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How to Start E commerce Business

A new way to do business is e-business, e-business is nothing but conduct of industrial, commercial and trade activity using computer network. E-business is quite a broad concept which includes all the activities of production, product development, finance, human resource management and buying & selling of Products

But e-commerce restricts to buying and selling, meaning thereby it is just a simple trading or exchange of goods and services in massively crowded online market.

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There are several sector who are dealing their customers through e-commerce, the following sectors are:

Sr. NO.Travel and Booking SectorTaxi Booking SectorOther SectorProduct E-commerce
Online MarketplacesFurnitureFashion and ApparelKids CategoryGlasses and Spectacles
1Make my trip.comOLA 
3Yatra.comTaxi for       


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Now a day, websites, Product Pages and Search Pages has been taken the place of SHOWROOM.

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E-Commerce Business Processes

  1. Sourcing of Goods/Product inventory
  2. Cataloging of products
  3. Upload Photos and Product online in websites (Listing)
  4. Order comes through Marketing
  5. Packaging
  6. Shipping


SCOPE of E-Business

  1. Business to Business Commerce – (B 2 B) transactions
  2. Business to Customer Commerce – (B 2 C) transactions
  3. Customer to Customer Commerce – (C-C) transactions
  4. Intra Business Commerce
  5. Business to Employees Commerce


Importance of E-Commerce

  1. Convenient
  2. Branding
  3. Cost saving
  4. Time saving


5 Basics To Start An E-Commerce Business In India

  1. Build Your Online Store
  2. Get A Secured Payment Gateway
  3. Clearly Specify The Terms & Conditions
  4. Market Your Online Store
  5. Keep A Feedback Channel Handy


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How a startup can start e-commerce business in India


Minimum legal formalities to operate

  1. Company registration (May include application of Pan card)
  2. A working bank account with your company name
  3. Import / Export license (if you are importing / exporting products from / to outside country)
  4. Application to Payment Gateway (depending upon your target audience

Other optional things you may do to look professional:

  1. A toll free phone number (Optional)
  2. A professionally registered domain name with your company name, not your personal name. (Optional)
  3. Email servers setup with your professional domain (Optional) So that you don’t sound like

Ecommerce Startups are trend in India. so mostly E Commerce Startups want to do these 3 things –

  1. a) Building a Marketplace :- Tie up with the Sellers and provide them platform for selling their products as  marketplace , earn the commission and closing fee.
  2. b) Our Products, Our Portal :- Inventory based model and sell products through their portal and most popular other marketplace like flipkart or snapdeal.
  3. c) Sell on Marketplace :- want to sell on Popular other ecommerce marketplace like Flipkart or Snapdeal.

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So Let’s understand about the type of Business Registration :-

a) Proprietorship Firm – In Simple words proprietorship is single man firm. its not a company so your liability is the unlimited in any case. so its a best way to start the business or you can say simplest way. In the case of proprietorship you need service tax registration certificate or VAT Registration certificate and open current bank accounts. Hence its recommend to startups when they are just testing their ideas. 

  1. b) Partnership Firm – In Simple words partnership firm is same as proprietorship firm as a feature but its need 2 person. so in the partnership firm same as liability is the unlimited. its need a registered partnership deed with current bank account again VAT or Service Tax Registration depend on the nature of the business.


  1. c) Private Limited Company – In Simple words private limited company is the major business formation for the startups and its very simple to register private limited company through filing Form INC 32, INC 33 and INC 34 and no requirements of minimum capital i.e. 1 lakh rupees. its need minimum 2 Director and best for the growing startups and want to funding from angel investor or VC Firms.


  1. d) Limited Liability Partnership – In Simple Words its a mixture of Private Limited Company and Partnership firm so feature also as same. its need minimum 2 partners. before 2015 Startup choose this business formation more because in the private limited company cost of formation is more as compare to LLP and second thing i.e. is minimum requirements of 1 lakh Rupees Capital.


  1. e) One Person Company – In Simple Words OPC is same like as Private Limited Company. but its need just one person. so feature are also same as Private Limited Company.

(Disclaimer – Below tips are not a legal advice because every type of business formation from firm to company have own features and importance.) 

  1. Choose Proprietorship Firm as a Service Provider Internet Startup when you are just testing your ideas and have budget less than 5000 Rupees on cost of registration as legally and need payment gateways and a bank account.


  1. Choose Partnership Firm when you have partners and all want to continue their jobs in other companies and want to just testing their ideas because in the case of partnership firm its a simple business formation and data of the firms not available easily online as compare to in the case of companies. so if we talk about the costing from experts then its nearby 4000/- to 7000/- Rupees.


  1. Choose Private Limited Company when you are dam sure that now just want to start for the long term and your idea is already tested as trial and looking for the funding from Angel Investor or want to approach to them. because VC Firms and Angel always prefer private limited companies. Reason is in simple words in private limited company Director can sell their shares to Investor easily. if we talk about the costing then its cost nearby 13000/- to 15000/-


  1. Choose LLP when your budget is less than 10000 but want to enjoy all the company features then LLP is the best for the start.


  1. Choose OPC when you are single person to start and you don’t want to include anyone as partner in your company but want to enjoy company features then OPC is the best.


Ecommerce business solutions startupscratch
Ecommerce business solutions startupscratch

Now I talk about some other thing that is also very important.

  • Take the Trademark Registration also because for a Internet or web based business Brand is more important so you can register your Logo or Brand with the Trademark. Even Trademark is also helpful as a domain name because as per .IN Registry of India if you have .in domain and another person have trademark on that domain then they can claim in domain easily.
  • Drafting the Website terms and conditions – For any web based Business website or app is important part but entrepreneurs have to must care about the website legal terms and conditions as privacy policy, disclaimer, third party data use, refund policy, affiliate terms & lot of things. even from the Blogger to e-Commerce website or Apps should have to maintain these things.
  • Vendor Agreements – Vendor Agreements used by the ecommerce marketplace to tie up with the vendor. so its also important part as payout policy, refund policy and other tax implications of the vendor.

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What kind of licenses are required to run e-commerce sites


There are no special licenses required to run an online business. They follow the usual business rules and taxation law, similar to an offline business selling products India wide.

There are no special license required but I shall explain the licences. First you need a trade license. This is a basic license that you need to do any business (Online/offline). After doing that you need to open a current account in a bank.

Now you need to understand a simple tax thing. VAT (value added tax is applicable when you are selling something within a state and it is charged by the state government) while CST (This is a tax which is charged when you are selling things to people in other states). 

Now when you are going to apply for payment gateway, the PG provider shall ask you for VAT and CST registration. In online business it is mostly inter-state trading and hence it is essential to have CST.  Actually every state has a VAT exemption limit (An amount of sales below which you need not register for VAT but PG (payment gateway) providers will be very reluctant to provide you the service without VAT/CST reg. 

Licences to run any eCommerce site will be same as that applicable to an offline business. This depends on category (e.g. selling alcohol online), geography (e.g. selling to a customer in Uttarakhand), sourcing (e.g. seller in Maharashtra, for marketplace), transport (e.g. dispatch via air).


Ecommerce business solutions startupscratch
Ecommerce business solutions startupscratch

E-Commerce: Internet Licenses and Permits


Having an Internet business can be a lucrative way to get customers, expand your market and increase sales. Typically, the licenses and permits that are required to start a business are the same as those required to start an Internet or E-Commerce business.

You will need a business license if you are starting or buying an E-commerce or Internet business just as you do with any other business. All businesses are required to obtain a business license. Even if you are operating your business out of your home, you will still need a business license.

Depending on your location, you may also need a city and county license. Such licenses are relatively easy to obtain and are not expensive. For local licensing requirements, contact your city or county government offices.

Requirements Vary by Type of Business and State

Not all businesses require the same licenses and requirements vary by state. The best thing to do is to check with your secretary of state. Different states may or may not require a license for a particular type of business.

While business licensing requirements vary from state to state, some of the more common types are:

  • Business licenses—A state business license is the main document required for tax purposes and conducting other basic business functions
  • Occupational and professional licenses—State licenses are frequently required for occupations as varied as building contractors, physicians, appraisers, accountants, barbers, real estate agents, auctioneers, private investigators, private security guards, funeral directors, bill collectors and cosmetologists
  • Licenses based on products sold—Some state licensing requirements are based on the product sold such as liquor, lottery tickets, gasoline or firearms.

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Operating without a License

If you operate without the required license, you run the risk of discovery. Authorities may discover such unlicensed businesses by checking state tax law returns and resale licenses. If caught operating your business without the required permits and licenses, you run the risk of being fined or you may be ordered to cease the business.

Collecting Sales Tax over the Internet

Whether or not you will be required to collect sales taxes over the Internet may depend upon whether or not your business has a physical presence in a state, such as a store, office or warehouse. If you do not have a presence in a particular state, you are not required to collect sales taxes from customers in that state.

Not every state and locality has a sales tax. Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon do not have a sales tax. In addition, most states have tax exemptions on certain items, such as food or clothing.

If you need to charge sales tax then you must be familiar with the applicable rates. Many online retailers use online shopping cart services that are programmed to calculate sales tax rates for their sales transactions.


Ecommerce business solutions startupscratch

How to start an ecommerce business in india

The e-commerce industry is witnessing a tremendous growth in India backed by increasing smartphone and internet penetration. With further increase in internet service providers and the launch of 3G and 4G Services, at affordable prices – the e-commerce and m-commerce industries are set to record even higher growth.

In this article we look at the procedure for starting a successful ecommerce business in India.


Setting up an ecommerce business

Business conducted over the internet is called ecommerce. In recent years, m-commerce or Mobile commerce – business conducted through smart phones has become very popular.

Currently there two main modes to starting an ecommerce business, a proprietary ecommerce website or joining an established marketplace.


Creating a proprietary (own) ecommerce website

Creating a proprietary ecommerce website is one of the hardest method of starting an ecommerce business. Starting a proprietary ecommerce business requires a web development team, online marketing team and a payment gateway for receiving payments. Starting a proprietary ecommerce website is a long-term initiative and requires a good amount of investment in terms of money and effort to build up a successful business.


Joining an established marketplace

Joining an established marketplace is an easy way to start an ecommerce business or sell products/services online. Joining an ecommerce marketplace as a seller often requires only a bank account and VAT registration, making the process easy and simple. Further, on an ecommerce or m-commerce platform aspects such as technology development, marketing, payment gateway, logistics, etc. are taken care of by the marketplace platform, reducing the workload on the seller. In addition, sellers can often join multiple marketplaces and sell their products, making it the easiest way to start an online or ecommerce business.


Some of the popular ecommerce or mcommerce marketplace are:

  • Flipkart
  • Amazon
  • Snapdeal
  • Shopclues
  • payTM


Legal Formalities for starting an Ecommerce Business

To start an ecommerce business, proprietary ecommerce website or become a seller on a marketplace, the following registration are required:

  1. Company or LLP Registration
  2. VAT Registration/Service Tax Registration
  3. Bank Account
  4. Payment Gateway
  5. Legal Documents


Contact us for any Assistance to setup your Ecommerce Business +919990694230


Startup Scratch team

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