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All You Need To Know About Registering An Online Business In India

Puneet Bhalla

Associate Director - Marketing @ Shiprocket

April 22, 2015

6 min read

Establishing a new business in India is an arduous and time-consuming process, but if you learn from your mistakes, enjoy your laurels, and stay patient, the fruits of your labor will start to pour in in no time.

It would be best to have a business plan to outline your business objectives, funding, and setup. Once you know in which direction you are headed, it becomes simpler to start. Entrepreneurs seeking to launch their company must first receive a permit to operate it. This article shares information on the procedure of registering online businesses in India.

Company registration for online businesses in India can be done in two ways, either as a private company or as a public company. To register your online business in India, you need to have a good knowledge of the Companies Act, 1956. Every business that wants to register as a company must apply under this Act.

Registering An eCommerce Business In India: Sole Proprietorship

For starters, a sole proprietorship is the easiest way to start a company because it demands lesser legal compliance and is easier to handle. You, as a proprietor, are a single entity in all legal matters. Thus, your brand/company and you exist as one soul, with no bias whatsoever. You can run a proprietary business out of your home, for which no special registration is required. However, when your business turns profitable and seeks expansion, it is wise to set up a physical office/commercial store. And for that, you need to complete paperwork as per the Shops and Establishment Act of 1965 and register the documents with your local municipal corporation for further processing.

An eCommerce business that intends to accept online payments must be a registered company. Only registered companies can integrate an authorized payment gateway into their website.

Registration Of Sole Proprietorship For eCommerce Business

You can register your eCommerce business under sole proprietorship at your nearest local municipal corporation office. To complete the registration process with the authorities, you need to submit the duly filled Shops and Establishment Form.

Essential documents for submission to the municipal corporation include:

• Registration Form
• Undertaking
• Fee Schedule

Cost to Establish a Sole Proprietorship Business

There is absolutely NO additional cost required. All you really need is a current account in the name of your business at a bank of your choice. However, for opening an account, you would need to submit an address proof of the establishment like electricity or telephone bill or a rental agreement to rent the commercial space.

Apply For Company’s Registration

This is the final step in establishing a sole proprietorship business. This includes incorporating the company name, registering the office address, notice for appointment of company directors, managers, and secretary, and declaring the employees’ salary structure. The following forms are needed to proceed with the process.

Form 1: The application form for availability or change a company name is declared in Form 1. Once you apply for a new company name, the MCA (municipal authority) will suggest four different forms, and you have to choose the most suitable one from the options. Proprietors can download this form from the website www.mca.com.

Form 18: You must declare authentic office address for your new E-Commerce establishment in Form 18, which you can collect from your local municipality office or download from the website www.mca.com

Form 32: For a new E-Commerce company, Form 32 declares the appointments of new Directors, Managers, and secretaries. For convenience, download the form from www.mca.com or walk into your local municipal office.
After submitting these forms, once the municipal authority has approved the application, you will receive a confirmation email on your store being successfully incorporated, and the status of the form will change to “Approved.”

Essential Documentation for Registration Process

Promoters who intend to be the Directors in a company must apply for Director’s Identification Number (DIN). Thus they must have a Permanent Account Number (PAN) and Digital Signature Certificate. The DIN application (DIN 1 form) is available on the website – www.mca.gov.in. Shareholders can apply for DIN online as it is a convenient way to upload and attach essential documents.

Upon obtaining the DIN, Directors must apply for the availability of the company’s proposed name to the ROC. Shareholders must fill the MCA-21 form (available on the www.mca.gov.in portal) for the same. Upon receiving confirmation on the name, the proposed company must be incorporated within 6 months; the name must be renewed by paying a fee.

Here is the procedure for ease of understanding.

Step 1: Fill An Application To Obtain Directors Identification Number (DIN); It Hardly Takes One Day To Receive It From The Government Authority.

Step 2: Apply For The Digital Signature Of Directors Of The Proposed Private Limited Company (Pvt. Ltd.) In India.

Step 3: File An Application To The Respective Registrar Of Company (ROC) To Obtain Approval On Company’s Name.

Step 4: Once the confirmation on the name is obtained, fill an application for the company’s registration to the same ROC of the state where the company has its headquarters. Simultaneously, the company’s members must be ready with legal documents like Memorandum of Association and Article of Association, identity proof, and residential proof of the Stakeholders.

Step 5: Apply For VAT At The Commercial Tax Office, Followed By Professional Tax At The Profession Tax Office, Both These Identification Codes You Shall Receive Within A Few Days.

Step 6: Apply for Provident Fund (PF) with the respective Provident Fund Organization. You need to submit the essential documents of the employees in the process.

Step 7: Register with the Employees’ State Insurance Corporation for medical insurance of the employees. If your employees meet with an accident on the job, this plan will take care of the medical expenses on behalf of the company. Submit the essential documents of the employees to the regional office.

Step 8: Once All Approvals Are Through, Apply For The Certification Of Company’s Incorporation.
If you find the process complicated and cumbersome, you can hire the services of a reputed law firm that exclusively deals with the Company Registration process. These top service providers are based in Chennai, Bangalore, Mumbai, Hyderabad, NOIDA, Gurgaon, Pune, and Delhi.

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