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Shops and Establishment

What Are the Benefits of Shop and Establishment License?

A shop and establishment license is a mandatory license required by businesses to legally operate in a particular state or region.

Over time, businesses in the unorganised sector have slower growth. The reason for this is that the vast majority of businesses in this sector lack legal status, which limits their access to development prospects. If you’re a new shop owner, you’re probably wondering what kind of advantages a shop and establishment license provides. The advantages of a shop and establishment license are the focus of this article. Let’s discuss about Benefits of Shop and Establishment License.

Benefits of Shop and Establishment License

The following are some of the Benefits of Shop and Establishment License:

  • Ease of Opening a Current Account

Businesses that choose to register under the Shop Act can easily obtain a bank current account. You don’t need to look for any other documents for this because the Shop Act license would suffice. With an independent bank account, you can avoid the messing up of the business transaction with personal account. As a result, you’ll be able to set up a separate financial account for your business.

  • Hassle-free Inspections

Regular inspections of shop owners are part of the state government’s and local municipality’s working protocols. Frequent inspections may damage your work’s efficacy. However, if you have a Shop and Establishment License, you can easily get out of trouble.

  • Ensure Peace of Mind for Employer & Employee

The Shop Act regulates all aspects of business operations, including employee well-being. The Act protects employees’ rights while also ensuring their health and financial security. Furthermore, the Shop Act prohibits any unethical behaviour that is detrimental to the workers’ interests. This would assist the business in providing a pleasant working environment for the employee.

  • Enforce Better Wages and Holiday Management

The majority of businesses in the unorganised sector do not have adequate wage and holiday plans. After availing a Shop Act license, the shop or establishment must pay attention to these core areas and make it more transparent for the employee and auditing authorities.

  • Avoid Unethical Business Practice

In the unorganised sector, child labour is common. Despite a law prohibiting such practices, adolescents can be found working in a number of industries for extremely low rates, from a café to a fabrication industry. Nonetheless, the Shop and Establishment Act contains some robust anti-child labour regulations. Any entity operating under the influence of such a license is prohibited from employing a minor to fulfil their work.

  • Encourage Expansion

Inherently, a business owner who devotes 100% to the Shop Act’s requirements will be able to enjoy unanticipated rewards in the long run. The Shop Act gives the entity a legal status, allowing the business owner to have better exposure to a neglected portion of the market over time.

  • Legal Complaince

Legal Compliance: The primary benefit of having a shop and establishment license is that it ensures legal compliance with state laws and regulations. It protects businesses from legal action and penalties for operating without the necessary license.

  • Credibility:

Having a shop and establishment license gives credibility to the business and demonstrates that it is operating legally and professionally. It can help businesses to build trust with customers, suppliers, and other stakeholders.

  • Funding and Bank Loans:

Many banks and financial institutions require businesses to have a valid shop and establishment license to be eligible for loans or funding. Having this license can help businesses to secure financing for growth and expansion.

  • Government Schemes and Subsidies:

Many government schemes and subsidies are available only to businesses that have a valid shop and establishment license. Businesses that have this license can take advantage of these schemes and subsidies to reduce their operating costs and grow their business.

  • Legal Protection:

A shop and establishment license provides legal protection to the business and its employees. It ensures that the business is compliant with labor laws and regulations, and protects employees from exploitation and unfair treatment.

  • Availing Shop Act License

Getting a shop and establishment license from the state authority is a straightforward process. However, it is important to note that the terms and fees associated with this license can vary from one state to another. To acquire this license in Uttar Pradesh, for instance, you must submit an online application via the website and pay the requisite fee, which varies based on the type of entity and number of employees. In contrast, other states may have different requirements for applicants to obtain the license. Therefore, shop act registration is conducted on a state-wise basis, and the fees associated with it may differ accordingly.

Documents Required for Shop and Establishment License

The documents required for the registration under Shop and Establishment Act are as follows:

  • Employer’s identity proof in the form Aadhar card, PAN card, driving license, voter ID
  • Employer’s passport-sized photograph
  • Photo of the establishment
  • Copy of rent agreement or lease deed is required in case of rented property
  • Any utility bill in the form of electricity bill, water tax receipt of the working premises. However, the said utility bill should not be two months older.

To be more specific, every start-up and small business is required to follow the provisions of the Shop and Establishment Act when conducting business. Those who choose to ignore the necessity of getting a Shop Act license must pay a fine. If you have any questions about the Shop & Establishment Act, you should seek advice from a professional. At Vakilsearch, we provide top-notch financial and compliance services dealing with numerous compliance.


In conclusion, obtaining a shop and establishment license is essential for any business that wants to operate legally and professionally. It offers several benefits such as legal compliance, credibility, employee benefits, funding and bank loans, government schemes and subsidies, and legal protection. Businesses should obtain this license as soon as possible to ensure that they are operating within the law and taking advantage of the benefits that come with it.

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