Every task in this section must be complete before you spend a rupee on software or products. A company that recruits distributors without a proper legal entity is exposing its founders to personal liability.

  • ☐ 1. Incorporate a Private Limited Company (Pvt Ltd) — recommended over LLP or OPC for distributor trust, investor-readiness, and scaling. File with MCA via SPICe+ form. Budget: ₹15,000–₹30,000 including professional fees. Timeline: 15–25 days.
  • ☐ 2. Obtain PAN and TAN in the company name — both are required before you can open a current account. TAN is mandatory for TDS deduction.
  • ☐ 3. Open a corporate current account — with a scheduled bank (ICICI, HDFC, Axis, SBI). Requires Certificate of Incorporation, MoA/AoA, and director KYC. Budget: ₹0–₹10,000 minimum balance depending on bank.
  • ☐ 4. Obtain GST registration — mandatory if projected annual turnover exceeds ₹20 lakhs. Get this before your first product sale. Free, processed in 7–10 working days via GST portal.
  • ☐ 5. Apply for relevant product licences — FSSAI for food/supplements, Drug Licence for Ayurvedic/cosmetics, BIS mark for electronics. Each has its own timeline (30–90 days) and fee structure.
  • ☐ 6. Register your trademark — file your company name and logo with the Intellectual Property India (IPI) trademark registry. Does not block launch but protects against name squatting. Budget: ₹4,500–₹9,000 per class.
  • ☐ 7. Obtain MSME/Udyam registration — optional but provides access to government schemes, easier bank loans, and some credibility with distributors and B2B partners.
  • ☐ 8. Appoint a Grievance Redressal Officer (GRO) — required under DSA 2021. The GRO must be named in your distributor agreement and on your website with a working contact address.

Section 2: Compliance Documents (9 Tasks)

These documents are legally required under India's Direct Selling Guidelines 2021. Do not recruit your first distributor without them in finalised, lawyer-reviewed form.

  • ☐ 9. Draft Distributor Agreement (DA) — the legal contract between your company and each distributor. Must cover: rights and obligations, compensation plan summary, code of ethics, termination provisions, buyback policy reference, income disclosure acknowledgement. Have an MLM-experienced lawyer review it.
  • ☐ 10. Write your Compensation Plan Document — a complete written description of every commission type, every rank, every qualification criterion, every bonus rule. This is what distributors sign up against and what regulators review.
  • ☐ 11. Create an Income Disclosure Statement (IDS) — discloses actual average earnings by rank level. For a new company, this is a projected IDS based on your plan model, updated annually with real data. Required to publish on your website.
  • ☐ 12. Write your Buyback / Return Policy — must offer minimum 90% refund on unsold inventory within 30 days of distributor purchase. The exact process (how to claim, turnaround time, inspection requirements) must be written and accessible.
  • ☐ 13. Draft a Code of Ethics for distributors — prohibited claims (medical, income guarantees), prohibited practices (pressure selling, false testimonials), and disciplinary procedures for violations.
  • ☐ 14. Prepare website mandatory disclosures — your website must publish: company registration details, GRO contact, income disclosure, buyback policy, distributor agreement summary, and product information with verifiable claims.
  • ☐ 15. Establish TDS deduction policy and process — document how you will calculate, deduct, deposit, and report TDS under Section 194H. This must be operational before your first commission payout.
  • ☐ 16. Create Privacy Policy — covering how you collect, store, and use distributor personal data (PAN, Aadhaar, bank details, phone number). Required under India's data protection framework.
  • ☐ 17. Prepare standard complaint response templates — for consumer complaints, distributor grievances, and government enquiries. Having these ready prevents inconsistent responses that create legal exposure.

Section 3: Software Configuration (10 Tasks)

Do not launch with untested software. Commission errors in the first payout cycle destroy distributor trust faster than any other issue.

  • ☐ 18. Complete software requirement documentation — write down every commission type, every rank qualification, every bonus rule with exact examples. This is what your software developer builds against.
  • ☐ 19. Configure compensation plan in software — with exact percentage values, cap amounts, flush rules, and qualification logic from your plan document.
  • ☐ 20. Test commission calculation with known inputs — run five to ten test scenarios with hand-calculated expected outputs. Every output must match exactly before you proceed.
  • ☐ 21. Configure GST invoice generation — with your GSTIN, HSN/SAC codes, correct IGST/CGST/SGST logic based on transaction geography.
  • ☐ 22. Configure TDS deduction logic — set the ₹15,000 annual threshold, 5% rate, and PAN-linked tracking. Test by running a simulation that crosses the threshold.
  • ☐ 23. Set up eWallet with minimum withdrawal amount and KYC gate — block withdrawals until KYC is verified. Set minimum withdrawal thresholds. Test the full withdrawal-to-bank-transfer flow.
  • ☐ 24. Configure KYC document upload and verification workflow — test that PAN deduplication works (two accounts cannot share one PAN number).
  • ☐ 25. Test registration flow end-to-end — from landing on the registration page through ePin activation through appearing in the genealogy tree in the correct position.
  • ☐ 26. Configure email and SMS/WhatsApp notifications — registration confirmation, commission credit, withdrawal approval, rank advancement. Test all trigger events.
  • ☐ 27. Complete User Acceptance Testing (UAT) — have 3–5 real users (not developers) test the admin panel and member portal for 2–3 days. Fix every issue they identify before launch.

Section 4: Payment Infrastructure (7 Tasks)

  • ☐ 28. Apply for payment gateway merchant account — Razorpay, Cashfree, PayU or your chosen gateway. Approval requires company registration, GST certificate, current account details, and product category description. Budget: 7–14 days for approval.
  • ☐ 29. Test all payment methods — run actual test transactions for every payment method you'll offer: UPI, credit card, debit card, net banking. Verify that GST invoices generate on successful payment.
  • ☐ 30. Set up bulk payout API for commission withdrawals — Razorpay X, Cashfree Payouts, or direct NEFT/IMPS API. Test a batch payout with dummy accounts.
  • ☐ 31. Configure payment reconciliation workflow — who reviews payment settlements, how settlement data maps to your accounts, how refunds are processed.
  • ☐ 32. Set up a dedicated company current account for TDS liability — TDS deducted from distributor commissions must be deposited with the government by the 7th of the following month. A separate liability account prevents accidental spending of TDS funds.
  • ☐ 33. Test the complete ePin purchase flow — distributor pays → ePin generated → ePin used to activate a new account → activation triggers commission calculation → commission credits to upline eWallet.
  • ☐ 34. Document the refund process — how a distributor initiates a refund, who approves it, how the gateway processes it, how the GST credit note is issued.

Section 5: Product Setup (6 Tasks)

  • ☐ 35. Confirm product sourcing with written purchase agreement — price, minimum order quantity, lead time, quality inspection rights, exclusivity terms (if any).
  • ☐ 36. Verify all product claims are substantiated — each product claim (health, performance, safety) must be backed by verifiable evidence. Claims that cannot be substantiated must be removed before launch.
  • ☐ 37. Complete all product labelling requirements — batch number, manufacturing date, expiry date, manufacturer address, ingredients, regulatory approval numbers (FSSAI licence number, BIS mark etc.).
  • ☐ 38. Set product pricing ensuring 90% buyback sustainability — your product price must leave enough margin to honour the 90% buyback policy without making the business uneconomical.
  • ☐ 39. Set up initial inventory with buffer stock — calculate expected first-month order volume and maintain 1.5× buffer. Running out of stock in the first month destroys momentum.
  • ☐ 40. Configure product BV/PV values in software — each product must have its Business Volume value that feeds into commission calculations. Confirm these are correct and that the total commission payout on expected BV is within your sustainable range.

Section 6: Distributor Onboarding (4 Tasks)

  • ☐ 41. Prepare distributor welcome kit — distributor agreement, compensation plan summary, product catalogue, code of ethics, website login instructions, and escalation contacts.
  • ☐ 42. Configure auto-welcome email with onboarding steps — triggered on successful registration. Includes distributor ID, login credentials, what to do first, and KYC document submission instructions.
  • ☐ 43. Train your founding distributor team on the software — at least 10 beta users should test the portal for 1 week before public launch. Their feedback will identify usability issues that developers miss.
  • ☐ 44. Prepare the first payout cycle manually as a verification — before running the automated payout for the first time, manually calculate expected commissions for 5–10 distributors and verify the software matches. This is your last quality check.

Section 7: Training and Launch (3 Tasks)

  • ☐ 45. Prepare distributor training materials — product knowledge, compensation plan explanation, compliance do's and don'ts, customer acquisition scripts, and portal usage guide. These must be ready on Day 1, not promised as "coming soon."
  • ☐ 46. Schedule and conduct a founding distributor kickoff event — even a virtual event of 1–2 hours creates launch momentum. Cover: the company vision, product overview, compensation plan walkthrough, and portal demo.
  • ☐ 47. Set up ongoing communication channel — a WhatsApp group, Telegram channel, or in-portal notice board for regular company updates, product launches, incentive announcements and compliance reminders. Silence from company leadership after launch is a top-3 cause of early distributor attrition.

The 5 Most Common Launch Mistakes

After deploying software for 20,000+ MLM companies, these are the five mistakes we see most often:

  • Launching without a lawyer-reviewed distributor agreement. Templates downloaded from the internet are not DSA 2021 compliant. Distributor agreements that don't mention the buyback policy, income disclosure, or GRO contact leave the company legally exposed from day one.
  • Skipping TDS configuration. The first two years feel fine. The income tax notice arrives in year three, covering all historical TDS with interest and penalties. The retroactive fix is always more expensive than building it correctly from the start.
  • Running the first payout manually. Manual calculations for even 50 distributors in a Binary plan produce errors. Your first payout is a trust-building event — it must be accurate and on time.
  • Launching with out-of-stock products. New distributors arrive energised and immediately try to place product orders. "Out of stock" in the first month kills momentum that takes 6+ months to rebuild.
  • Not training the founding team before launch. Distributors who cannot explain the compensation plan or navigate the portal confidently recruit less effectively and have higher early attrition. Pre-launch training of your founding team is one of the highest-ROI investments in the launch budget.