E-Commerce Services Company: Objectives, Tax Benefits, Legalities & Procedure

The e-commerce services the first thing that comes to one’s mind is how it has disrupted the retail business by providing services and products online.

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    Table of Contents

    e-commerce services company

    Overview: E-Commerce Services Company

    Whenever someone first thinks of the e-commerce services the first thing that comes to one’s mind is how it has disrupted the retail business by providing services and products online. This upheaval is occurring in every country. Even now in India, the development of e-commerce has changed customer inclinations toward online purchases. E-commerce activities are governed by many regulatory standards. As a result, using E-commerce operations is critical. E-commerce network operators will walk you through the legal requirements for your online store.

    What are E-Commerce Services?

    To create an e-commerce site, an entrepreneur or individual needs a well-structured business model. In addition to this business model, the person will want competent regulatory counsel on how to establish an e-commerce company. E-commerce operations advice would comprise the type of corporate framework that can be used to launch an e-commerce company. Besides this, e-commerce services encompass all aspects of establishing an e-commerce business.

    Types Of E-Commerce Businesses

    When talking about the types of e-commerce businesses, there are 4 main types:

    • B2C Model
    • B2B Model
    • C2B Model
    • C2C Model

    B2C Model

    It stands for Business to Consumers Model, and it is applicable when an e-commerce firm offers products to clients. A simple example of such a business model is Flipkart and Amazon services.

    B2B Model

    It stands for Business to Business Model, and it is applicable when an e-commerce firm sells its services and products to another firm. A simple example of this business model is a corporation that utilizes an e-commerce operation to distribute its goods to corporate clients.

    C2B Model

    It stands for Consumers to Business Model, and it is applicable when clients are permitted to trade goods with a firm. For instance, when a firm hires freelancers, they provide services to the firm based on a contract or ongoing basis.

    C2C Model

    It stands for the Consumers to Consumers Model, and it is applicable when clients sell their products on an online platform to other clients. An example of this business model is the Instagram or the Facebook market where clients sell their products to other clients by using an online platform.

    Objectives of E-Commerce Services

    1. E-commerce programs are accessible to assist individuals or businesses in setting up an online store.
    2. It is not easy to set up an e-commerce business. As a result, the services we give will offer you all the necessary experience to start a full-fledged e-commerce business.
    3. Your organization can maintain conformity by utilizing e-commerce solutions.
    4. Consumer tastes have shifted to buying things online as a result of e-commerce services disrupting the market.
    5. Customers have additional purchasing options based on their tastes.

    Requirements For Starting An E-Commerce Business

    Our experts at ODINT Consulting have prepared a list of all the special requirements before starting an e-commerce business, and here is the list:

    • Study of 3-commerce services & how do they work
    • Pick the products you wish to sell
    • Pick your brand and name
    • Start your company or its site
    • Create a payment method
    • Promote your firm

    How To File The Application?

    When you decide to apply for an e-commerce company, you will have to follow some steps to file your application successfully:

    • Register your firm as a Private Limited Company
    • Establish your business online
    • To register as a director in the company, apply for a DIN number

    Business Structure For Your E-Commerce Business

    The ideal company framework for your e-marketing is determined by several factors. The below-mentioned business formats are available through various e-commerce businesses:

    Sole Proprietorship Framework: Starting a sole proprietorship corporation is an easy procedure. A sole proprietorship type also has minimal regulatory requirements. This sort of approach, meanwhile, does not follow the limited liability concept. The sole proprietor’s responsibility is limitless.

    Partnership Framework: When it pertains to the notion of responsibility, the Partnership Model is similar to the Sole Proprietorship Model. A general partnership firm,  on the other hand, would have two to three partners who would share profits. Because of the issue of limited liability, this structure wouldn’t be suited for beginning an e-commerce company.

    Limited Liability Partnership Framework: This framework is a hybrid of the partnering and the PLC, private limited company models. The advantages of a business partnership, as well as the principle of limited liability, could be experienced under this format.

    Private Limited Company Framework: For an online firm, the Private Limited Company design is a great option. There are numerous formalities involved in forming a business. There are also documentation obligations and a minimum capital need for a business. Many businesses, however, are considering this company strategy because of the benefits it provides.

    OPC (One Person Company): The 2013’s Companies Act established this type of corporate entity. The one-person firm has only one stakeholder who is also titled the director. If the individual is not able to administer the company, a candidate must be chosen. OPC has the added benefit of limited liability.

    ODINT Consulting offers e-commerce services that also help you choose the best business structure.

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      Tax Benefit For The Above-Mentioned Business Structures

      When you decide to take up our services, know that we also offer advice on tax for various business entities. Here are the types of taxes applied to business entities:

      Sole Proprietorship

      • If one has put money in any investment operation present in Section 80c, 80ccc, and 80 CCD (for instance, PPF Account, Life Insurance Policy, National Saving Certificate, Pension plans, etc).
      • Deductions that are done for donations are usually made to the charities, and this is a part of the ITA’s section 80 G.
      • Long-Term Capital Gains Tax
      • Save Tax under Educational Loans.

      Limited Liability Partnership

      • No liability to submit tax on income and share
      • Commission, bonus, or remuneration, any payment of wage, interest to partners, permitted as a deduction

      Private Limited Company

      • Tax rates were reduced to 22% from 30%
      • E-commerce and digital firms can choose a tax exemption program
      • Deduction assessed on machinery and plants at a 15% rate.

      Legal Formalities of the e-Commerce Business

      Once the tax advantages are achieved, your firm must complete all the legal formalities needed for establishing an e-commerce firm:

      Registering a Business Entity

      1. Handover all the needed papers for establishing a firm
      2. Upload and submit these papers on the MCA website
      3. AOA & MOA
      4. Information about the directors and shareholders
      5. Amount of funds required for the corporation to set-up

      Online Establishment of the Business

      1. Establishing a firm can be done through online means (SPICe -INC-32)
      2. The papers needed to establish a business online are AOA (e-Articles of Association, INC-34), and eMOA (e-memorandum of association, INC-33)
      3. Generally, firms are to be established by SPICe only.

      Other requirements

      DIN number

      People who wish to be the company director have to file for a Director Identification Number.

      1. The SPICe Form should be used to apply for a position as a first director.
      2. DIR-3 Form: Any person who wishes to be a director of an established business can apply for a DIN number using eForm DIR-3.
      3. DIR-6 Form: Any modifications to the directors’ data must be recorded on form DIR-6.
      4. Company incorporated
      5. Digital Signature Certificate and Pan Card
      6. Shops, provident fund, establishments registration, and ESI registration
      7. GST registration.
      8. Certificate of Incorporation which is filed to the corporation.
      9. Legal Advisors/ Professionals.
      10. Appointment of Auditors for the company under the CA 2013.
      11. Starting a Business Bank Account.

      Things To create for your e-commerce business

      • Creating a Website

      It is critical to establish a website when all of the formalities have been fulfilled. Web design is included in ODINT’s e-commerce solutions. Besides e-commerce operations, our panel of professionals can help you build your site. All customers should be able to use the website. When creating a website, keep the following factors in mind:

      1. Using a ready-made website
      2. Making a website from the ground up
      3. Geographical influences on website design

      Website designing can take quite some time to create a website from start. Nevertheless, it would boost the site’s brand recognition. Also, there is a cost associated with constructing the website. Envisioning the site in the manner in which you believe it will function is more relevant for your company.

      The second step is to maintain and improve the site daily. It is necessary to check the site and identify any issues. The site must be updated with new products and photos.

      • Developing a site payment port

      For your firm to handle customer transactions, you’ll need a payment system. Our e-commerce solutions can also help you set up a payment processor. This is included in ODINT’s e-commerce services bundle. The following papers must be submitted:

      1. At least two Members / Director must endorse and seal the Authorization Letter / Board Resolution for the Signing Authority on the firm letterhead.
      2. Cheque returned, the IFSC code, original copy, and your name.
      3. Proof of the Approved Signatory’s Pan Card, duly certified.
      4. Justly notarized proof of address (Driving license, Aadhar card, voter ID, passport).
      5. An authorized signatory must verify and seal a photocopy of the firm’s pan card. Proof of the company’s government evidence appropriately checked and approved.
      6. Form 18 (copy)
      • Promotion of the site

      SEO (Search Engine Optimization): In addition to e-commerce solutions, our firm offers SEO techniques. Other forms of advertising exist in addition to online advertising through search engines. Digital media outlets can be used to promote the site, including:

      1. WhatsApp
      2. Instagram
      3. Twitter
      4. Facebook
      • Marketing Techniques
      1. Booklet Handling
      2. Pamphlets
      3. Newspaper advertisements and flyers
      • Warehouse Real Estate

      Property- If the business doesn’t already own warehouse property, you’ll have to rent it out at first. Our e-commerce solutions will assist in the estate’s security.

      For warehousing, rental buildings are more important. It is necessary to obtain property and business insurance.

      • Means of Delivery
      1. Four-wheelers.
      2. Two-wheelers.
      3. Other methods of transportation are available.
      4. Orders from abroad.

      Establishing an e-commerce firm in India requires the above things.

      Types of Business Models

      Single Vendor Model: It refers to the fact that only one vendor sells goods to their clients. As a result, there are only two main parties in this framework: the seller and the buyer.

      Advantages:

      1. Consumers and one seller
      2. This type of strategy involves minimal transactional costs and operational expenditures. This method is effective if you contemplate employing it and have your warehouse for transporting the goods.
      3. It will be considerably less expensive to set up.
      4. Gross margins are higher.

      Multiple Vendor Model: Just like the title suggests, this model includes a large number of customers and vendors. The e-Commerce platform allows numerous suppliers to list their goods.

      Advantages:

      1. More merchants will join your platform, resulting in a higher royalty.
      2. Aside from that, thanks to external vendors, your e-commerce site would have ongoing sales.

      Disadvantages:

      1. Since there are more providers, transaction costs will be greater.
      2. The expense of warehousing might be higher.

      Given the e-commerce items mentioned above, the Single Vendor approach would be appropriate for a new e-Commerce site. Moving to a Multiple Vendor Structure after some time of profit margins would be reasonable. As a component of ODINT’s e-commerce solutions, we also offer vendor model migration.

      Brand Establishment

      After deciding on a model/market for your e-Commerce company, the following step is to come up with a title. The title of the commercial entity must meet certain criteria.

      The company’s brand name should be:

      1. Visually appealing
      2. The title should be related to the company’s products.
      3. The Companies Act of 2013 must be followed
      4. It shouldn’t be insulting, unwanted, or infringe on national symbols
      5. In a firm name, abbreviations must not be utilized
      6. The title must be displayed outside the company’s registered office in a prominent location
      7. The title should be imprinted on the company’s common emblem
      8. All company correspondence, emails, faxes, and signings must include the company’s name, location, and CIN, Corporate Identity Number.
      9. In documents, your name should be printed
      10. The title must adhere to the Trademark Law and Copyrights Act.
      11. If it’s a PLC, a private limited company, it should be represented by Pvt Ltd. The letters (Ltd) must appear in a PLC.
      12. The firm’s proposed title should not be similar
      13. Names that have been stricken off can’t be used, as well as some titles need Central Government clearance.

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        Conclusion

        The E-commerce sector is slowly taking over the retail world. If you too wish to join the era of digitalization, feel free to contact us at ODINT Consulting. We can help you with all the requirements and set up the best e-commerce business for you.

        FAQ’s

        When setting up an e-commerce business, you can choose any of the following corporate entities:

        • Sole proprietorship
        • Partnership
        • Limited liability company
        • One-person Company
        • Private Limited Company

        Amongst all, a private limited company is known to be best suited for e-commerce firms.

        One can market his/her business on Facebook, WhatsApp, Twitter, Instagram, etc to gain more promotion. The delivery methods that can be used are, 2-wheelers, 4-wheelers, others, etc.

        • Utilize a ready-made site
        • Build a site from the start
        • Influence of location on-site design

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