What are the legal requirements for starting and managing an e-business? Do I need to get any permission from any government department to start e-commerce? These are the kind of question that many potential or existing SMEs frequently ask now a day.Before moving forward on the subject, it is desirable to know what these two terms namely e-business and e-commerce mean? Are they used and understood to convey the same sense and expression in common parlance or is there a difference between the two?

E-business or Online Business is a term used for doing business or commercial transaction through the use of internet. E-business is a comprehensive term and includes e-commerce, while e-commerce is not just e-business. E-business is a combination of following three sets of activities: internal business processes such as interconnected inventory, customer database, accounts etc.; customer and supplier relationships such as integrated marketing, product delivery, customer support etc. and e-commerce, which comprises integrated ordering, managing and paying for items, selling products and services over the internet and receiving payments.

Generally, there are no specific preconditions or legal requirements to start an e-business or e-commerce.For doing a business electronically or otherwise, an entrepreneur may choose to do so either as a sole proprietor, as a partnership firm, a limited liability partnership or as aprivate or public limited liability company. Once a decision to opt for a particular business form is taken, then comes the time to take operational decision regarding adopting an electronic form of doing business or commerce as the case may be. The first thing that a business does is to establish an interconnected computerized system having inventory, accounts and customer database etc. which is usually in the form of a software. A business must be careful while selecting to buy a software.

A software, in its original form, is duly protected under the copyright law whether or not the proprietor thereof gets it registered with the relevant government authority. Therefore, a business while getting a software must ensure that it was getting the same from the original owner thereof or from a person legally licensed to sub-license such software to avoid any pitfalls in future.

The second most important aspect of doing e-business is the establishment of a website for the purpose of selling, displaying, marketing, product delivery and customer support in relation to the products to be sold. To establish a website, a business first need to get a domain name registration along-with a web-space for hosting the website from a web hosting service provider. Getting a domain is relatively easier and cheap. However, it is the single most important identity of a business in the virtual world that enables a business to remain visible, active and working in front of its customers and suppliers alike.Therefore, it is important to get the domain name of your website registered as a trademark under the Trademark Law so that it is protected against any unauthorized use by any other person. Another way of protecting your website is to get the same registered under the copyright laws. This will help in preventing a business’s competitors from copying the design and color scheme of its website. A very important part before going to operationalize a website for trading is to develop privacy policy and terms of use agreements.

A privacy agreement explains the mode and manner of collecting and using of personal information of a customer while a terms of use agreement notifies the website users about the copyright protection of the business and the termination/suspension of an account of a user. Both these legal agreements bind the users of a website and are meant to secure the aspiring business from any possible action by a consumer.

Then comes the phase of putting in the information, private or commercial, of a business on the website. While giving information of products on sale via the website, a business must ensure that relevant details about the quality, quantity and applicability of taxes, if any, is clearly and conspicuously given in relation to the products on sale. Absence of such information may lead to disputes with customers that may end up in a legal battle between the customer and the seller. Remember, a customer may sue a business in a consumer protection court, if the sold product or service is of inferior quality as against the quality parameters given on the website. An important point to keep in mind before going for online selling is knowing about applicability of sales tax on the goods or services being offered for sale. In case, the sales tax is applicable, registration with the sales tax department will be required and a sales tax invoice would have to be issued against sale of a taxable product or service if the annual turnover of a business is more than the threshold exempted by law. Other steps that a business must consider before going online are to develop policies regarding methods of payment, return, refund, delivery, replacement of products etc. and put them on the website. These policies will make a business less vulnerable to disputes with customers.

If a business does not want to establish its own website or in addition to its own website a business intends to capture a greater market, it may opt to work with an online market place like daraz.pk or olx.com etc. In such a case, it is advisable that the businesses take some pain to carefully read the terms and conditions, uploaded by such online marketplace, for placement of their products for sale on such websites. Generally, these online market places do not take any responsibility for quality of the goods or services for which only the manufacturer or proprietor thereof is to answer. It is important to know that commercial transactions done through the website are legally recognized under the Electronic Transactions Ordinance, 2002.

Apart from the above considerations, anyone engaged in e-business/commerce need to take care of following legal prohibitions prescribed under the Prevention of Electronic Crimes Act, 2016 as violation thereof is an offence punishable with imprisonment or fine or with both: obtaining, selling, possessing or transmitting another person’s identity information without authorization; tampering of communication equipment without authorization and using or marketing such device for transmitting and receiving information; disclosure of confidential information except when required by law; making, obtaining or supplying devices for use in offences, displaying unlawful content on the website i.e. a content that is against the glory of Islam or the integrity or defense of Pakistan, public order, morality or contemptuous to a court; spamming i.e. transmission of harmful, fraudulent, misleading, illegal or unsolicited information without permission. Know that the Organizations engaged in direct marketing services must provide the option to the recipient of direct marketing to unsubscribe from such marketing.