Startup Stories|Society with World

What are the Legal Requirements of E-Commerce Business?

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Today, everyone enjoys shopping online through various applications on their cell phones. Online selling is comfortable and suitable not just for customers, but for sellers, too! In online selling, overhead expenses are lower, and also an individual can have access all over India. But the law sees you and your offline business presence as the same. The same rules, taxes, and compliance’s are applicable to apply. In fact, they apply sooner. While Central Sales Tax, which is relevant to inter-state trade, is not likely to apply to offline businesses until they’re effective,however it will apply to online sellers immediately. Many e-commerce businesses fail to appreciate the importance of these legal matters fully. Here are few points which will explain the legal requirements of online business.

Business Registration

Without registration of your business as a private limited company, one-person company (OPC) or limited liability partnership (LLP), you’re exposing yourself to plenty of risks. You are personally accountable for all the debts of the company; in other words, a borrower can get you for all you’re worth. Pvt ltd company registration in India helps your business to gain a separate entity. If you are looking to raise funds from investors, the private limited structure is your only choice, though the LLP can be extra tax-efficient; the OPC is for individual entrepreneurs.

VAT/Sales Tax Registration

These taxes apply to all markets in any niche selling tangible goods. The distinction between a Value-Added Tax (VAT) and Central Sales Tax (CST), however, is that the former applies to products sold in a single state while the latter refers to inter-state trade. Businesses need to gather VAT based on turnover, which differs from state to state, while CST is applicable regardless of turnover. Being an E-commerce company, you would need to register for both as quickly as you start operations, or shortly after you register your company.

Vendor Agreement

All E-commerce companies must have in place an agreement with vendors listed on their portal. If you’re not operating a marketplace and are only marketing your goods, then an agreement with your suppliers. This contract should define the expectations of both parties, including the roles and duties of the parties, how the default will be dealt with, fee, if any, etc.

Terms of Service & Privacy Policy

You may have seen these on all other websites, and now yours requires one, too. The terms of service will notify your users of their rights and duties on your website and restrict your company’s liability as far as possible. The privacy policy will state whatever will be done with the data the user submits on the website. These two documents are necessary on all E-Commerce websites. You may also need to spend on data security as the maximum fine for failing to protect customers’ data is Rs. 5 crores.

Intellectual Property Protection

As an E-Commerce company, you need to ensure that you are not violating anyone else’s intellectual assets, while also defending your own. Therefore, ensure that the name you decide to operate or trade under is not too familiar to anyone else’s name. If you are assured of the name, it would also make sense to register it with the Trademarks Registry. You would further want to confirm the authenticity of the brands being sold on your portal. The selling of fake goods or items will lead to legal notices for owners of the brand.

Conclusion:

Irrespective of business operations being offline or online, setting up a business is a difficult task. There are a lot of things that has to be taken into considerations. Afleo.com based in Mumbai, which aims to help startups and small business with its expertise in GST Registrations, Intellectual Property Rights Registration, IEC Code registration, IEC modification and e-learning translation.

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