When launching a business, ensuring compliance is of the utmost importance. Understand which licenses and authorizations are necessary to launch your company.
Getting started is the first step toward accomplishing anything. An Indian startup isn’t quite a fairy tale, but the country has made significant progress in recent years, making it much easier for entrepreneurs to start the business. This section will discuss the types of licenses and registrations required for different types of businesses in India. No matter how big or small your company, obtaining a permit is a need. Businesses in India, like in any other country, are needed to seek and renew various business licenses and permits. Read more to know about different types of business license registration.
However, obtaining a license can be difficult and complex, especially for small enterprises with few resources. In India, obtaining a business license depends on various factors, such as the business’s size, kind, industry, and jurisdiction. In this post, we glance at some of the company licenses and registrations that are the most typical and easiest to acquire.
What Is a Business License In India?
Purchasing a business license grants the buyer the legal authority to start and run a specific type of business within the license’s jurisdictional scope. It is a form of government-issued license allowing a corporation to do business. As a part of starting a business, you should determine whether or not you are required to have a license because some types of companies do not have this requirement.
However, you are liable for fines or even forced to close your company if you do not have a license. Some businesses require licenses from multiple jurisdictions; others don’t need any. The location of your business will affect the type of license you require and where you can get it.
Why are Business Licenses Important for Companies?
Business licenses serve as a regulatory mechanism imposed by the government to foster accountability, and transparency, and protect consumers. Without the requisite licenses, organisations may encounter difficulties in their dealings with regulatory bodies, and extreme cases, they may face fines or the risk of closure for non-compliance. The enforcement of business licenses ensures a structured and monitored business environment, contributing to the overall integrity of commercial operations.
It’s noteworthy that business licenses are not exclusive to physical establishments; even home-based or internet-based enterprises may find themselves in need of such licenses. Despite the potential time investment, obtaining all necessary business permits upfront proves to be a prudent approach. This proactive measure not only facilitates smoother interactions with regulatory bodies but also mitigates the risk of unexpected penalties or closures, ultimately minimising stress and long-term financial implications for the business.
Eligibility to Apply for a Business License in India
Getting a business license in India is like unlocking the door to your entrepreneurial dreams. But before you step through, it’s crucial to understand who qualifies to hold the key. The eligibility criteria can vary depending on the specific license you need, but here’s a breakdown of the general requirements:
- Age is Just a Number (as long as it’s 18): You must be at least 18 years old to be the legal face of your business.
- Business Basics: Your business needs to be a legally recognised entity, whether it’s a sole proprietorship, partnership, or company.
- Citizen or Resident with Valid Papers: Indian citizens and foreign nationals with valid visas can apply.
- Education for Specific Licenses: Certain licenses, like those for medical practices, may require specific educational qualifications.
- Experience Might Be Required: Some licenses might ask for proof of prior experience in the relevant field.
- Financial Fitness Check: For some licenses, demonstrating financial stability through bank statements or business plans might be necessary.
Business License Registration In India
In India, there are many different types of business license registration . However, the most common ones are classified into the following categories:
1. Business Registration
Most Indian enterprises are founded as sole proprietorships or partnership firm registration, which do not require formal registration with the government at the national level. The Corporate Affairs department governs companies’ registration procedures and limited liability partnerships. Businesses with annual revenue exceeding Rs.20 lakhs should register as a limited liability partnership or a corporation. Once an LLP or corporation is registered, the business will have its legal existence, and the investors will be protected from financial losses. As a result, the business would be more easily transferable, and the organization would continue to exist. Consequently, consulting an expert and setting up an LLC or corporation are essential steps before launching a firm.
2. Registration for Goods and Services Tax, GST
There is a mandatory registration requirement for all businesses and people with combined yearly sales of more than Rs 20 lakhs for most states and Rs 10 lakhs for the Special Category State. In addition, each supplier of goods involved in interstate supply must do GST registration online, regardless of turnover. In the first 30 days after beginning a firm, every entrepreneur should learn about the requirements and register for the Goods and Services Tax, GST.
3. Registration for the Udyog Aadhaar
PVT limited company registration, such as a mini, minor, or medium-sized one, requires registering with the Small Business Administration, SBA. Udyog Aadhaar registration is based on a manufacturing company or service provider’s investments in plant and machinery or on the equipment they use to perform services. When a company obtains Udyog Aadhaar registration, it is eligible for various government subsidies and programs to support India’s small companies.
4. FSSAI Certification or Registration
FSSAI verifies the safety and standards of food items countrywide. This five-letter term is sought for in the packaging or containers of food sold in restaurants, retail stores, kiosks, and modern trade outlets, as well as by individual customers. FSSAI categorizes licenses and registrations into three distinct groups:
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- FSSAI State Registration
- FSSAI State License
- FSSAI Central License
5. Code for Importing and Exporting
The DGFT Department requires that everyone who imports or exports products or services from India obtain an Import Export Code. The business must have a PAN and a bank account to receive an Import Export Code.
6. Shops and Establishment Act license
When the “Shop and Establishments Act” was enacted, it was to regulate the operation of a business, including the hours of employment, the use of children, and wages. State governments offer licenses or registrations under the Shop and Establishment Act, which vary from state to state. Therefore, to obtain a Shops and Establishment Act License, it is necessary to contact the appropriate state government authority, which differs depending on the state where the company is located.
7. Gumastha Permit
To operate a business in Maharashtra, individuals need to get a “Gumastha” license, which is issued by the state. To get it, you’ll need the following documents:
- PAN Card
- Address evidence or a landlord’s no-objection certificate
- Application letter to the Greater Mumbai Municipal Corporation
- Business Authorization Letter
- Partnership Government Fees
- Memorandum and Articles of Association
- Certificate of Incorporation
- Director’s ID and Address Proof are required documents for a partnership firm.
8. Other Permissions and Registrations
Particular businesses involving insurance, defense-related services, financial services, broadcasting, etc., require permission from regulatory agencies like IRDAI, Reserve Bank of India, etc. In addition, a company might be required to acquire permission from the fire service, the environmental control board, or even the local hospital system. Ultimately, it all comes down to what kind of business you want to start and run. Before company registration or business, review its legal and regulatory needs with a professional.
How can I get a business license in India?
The path to obtaining a business license in India can seem like a winding road. The good news is, you don’t have to navigate it alone! Here’s a breakdown of the process:
- Know Your Needs: The first step is understanding what licenses and permits you actually require. This depends on your business type, location, size, and industry. It’s like picking the right key for the right lock.
- Do Your Research: Many resources are available online or from government agencies to help identify the specific licenses you need. Think of it as gathering a roadmap for your journey.
- Consider Expert Help: While some licenses are straightforward, for complex situations, seeking guidance from a business consultant or advisor can be a wise investment. They can be your guide on the path to licensure success.
- Gather Your Documents: Once you know the licenses required, compile the necessary documents. This might include proof of identity, business registration papers, and location-specific approvals.
- Apply and Submit: With all your documents in order, you can finally file your application with the issuing authority. Be prepared for some back-and-forth communication, as clarifications or additional documents might be required.
- Patience is Key: Obtaining licenses can take time, so be prepared to wait a few weeks or even months. Stay patient and persistent, and eventually, you’ll unlock the doors to officially operating your business.
Documents Required For Business License In India
The documentation requirements may vary depending on the type of authority or business. To complete the business registration process, the following documents must be provided:
- Pan Card
- Driving License/ID/Aadhaar Voter’s card
- Passport
- Bank statement
- No-objection letter from the landlord
- Lease Agreement or Rent Agreement
- Authority Letter of Business
- Articles of association and Memorandum Of Association
- Co-ownership Agreement
FAQs related to Types of Business License Registration:
1. What is a business license number in India?
A business license number in India is a unique identification number assigned to a business entity by the relevant government authorities. It serves as a distinct identifier for regulatory and legal purposes.
2. Can I start a business without GST registration?
Generally, businesses with an annual turnover exceeding the prescribed threshold are required to obtain GST (Goods and Services Tax) registration in India. Operating without GST registration when mandatory can result in legal consequences. It's advisable to check the applicable rules based on the nature and turnover of your business.
3. How much does a business license cost in India?
The cost of a business license in India can vary depending on the type of business, location, and specific requirements. Different licenses may have associated fees, and the overall cost can also include charges for document processing and verification. It is recommended to consult with local regulatory authorities or a professional to determine the exact costs relevant to your business.
Conclusion – Types of Business License Registration
This blog offers India business license advice – https://services.india.gov.in/service/listing?cat_id=16&ln=en. Businesses that manage or provide security or safety, broadcasting offices, financial institutions, and defense services, for example, need to be licensed and registered with government authorities like IRDAI, the Reserve Bank, fire stations, RTO, pollution control boards, and so on. Therefore, everything is determined by the work you will do in the future. Consult with a Vakilsearch before beginning a business in India to learn about the legal requirements for getting a business license and permission.
