Licenses and Registrations required to operate a Business in India

We have penned the different types of company licenses and registrations required to run and operate a business in India. Dive in to learn more!

Registrations for business in India: Starting and operating your own business can be a rewarding and exciting experience if done correctly. However, the ability to operate a business legally is heavily reliant on getting the necessary business licenses.

To allow businesses to function, the government of a particular state or town issues licenses. A business license is required for a specific individual to start a business in India. These licenses are also used to check on firms to see whether they are adhering to the law’s criteria. Each state has its own set of requirements.

The procedure for obtaining a license differs by industry, based on factors like the total number of employees, the kind of business, the sector, the location of the organization, and so on. In this informative post, we’ll look for and discuss some of the most common company licenses in detail and depth.

In this blog, we’ll look at the most typical company licenses necessary for doing business in India.

Company License: Why Do You Require?

For the past four decades, the country has employed business licenses, which are managed by state governments through municipal corporation legislation. This assures that no one’s hurt in any manner as a consequence of a health risk or a business’s disruption. It also assures that the company or trade is conducted in a particular place and region and that no one is participating in illicit business practices.

Applying for a Company license: Eligibility Criteria

The following are the prerequisites for obtaining registrations for business in India:

• The candidate must be over the age of eighteen.
• The candidate should have no criminal history.
• The company’s operations must be legal.

Company License List in India

There are certain measures that must be taken in order to establish and make company incorporation in India. These are as follows:

Step 1: Select the Correct Type and Get Registrations for Business in India

Company Registration is the first and most important procedure for a new business organization in India. In India, the following sorts of new business registration categories exist:

• Proprietorship Firm

Well, when a single individual manages a firm, it is referred to as a proprietary business, and the company owner is referred to as the proprietor. In India, a proprietorship is a prevalent type of business. You can start and run the business with little regulatory oversight. However, the Indian government does not provide a comprehensive method for registering your proprietorship. Tax registration and other business registration is the proper technique to demonstrate the existence of your private firm. The registrations listed below can be used to show the presence of your proprietary business:

• GST Registration
• Professional Tax Registration
• Shop and Establishment Registration

Because a sole proprietorship firm has no independent identity under the law, the owner often signs contracts in their own name. Customers will usually write checks in the sole proprietor’s name, even if the firm utilises a fictional name. LLPs, Partnerships, and Private Limited Companies can’t mix personal and company property and funds, although sole proprietors can.

• Partnership Firm

Well, a partnership is regarded as one of the most fundamental types of business organisation. Two or more individuals start a firm and split the earnings in an agreed-upon ratio. A partnership is simple to form, and compliance is low as compared to a corporation.

When numerous partners agree on conditions for a firm’s commercial operation, the difficulty becomes serious. This diversity of perspectives has various legal and regulatory implications.

The proprietorship type of ownership includes constraints, such as restricted human resources, a limited skill set for employment, and limitless liability for losses. More cash, stronger expertise, and limited liability all aid in business expansion. An owner discovers that he is unable to meet these standards. This calls for more people to get together with diverse backgrounds and form a business, for example. This person may lack managerial abilities but may have funds that may help your firm.

• One Person Company

The One Person Company registration, which was introduced in 2013, allows a lone proprietor to register their corporation and lawfully continue their business operations.

• Limited Liability Partnership

The majority of businesses in India are general partnerships or sole proprietorships, with no central government licensing. The Ministry of Corporate Affairs is in charge of limited liability partnerships and business. Business owners who want to conduct business with a yearly income of over ₹20 lakhs are recommended to register as a firm or an LLP.

Once you make private limited company registration or LLP is registration, it has legal existence and the promoters are protected from liability. Furthermore, the company would be easily transferrable, and the business would continue to run indefinitely. As a result, before beginning a firm, it is essential to obtain counsel from an expert.

• Private Limited Company

This sort of business attempts to restrict its owners to specific socio-economic classes. If a firm is registered as a PLC or Private Limited Company, it is treated by Indian law as a totally separate entity from its founders. A company like this includes directors and shareholders, and every entity within the firm is considered an employee or worker of that particular company.

• Public Limited Company

For a Public Limited Company, the law views a PLC as a legal body formed of a voluntary union of members. The legal obligation of each member is confined to the total number of shares they hold. Companies with a significant turnover are registered as PLCs, without or with the intention of launching an initial public offering in the coming times.

Step 2: Apply for Licenses/ Registrations for Business in India

Below given are the registrations for business in India that has to be done:

• GST Registration

Well, GST Registration is required for all businesses and individuals with an annual turnover of more than ₹20 lakhs in most areas and ₹10 lakhs in Special Category Provinces. Furthermore, regardless of revenue, anybody shipping products for intra-state sale must register for GST.

In addition to the aforementioned criteria, the GST Act has a slew of others that establish the requirements for GST registration. Understanding the prerequisites and acquiring GST registration within one month of beginning a business is critical for all entrepreneurs.

• Shop and Establishment Act License

This particular act was passed to regulate company activities such as working hours, salary payment, child labour, general health, and worker safety. Shop and Establishment Act permits or registrations are issued by state governments and vary by state. As a consequence, depending on the state where the business is located, the applicable State Public body for obtaining a Shop and Establishment Act License should be approached.

• Udyog Aadhaar Registration

This license is available to startups that wish to start and manage a small business in India – small, medium, and micro firms. The qualifying requirements for obtaining this registration are dependent on the investment in machinery and plant of a manufacturing firm or the investment in the machinery of a service provider.

Once a company has obtained a Udyog Aadhaar license, it’s eligible for a variety of government advantages and programmes aimed at assisting small businesses in India.

• FSSAI License

If you’re wondering how to acquire a business license for food business, look no further.

The FSSAI, or Food Safety and Standard Authority of India, is a government-run organisation responsible for the safety and standardisation of all food products supplied in India. If you intend to start a food business, whether a restaurant, cloud kitchen, packaged food, or any other food business model, you must acquire an FSSAI licence.

• Import Export Code

Everyone who exports or imports or goods or services from India must get an Import Export Code from the DGFT Department. To obtain an Import Export Code, the company must have a PAN along with a bank account.

Conclusion – Registrations for Business in India

We hope you found our guide on obtaining registrations for business in India useful. Certain types of businesses, such as those dealing with security or safety, broadcasting offices, financial institutes, defence services, and so on, would require registration and license from government agencies like the IRDAI: https://www.irdai.gov.in/, Fire Station, Reserve Bank of India, Pollution Control Board, Regional Transport Office, etc.

Everything is determined by the sort of business in which you will be involved. As a result, before beginning a business, speak with a legal expert firm like Vakilsearch to establish and understand the legal requirements for acquiring a business license in India.