If you're running a micro, small, or medium-sized enterprise (MSME), obtaining a Shops and Establishments License is crucial. This license is mandatory for businesses operating in India and covers various aspects such as working hours, employee rights, and safety regulations.
Small and Medium Enterprises (MSMEs) form the backbone of the Indian economy, contributing significantly to employment and economic growth. However, to operate a business in India, entrepreneurs must comply with a range of legal and regulatory requirements. One such requirement is the Shops and Establishments License, which is mandatory for all businesses operating in India. In this article, we’ll provide a quick guide on how to obtain a Shops and Establishments License for MSME. We’ll cover the documents required, the application process, and the fees involved. Don’t let the Shops and Establishments License for MSME application process overwhelm you – follow our guide and ensure your business is compliant with the law.
Micro, small, and medium enterprises are collectively abbreviated as ‘MSMEs’. Currently, almost 6 crore of such small economic engines are operational in India contributing to 30% of our GDP, 45% of manufacturing output, and approximately 48% of the country’s exports. More than 11 crore people are employed in the MSME sector. They’re rightly referred to as the ‘Backbone of the country.’
The central government has lately taken key interest in development of the MSME sector, enacting many schemes, policies to make them self-reliant. The MSMED Act of 2006 is an initiative. However, the small shop owners often find themselves at a dilemma regarding the kind of benefit a Shops and Establishments License for MSME might offer them.
Objective of Shop and Establishments Act
An establishment is a commercial entity doing trade or business such as a shop, hotel, newspaper printing, cinema theatre, amusement parks, stock brokering, etc. In order to operate and regulate these, Government provides Shop Establishment Licenses under The Shop and Establishment License Act, 1953.
Main objectives of this license:
- Empowering states to impose rules based on local culture:
- To convert unorganised sector into organised
- To increase mandatory Registration of small businesses
- To Regulate Wages, work hours and labour rights of unorganised sector Employees
- Stop Child labour
- Grant special benefits to women employees
How to Obtain Shops and Establishments License for MSME
The Shops and Establishments Act is a state-specific law that regulates the working conditions of shops, commercial establishments, and other places of business in India. Obtaining a Shop and Establishment License for msme from the local municipal corporation or state government is must. Here is a step-by-step guide on how to obtain the Shops and Establishments License for MSME
Step 1: Verify the Eligibility Criteria
first verify the eligibility criteria for obtaining the Shops and Establishments License for MSME in their respective state. The criteria may vary from state to state, but generally, businesses that employ one or more employees are required to obtain the license.
Step 2: Gather the Required Documents
The applicant needs to gather the required documents for the Shops and Establishments License for MSME application process. The documents may vary from state to state, but generally, the following documents are required:
- Proof of identity and address of the proprietor/partners/directors
- PAN card and address proof of the business
- Proof of business registration
- Details of employees, such as their names, addresses, and salaries
- Lease agreement or rent receipt for the premises
Step 3: Fill the Application Form
The applicant needs to fill the Shops and Establishments License for MSME application form for the license. The form is available online or can be obtained from the local municipal corporation or state government office. The applicant needs to provide the required details, such as business name, address, and details of employees.
Step 4: Pay the Fee
The applicant needs to pay the prescribed fee for the Shops and Establishments License for MSME. The fee may vary from state to state, depending on the number of employees and the nature of the business.
Step 5: Submit the Application
The applicant needs to submit the filled application form along with the required documents and fee to the local municipal corporation or state government office. The licensing authority will conduct an inspection of the premises to verify compliance with the Act.
Step 6: Receive the License
If everything is in order, the licensing authority will issue the Shops and Establishments License for msme within a few weeks. The license is valid for a period of one to five years, depending on the state.
Benefits of Shops and Establishments License for MSMEs, Startups
Legal Right to Conduct Business: The business owner obtains the legal right to conduct business within the Act’s authority by obtaining a shops and establishments license for msme and providing evidence of business, such as a partnership or proprietorship. He/she cannot be bothered and harassed by law enforcement officials.
Business Banking Account: According to RBI regulations, every business must have a separate business account to manage its money. This business account may only be created with a certificate issued under the Shops and Establishments Act.
Hassle-free Inspections: Local municipality authorities and other statutory entities such as the FCCAI, among others, have the authority to perform inspections and checks. If you don’t have a shop and establishment act license, such audits and inspections can quickly escalate into a major problem, causing you to close your business. The best course of action is to obtain a shop license and run your business legally.
Availing Government Benefits: A Shops and Establishments Act license enables accessibility to a variety of government schemes and offers designed to promote small shops and commercial enterprises. There are also low-interest bank loans, financial plans, and programmes available to enterprises that are registered under the shop and establishment legislation
Encourage Expansion: A company owner who is 100 percent committed to following the Shop Act’s compliances will be able to reinforce the entity’s root in the market by giving it legal status, which will help the business owner to attract exposure to newer segments of consumers and client base over time.
Conclusion
To conclude, Shops and Establishments License for MSME strengthens MSME business by serving as proof of legal entity and right to conduct business . However, this act has some unique features. It varies from state to state on structure, features, eligibility, fees, terms and conditions, etc. This license must be obtained within 30 days of the start of commercial operation. Before creating a business current account, banks require this license as a legal document and lastly public sector-run business entities are exempted from the license
Still wondering why you should apply for a shops and establishments license for MSME and how to get one? We at Vakilsearch can provide you with the right help.
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