Table of Contents:
1. What Is Business License In India?
A business license is essential to establish and operate a business within a specific territory. It is obtained legally from the state licensing organisation to register the business legally. Even if for a small business, acquiring a business license is equally essential like it is for a big corporation or big business.
If you're up to start your own small business, then one thing you will need for sure is a business license. Every country has made it compulsory for businesses to comply with legal rules around a business’s environmental issues. Registering your company with some form of a business license will grant you legal permission to operate by falling in line with central and state guidelines.
The industry and location a business reigns in determines the kind of licenses and permits it would need. Each state has specific business registration requirements and can help business owners like you, as getting the business license takes a significant period and as resources. Businesses, whether large or small, in India, also should acquire registration and business licenses and get the business license renewed on time.
2. Business License Registration In India
One can obtain a business license to legally register your company, which permits you to operate within your industry and jurisdiction. Getting a business license can bring profit to counties by permitting the businesses to collect additional revenue, regulate zoning restrictions, and check which companies can operate within the scene. Acquiring a business license is useful for a business owner as well. It allows them to present their employees, customers, and other stakeholders with confidence about their well off business and that the goods and services are trustworthy.
Another benefit of licensing is that it is applicable as a competitive lead in specific sectors, where businesses with a license can exhibit proof of licenses during the negotiation process. Small businesses require state and central governments to get hold of the applicable business licenses. Different states might have different rules and regulations on business licenses, so it's best to ascertain with your local government office. You could also seek advice from a legal business representative or professional accountant to verify if you meet all legal requirements before you open for business.
Licenses and registration of companies in India are acquirable in different forms like Private companies, sole proprietorship, Trust, NGO, and others. Startups can qualify if they are defined, like a Private Limited company in the Companies Act 2013, a Partnership firm in the Indian Partnership Act, 1932, etc.
Smaller startups have the option of registering as a sole proprietor as an alternative to a corporation or LLP. The Ministry of Corporate Affairs, Government of India controls the enlistment of a Company or LLP. Most establishments in India open as proprietorship or partnership firms, with no enlistment from the Central Government. Once a company or LLP enlists, the business would have a unique legal character, and the promoters would appreciate the force's risk assurance.
3. New Business Registration In India
Following is a list of registrations mandatory that are common to all states are as follows:
- Registration of Business's Name- Giving a name to your company and securing it right away is the first and foremost step towards registering for your small business under a novel name.
- Director Identification Number (DIN)- The Director Identification Number (DIN) is a distinctive 8 digit number required for an existing or proposed Director of a company. It is an easy one day process and can be acquired online.
- GST Registration- Any individual or business providing goods or services dealing in the intra-state supply and unmindful of the turnover must acquire their business's GST Registration. All entrepreneurs need to comprehend the different criteria mentioned under the GST Act and get GST Registration within 30 days from beginning a business.
- State Business License- Tax collection is the state's objective to regularly check on the sale and purchase, transactions, and tax amounts. Hence, state governments have made this State Business License mandatory for every company. The state governments issue a license only after verifying a few documents. Every small business dealing with any department like food, consumer goods, apparel, electronic devices, and sports needs this license.
4. FSSAI Registration And License
FSSAI is necessary to verify the security and institutionalisation of nourishment and food items supplied across the nation. It comprises restaurants, bakeries, retail locations, food franchise outlets, cafeterias, canteens, eateries, present-day exchange outlets, vendors, manufacturers, importers, and purchasers who require the five-letter word in their food parcels or holders. Under FSSAI license, the permit divides into three classifications, which are:
- FSSAI Registration
- FSSAI Central License
- FSSAI State License
5. Import Export Code
Any business or individual associated with the import or export of products and services from India must acquire the Import Export Code from the Department of Director General of Foreign Trade (DGFT). Your business needs to have a PAN and a Current Account in a bank to acquire this Code.
6. Udyog Aadhar Registration
This is an enlistment for businesses that need to begin and work as an independent company, like Micro, Small or Medium (MSME) Scale Business. It is an initiative of the MSME Ministry, Government of India. Its main objective is to simplify the registration process for entrepreneurs and provide different subsidies and benefits to businesses to promote ease of doing business.
7. Shop And Establishment Act License
The Shop and Establishments Act aims to direct the efficiency, the extended periods of professionalism and work, wage instalments, and health of the representatives. The Shop and Establishment Act License or Shop act Business License is given by the State Governments and differs from each state. It should be acquired within 30 days of commencement of work, whether or not it has employees.
8. Fire Department License
For any business that deals with flammable material and is also open to the public, a fire department permit becomes indispensable. Some states have even made it mandatory. This license is especially essential for businesses where people often gather, such as restaurants.
9. Air & Water Pollution Permit
If a business deals with manufacturing processes using natural resources, it would need a permit from the Environmental Department. Besides, to avoid any issues later by the environment department, this permit is imperative before constructing any building.
10. Documents Required For Business License In India
Apart from the above registrations necessary for your specific business, the following are the documents that you need to submit and acquire your small business's license:
- Government-issued Identity containing your address
- PAN card
- Driving License
- Address proof
- Bank statement
- Residence card
- Residential proof
- Bank statement
- Electricity Bill or Telephone Bill or Mobile Bill
- Registered office proof
- The registered document of the premises of the registered office in the name of the company
- The notarised copy of the agreement in the company’s name and the copy of the rent paid receipt should not be older than a month.
In today's scenario, India has an excellent field for small businesses. Every individual has a unique idea for them to enter into entrepreneurship and make sure profits. There are a few requirements of individual licenses and registrations when a person plans to establish their small business needs. Thus, carrying out the legal requirements is the first and foremost step to lead the business to progress lawfully.
11. Key Takeaways
There are many examples of many businesses failing due to non-compliance with the legal rules and regulations and landing into a crater of giant penalties and legal proceedings. Hence, this could hamper the business’s growth initially, after which the entrepreneur might have to lock down the startup. Therefore, getting registered then and acquiring the license is the most appropriate way to start a business. We hope you have a comfortable beginning for your new business venture with the guidelines mentioned above.
|We hope our article turned out to be useful for you. For more such informative content, you can visit these linked articles as well:|
|How to start a Book House?||How to start a Photo Studio?||How to start a Car Repair Shop?|
|How to start a Coaching Centre?||How to start your own Franchise?||How to start a Consultancy Firm?|
Stay updated with new business ideas & business tips with OkCredit blogs in- English, Hindi, Malayalam, Marathi & more!
Download OkCredit now & get rid of your bookkeeping hassles.
OkCredit is 100% Made in India.
FAQs On Types Of Business Licenses And Permits In India
Q. What are the Government policies for business in India?
Ans- The country is filled with new business enthusiasts every other day and the governing parties curates policies helping them grow. Let us check out the top government policies for business in India:
- Incentives and Subsidies for Home Industries
- Conducting Routine Quality Inspections
- Commercial Technology Transfer
- Developmental Assistance to Small Scale Industries
- Timely Information Supply
- Basic Infrastructure Provision
- Balancing Regional Growth & Development
- Rendering Monetary System
- Sustaining Law and Order
- Establishing & Implementing Laws
Q. How much does it cost to get a business license in India?
Ans- Different types of businesses have different charges respectively. The standard fee for all business types are:
- Sole Proprietor Company- Rs. 2500
- Partnership Firm- Rs. 5000
- Private (LLP or LLC) Company with 1 Lakh Capital- Rs. 7000
Q. Is license required for small business?
Ans- Yes, small business licenses are offered only if you meet the following requirements:
- A license permit is mandatory for people having businesses in sports, electronic devices, consumer foods, food, and apparel.
- Tax registration– GST registration is henceforth mandatory to evade any tax penalties.
Q. What is business license number in India?
Ans- To obtain the basic details of any businesses registered in India, a unique CIN (Company Registration Number) number is allocated by ROC (Registrar of Companies). This feature is found in most states of India and is monitored by the Ministry of Corporate Affairs.
Q. What is the difference between an LLC and a business license?
Ans- An LLC renders you with an official, legally recognised business entity while a license permits your engagement in a particular business in a specific jurisdiction.
Q. What is a small business license?
Ans: A small business license refers to a legal permit delivered to a business for the smooth functioning of conducting business within a particular territory. The license is issued to the business after the company complies with the local license requirements and taxes.
Q. Who needs a small business license?
Ans: Any individual or entity who looks forward to conducting business in a particular region or who has a business setup must get a small business license.
Q. How is the tax rate of the business determined?
Ans: The business’s tax rates are determined based on the business activity of the entity/company.
Q. How to know if the business is allowed in that territory?
Ans: The individual should check with the region's planning division to check whether that business is allowed/ permitted in that territory.
Q. What will happen to people who conduct business across various cities?
Ans: Individuals who deal with business across various cities should acquire a small business license for each region/city. There is no universal small business license.