What Should You Know About MLM Registration For Startups?

Posted by Nitin Arora on February 8th, 2022

Among all the marketing business models, multi-level marketing has diversified over the span of time. This promotional marketing strategy not only involves the salesmen, but also individuals to sell as well as distribute products with utmost consistency. In fact, this chain of selling products and services continues ahead as the business aligns distribution strategy. The profits of the salesmen involved in MLM services depends on the growth of the chain of product sale or services’ distribution. Nevertheless, in order to attain profits or improve the compensation plan and run business processes in network marketing smoothly, the MLM registration for startups is worth a consideration.

In terms of registration of MLM startups, the law which was proposed in the Parliament in 2005 and not yet become a law, mentioned that certain schemes cannot be carried out in India. However, the current guidelines by the Government focus on the consumer rights’ protection and proper regulation of the sale of goods & services. Following points should be focused on while getting MLM startups registered:

Statutory compliance according to taxation laws

The business entity should adhere to the norms and formalities entitled for the multi-level marketing startup registration, wherein, complying with statutory guidelines is a must. In addition, this rule is not limited to taxation laws, but also, consumer protection act 2019, trade licenses, etc.

Specification of business model and compensation plan in the Memorandum of Association

From business model as direct selling, MLM compensation plan and the type of business considerations included to other offerings of the startup must be specified in the Memorandum of Association.
A separate legal entity or person registered under the Companies Act 2013 or LLP Act, 2008
In order to operate as a registered startup, it needs to be registered as a separate business entity or individual according to the terms of either Companies Act 2013 or Limited Liability Partnership Act, 2008.

List of products to be promoted along with compensation plan should be submitted

During the registration, it is essential to submit the products which are a part of promotion agenda along with the compensation plan which the updated version startup guidelines will include.

Documents denoting company’s details must be submitted during startup registration

  1. Copies of Taxpayer Identification Number (TIN), Director Identification Number (DIN) of Director/s, Tax Deduction Account Number (TAN), and Permanent Account Number (PAN)
  2. Certificate of Goods and Service Tax Registration/s
  3. Certificate issued by Registrar of Companies, Memorandum of Association, Articles of Association and Management and Operations Memorandum
  4. Copies of all GST Returns filed with the authorities
  5. Copy of the latest balance sheet, profit and loss account and reports of the auditors or directors of the applicant
  6. Copies of IT Returns of the company filed with the authorities
  7. Records of Know Your Customer (KYC) and Know Your Direct Sellers (KYDS), the formats of which should be available on the company website (password protected)
  8. Tax Deducted at Source (TDS) Statements of direct sellers and respective challans paid

Apart from the above registration guidelines for MLM startup, it should be noticed that professional assistance and consultation acts as the strong foundation to execute the process without any hassle. Therefore, it is necessary to hire the top MLM consultancy that can offer you updated information related to startup registration. Not only the MLM consultants have extensive knowledge about startup registration for direct selling businesses, but also, their services comply with the latest guidelines of the government. This is where their precise consultation and assistance altogether prove to be the ultimate resource for the getting the startup registered ethically. 

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Nitin Arora

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Nitin Arora
Joined: April 22nd, 2019
Articles Posted: 8

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