What kind of license is required for a home-based business?

. 6 min read
What kind of license is required for a home-based business?

Individuals interested in starting home-based companies are often so keen to get started that they overlook a key step: obtaining all necessary licenses and permits to lawfully run their home-based business. This is an important step as it can lead to serious complications in the future. The last thing you want is to establish a thriving home-based business just to see it abruptly shut down by the authorities for failing to obtain a necessary permit. It's worth taking the time and effort to make sure you get all company licenses completed from the get-go.

Home-based business rules & regulations

The main issue with running a home-based business without a license is that you will face fines and possible legal implications if you are caught. Due to the potential risk, it's worthwhile to learn the legal criteria for operating a home-based business in your city, country, and state at the outset.

  • Business Name: Giving your business a name and securing it immediately is the first and most important move toward registering your small business under a unique name. The website of the Ministry of Corporate Affairs has made it very easy to register your business online, and this process includes registering the business name.
  • General Business License: Any form of business, including a home-based business, is required to acquire a general business license. This is a fundamental authorisation to conduct commercial activity within the municipal government. If your city or country lacks a dedicated business licensing office, you can acquire guidance on acquiring a simple business license from your local tax office.
  • Health & Safety License: Depending on the form of business you wish to conduct, you will be required to obtain a fire department inspection and permit. This is required when consumers visit your place to conduct business. It is usually not essential if your home-based company only sells merchandise or services online unless you maintain an inventory of potentially flammable items at your residence.

Environmental licenses and health department approvals are less often required. Licenses or permits of this kind are often issued for companies engaging in the wholesale or retail distribution of food and beverage goods.

  • Professional License: Certain home-based businesses, such as daycare centers, hairstyling, legal facilities, and financial planning services, require a professional license or credential. To access a list of all professions or enterprises that need professional licenses, contact the local business office or visit the official state website.
  • Sales Business License: The state's goal of tax collection is to keep a close eye on sales and purchases, transfers, and tax numbers. As a result, state legislatures have made this State Business License a must for all businesses. Licenses are issued by state governments only after some documents are verified. This authorisation is needed for any small business that deals with fruit, household products, clothing, mobile devices, or sports.
  • GST Registration: Any person or company engaged in the intra-state supply of products or services, regardless of the volume of business, has to register for GST. Entrepreneurs must understand the various GST Act requirements and register for GST within 30 days from starting a company.
  • Sign Permit: At times, you can run afoul of sign ordinances. Sign ordinances regulate the height, illumination, venue, and style of signs that can be shown outside a business's premises.

Small home business license

The number of small businesses in the country are rising today. Each person has a distinct idea for entering the world of entrepreneurship and profit-making. Here are some of the important registrations to keep in mind:

  • Business Registration
  • Tax Registration
  • State Business License
  • Fire Department License
  • Air & Water Pollution permit
  • Sign Permit
  • Health Department Permit
  • MSME Udyog Aadhaar Registration - It is a government of India project spearheaded by the Ministry of MSME. Its primary goal is to streamline the enrolment process for entrepreneurs and to offer various discounts and incentives to enterprises to facilitate ease of doing business.
  • TAN Number (Tax Deduction Account Number or Tax Collection Account Number) - This is a ten-digit number issued by the Income Tax Department.
  • Shops & Establishments Act License - Also known as the Shop Act Business License, this license is issued by state governments and varies from each state. It should be obtained within 30 days of the start of the operations.
  • Import-Export Code - In order to be authorised to do business outside India, the company has to obtain an Import Export Code. To obtain this Code, the company must have a PAN and a current account with a bank.
  • FSSAI Registration.

FSSAI license for a home-based business

Home-based food processing has been a very common business model in recent years. Low initial investment and adaptability are the primary reasons people prefer this business. FSSAI licenses and registrations are also highly recommended for home-based food processing in order to comply with legal requirements. The form of FSSAI license required would differ according to the nature and size of the home-based food business.

  • Home-based food business license: Any food business operator (FBO) who manufactures, processes, stores, distributes, or sells food products is required to obtain an FSSAI Registration or License. FSSAI Registration is distinct from FSSAI Licensing in that an FBO can acquire the requisite registration or license based on the scale and nature of the business. This license is a 14-digit authorized number that appears on the back of all product packaging. The 14-digit identification number contains information regarding the assembling condition and the manufacturer's permit. This registration process is intended to increase the FBO's responsibility for food commodity safety. The process and conditions for licensing and registration are governed by the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011.
  • Types of FSSAI registration: The FSSAI registration or licensing depends on the size of the business and the location of the premises.

3 Types of FSSAI Registration

All the documents for home-based business requirements - Apart from the registrations listed above, the following documentation is needed to apply and obtain for your home-based business.

  • PAN card
  • Driving License
  • Residential proof
  • Residence card
  • Bank statement
  • Passport
  • Electricity bill or telephone bill or mobile bill
  • Registered office proof
  • The registered declaration establishing the location of the registered office in the company's name.


Multiple incidents exist of numerous businesses collapsing as a result of non-compliance with legal laws and legislation, resulting in a crater of massive fines and legal action. As a result, this could initially impede the growth of the home-based business, forcing the entrepreneur to shut it down. As a result, registering and obtaining the appropriate licenses is the most suitable way to begin a home-based business.

Also Read:

1) How To Do Dealings In Business During The Pandemic?
2) How To Reward Your Employees For Their Efforts During Pandemic
3) How To Ensure Employee Safety During Pandemic In Your Business?
4) How to Ensure Sufficient Stock During this Pandemic in your Business?

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Q. Do home-based businesses need a license in India?

Ans. Any kind of business including home-based business must obtain a license, though it varies from state to state.

Q. Which business is profitable from home in India?

  • Food & Beverage
  • Website Designing
  • Real Estate
  • Labour Contractor

Q. What business can a housewife start from home?

  • Blogging
  • Catering Services
  • Wedding Planner
  • Freelancing
  • Food Delivery

Q. How is the business's tax rate determined?

Ans. Tax rates on businesses are dictated by the nature of the business's activity.

Q. How can you determine whether your business is permitted in that territory?

Ans. The applicant should contact the region's planning department to determine if the proposed business is permitted/allowed in that territory.