Overview
There are a number of arrangements and formalities that must be made when starting a new business, such as opening a salon, in order to comply with the applicable legislation. You must apply for and get all necessary licences and permits in addition to receiving training and developing the necessary skills for starting and operating the business.
The fundamental prerequisites include a rent/lease agreement or sale deed for the property where the salon will be physically located, business licences and registration, as well as obligatory audit and tax compliances. We'll talk about how to get the needed documents in this article.
Fix a Place for Your Shop
Decide on a place before opening your shop.
If you already own a location, you must obtain authorisation from the relevant authorities before using it for business (in case it is a residential property).
You can either purchase, rent, or lease a retail area depending on your goals and financial situation.
Here, we'll go over the steps:
- Purchasing a Store: When business owners believe that the location will increase their company's worth, they often choose to purchase a space for their shop. A sale deed is typed on stamp paper that varies in cost based on how much the property is worth overall. The registrar's office is where the sale deed is registered. There must be two witnesses, as well as signatures from the buyer and seller.
- Renting a Shop: Make sure to have a record of the rental agreement for future reference if you are renting the property. On stamp paper, the rental agreement is printed. Each state has a different stamp duty. The owner, tenant, and witnesses all sign it. The agreement must specify the period, rent paid, and the liabilities involved regarding maintenance and other necessary formalities.
- Residential Property Used for Commercial Purposes: If you wish to open a business in a residential neighbourhood, perhaps out of a portion of your own home, you must still get approval from the town planning authority or corporation. However, not all residential zones can be used for business; it depends on the local authorities' policy.
Licenses and Registration
Registering the Business
Partnership Firm Registration, private limited company, limited liability company, or sole proprietorship is the initial step for any business. If a corporation or LLP is chosen as the business structure, get the registration from the registrar. The registration is completed at the sub registrar's office if it is a partnership firm. If it is a sole proprietorship, it need not adhere to many of the formalities, nevertheless.
Registering under the Shops and Establishment Act
According to this act, a license must be obtained within 30 days of the business' start. One must register under the Shop Licence Registration Act before operating any shop or establishment, conducting business, or hiring staff. This legislation outlines the standards that the employer must adhere to with regard to opening and closing times, working hours, overtime rules, leave policies, how work is distributed, how notices are displayed, etc.
Registration for PAN and TAN
Each and every firm must register for a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN) under its own name. The PAN and TAN can, however, be issued in the owner's name in the case of a sole proprietorship.
Both are ten-digit alphanumeric, unique numbers that are both issued by the Income Tax Department. A PAN is required in order to make payments of ₹50,000 or more, and a TAN is required in order to deduct TDS.
Registration of GSTIN
The business must pay GST if its annual revenue exceeds ₹10 lakhs in the North Eastern and special category states and ₹20 lakhs in all other states. Your company needs a GSTIN registration if the boutique's revenue meets this requirement.
Both are issued by the Income Tax Department – two ten-digit alphanumeric unique numbers. For making payments of Rs. 50,000 or more, it is necessary to have a PAN and – so as to deduct TDS – TAN is necessary.
Trade License
It is required to obtain a trade licence from the local administration before starting the firm. Only after verifying that the trade is both legal and in accordance with public policy is this licence granted. The following documents are included with the trade licence application: the company/firm registration paper, the property tax document, the fire NOC, the ID proof, the address proof, etc.
Professional Tax Registration
Professional tax is levied by the local authority – municipality or corporation. This tax varies from state to state. Depending on the laws regulating in your state, you have to get yourself registered for professional tax registration.
Fire NOC
A no-objection certificate (NOC) from the Chief Fire Officer is required when opening a boutique, depending on the locale, the type of business (online/offline), and the work being done. As an example, if you are running an offline business where consumers will visit your shop and employees will be needed to run the business, you must obtain the fire NOC.
Along with the application, additional papers must be supplied in order to obtain the NOC. These additional documents include the building design, the model of the building, a certificate from the architect, a list of the electrical appliances being used, etc.
Pollution Control Board (PCB) Certificate
If you are creating bio waste which is essential for salon as hair and nails along with chemical waste are produced you need a pollution certificate , it falls under the category industry as per the Pollution Control Board (PCB). After verifying the documents submitted and, if required, conducting an on-premises inspection of your facilities, the PCB will issue you a license
Employment Registration
ESIC Online Registration (ESIC) is required if you hire 20 or more people on a pay basis. Every employee who makes less than ₹21,000 per month is eligible to get benefits under this programme.
Permission from Pollution Control Board
If you are dyeing the clothes in your boutique and treating dress materials with chemicals and other substances, it falls under the category industry as per the Pollution Control Board (PCB). After verifying the documents submitted and, if required, conducting an on-premises inspection of your facilities, the PCB will issue you a license.
Audit and Tax Compliance
Depending on the type of organisation you have registered, there may be a tax audit limit. If the sole proprietorship's annual revenue surpasses ₹1 crore, a tax audit is required. The tax audit laws will apply if the store is registered as a partnership entity and its gross sales exceed ₹50 lakhs.
Similar to this, it is required in all circumstances for private limited companies and LLPs with more than ₹40 lakhs in annual revenue or ₹25 lakhs in capital contributions.
Every company is required to submit income tax forms, where they must include information about their revenue and gross profit. GST returns must be filed.
Why Vakilsearch?
Vakilsearch is a group of experts, lawyers and chartered accountants who will help you navigate through the arduous paperwork of setting up your business. Other than that, they will also help you avoid any legal hassles which you may face in setting up your business with 24x7 support.
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