What are the legal requirements needed to start B2B ecommerce website

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Dear Client,

I am writing this response with regard to your query posted above. At the outset, it is pertinent to note that the selection of legal entity/form such as company, LLP, partnership firm (registered or unregistered), or sole proprietorship is majorly based on the factors, including but not limited to, amount of funding, business scalability, cost of formation and compliance cost, encashing the benefits of government’s policies (like government’s start-up program) and ease in pitching investors (domestic or foreign).

At the nascent stage, if you just want to test the market and demand, and you wanted to do it at your own then you may go for “sole proprietorship”. Alternatively, if you have any partner at present and both of you are ready to equally share the risk you may go for unregistered partnership firm; however, note that there are a few inherent risks in unregistered partnership firm but it will save some compliance and filing cost the initial stage.

In light of the above, please find my response to your queries in turn:
1. Can I do it or company registration is mandatory?
Response: Yes, you can do it. Company registration is not mandatory, however, if you want to encash the benefits Start-up Program of the Government of India you need to incorporate a company under the Companies Act, 2013.

2. Will there be any legal challenges?

Response: Typically, the legal challenges are based on:
(a) the nature of business such as e-commerce, software development, call center services, hosting services etc., and
(b) the type of legal entity selected by you.

If you select the sole proprietorship form of the business, then you need to check commercial agreements with your clients, terms of use, privacy policy, intellectual property right policy, and the procurement agreement with your vendors. The commercial agreements with the clients and the procurement agreement with your vendors must be well negotiated as per your requirements specially focusing on your limitation of liability or personal liability, representation and warranties, intellectual property, data security etc.

Please note that the complexities of exit, liability and compliances would differ based on the form of legal entity selected by you.

Disclaimer: As to matters of law, I limit my response to the laws of India and the laws/rules/regulations of the state under whose jurisdiction the subject matters falls. Further, my response is limited to the facts presented by the client and laws in existence on the date of this response and at no subsequent time. This response is delivered to you in connection with the query raised/posted, and may not be utilized or quoted by you for any other purpose or relied upon by any other person or entity without prior consent. Further, this response does not create any attorney client relationship.

Advocate Sangeet Sindan LawRato