.

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