Starting is the first step toward success. Setting up a business in India isn’t an easy task, but the country has made significant progress over the years, making it much easier for businesses to get started.
Licenses and permits are issued by the government of a certain municipality or state to allow firms to operate. For a specific individual to start a business in India, obtaining a business license is necessary. This is an important and needed document issued by a municipal council. Businesses are allowed to engage in defined activities in a given area. These licenses and permits are also used to check on businesses to determine whether or not they are following the law’s standards.
Why do You Need a Business License and Permits?
Business licenses and permits have been used in the country for the past forty years, and state governments manage them via municipal corporation laws.
This ensures that no one is harmed in any way due to a commerce or business’s disturbance and health danger. This also ensures that the business or trade is being held in a particular area, in a specific location and that no one is engaging in illegal business activities.
Let us go over the business license, its uses, and its advantages in more detail.
The process of getting a license differs from one type of industry to the next, depending on a variety of criteria such as the number of workers, the sector, the type of business, the location of the firm, and so on. In this article, we’ll look for some of the most popular company licenses and registrations and delve into this more.
Eligibility to Apply for a Business License
The following are the requirements for applying for a business license:
- The applicant must be at least eighteen years old.
- There should be no criminal records on the candidate.
- The company should be lawful to operate.
List of Business License in India
1. Company Registration
The first and foremost requirement for a new business entity in India is company registration. Based on the company structure and the partners involved.
Following are the types of new company registration categories that exist in India:
Company or Limited Liability Partnership (LLP)
Most enterprises in India are formed as sole proprietorships or general partnerships, with no central government licensing. The Ministry of Corporate Affairs oversees the formation of businesses and limited liability partnerships (LLPs). It is advised that entrepreneurs who aim to operate a business with annual revenue of more than Rs.20 lakhs register as an LLP or a firm.
Once a business or LLP is registered, it will have its legal existence, and the promoters will be protected from liabilities. Moreover, the firm would be easily transferable, and the business would continue to operate forever. As a result, it is best to seek advice from a specialist before starting a business.
The best advantage of being an LLP company is that the business is easily transferable without any legal hassles.
One Person Company Or OPC
Introduced in 2013, the One Person Company registration allows a sole-proprietor to register their business and legally carry on his/her business operations.
Private Limited Company (PLC)
If a company is registered as a Private Limited Company or PLC, then Indian law views the company as a separate legal entity from its founders. Such a company has shareholders, directors, and each entity within the company is regarded as an employee of that company.
Companies and startups looking to raise funds and issue ESOPs to employees often register as PLC.
Public Limited Company (PLC)
In the case of Public Limited Company, the law regards the corporation as a legal entity composed of voluntary association of members. The legal liability of every member is limited to the shares they hold. Businesses with high turnover are registered under Public Limited Company, with or without the aim of issuing IPO in the future.
The Ministry of Corporate Affairs does company registration under either of these classes. More information can be availed here.
2. Registration for GST
GST Registration is necessary for all firms and people with annual revenue of more than Rs.20 lakhs across most regions and Rs.10 lakhs in Special Category Provinces. Moreover, despite revenue, anyone delivering goods for intra-state sale is required to register for GST.
In addition to the foregoing criteria, the GST Act contains many other criteria that define the needs for GST registration. Understanding the conditions and obtaining GST registration within one month of starting up a firm is important for all businessmen.
3. Registration for Udyog Aadhaar (Udyam or MSME)
Startups who want to create and run a small company – micro, small, and medium businesses – can apply for this license. The eligibility criteria for getting Udyog Aadhaar registration are based on a production concern’s investment in plant and machinery or a services provider’s investment in machinery.
Once a firm has gained a Udyog Aadhaar license, it is eligible for various government benefits and initiatives to assist small enterprises in India.
4. Import Export Code
The DGFT Department requires everyone dealing in importing or exporting goods or services from India to get an Import Export Code. The firm must have a PAN as well as a bank account to receive an Import Export Code.
5. A License Under the Shop and Establishment Act
The “Shop and Establishments Act” was adopted to control business practices such as working hours, child labor, salary payment, worker safety, and overall health. State governments offer Shop and Establishment Act licenses or registrations, which vary by state. As a result, the relevant State Public authority for getting a Shop and Establishment Act License should be contacted based on the State where the business is located.
6. Gumastha Registration
If you want to start a new business in Maharashtra, you’ll first need a Gumastha license. To obtain it, you must have the following documents:
- PAN Card
- Residence proof or an owner’s no-objection letter
- Application letter to the Municipality of Greater Mumbai
- Authority Letter for Business
- Government in the prescribed format for a partnership
- Business Documents of Agreement Certificate of Incorporation of the Business Director’s ID and Proof of Address
7. FSSAI License for Food Business
If you are seeking an answer to how to get a business license for food products, then here is the answer.
Food Safety and Standard Authority of India or FSSAI is a Govt of India undertaking responsible for the safety and standardization of every food product sold anywhere in India. If you are planning to launch a food business, be it packaged food, restaurant, Cloud kitchen, or any other food business model, you must obtain a license from FSSAI.
There are three types of FSSAI licenses:
- FSSAI Central License
- FSSAI State License
- FSSAI State Registration
These are classified based on business turnover:
- Turnover up to Rs 12 lakh: Basic FSSAI registration
- Turnover between Rs 12 lakh and Rs 20 crore: State FSSAI registration
- Turnover more than Rs 20 crore: FSSAI Central registration
8. Other Registrations and Licenses
Certain sorts of businesses that deal with or provide insurance, financial services, broadcasting services, defense-related services, and so on would require regulatory permission from agencies like the Reserve Bank of India, IRDAI, etc.
Moreover, a company may be required to get permission from the fire dept, the environmental control board, or the local health service. It all relies on what kind of business you want to start. As a result, before beginning a business, consult with an expert to evaluate and know the legal requirements.
How to Apply for a Business License in India?
The process to obtain a business license is determined by the type of the firm, its location, its nature, and its size. To find out what type of business license and permits in India is necessary, call a professional service provider or even a CA, CS, and ICWA agency and ask for advice on securing a business license in India.
Getting professional advice on gaining a business license will help determine whether or not you need that specific business license. It would also save time and ensure that no errors or mistakes are made throughout obtaining a company license.
To start a business in India, you’ll need the following documents.
- Pan Card
- Driving License and Voter Id
- Aadhar Card
- Rent Agreement and Lease Agreement’
- Electricity Bill, Water Bill, or Telephone Bill
- Chartered Accountant Certificate
- Memorandum Of Association and Article of Association.
- Partnership Deed
So, those are the documents you’ll need to set up a business in India.
The Bottom Line
We hope you found our guide on the business license in India helpful. Certain kinds of businesses, such as one that deals in managing or providing security or safety, Financial Institutes, broadcasting offices, Defense Services, etc., would require licensing and registration from public agencies such as the Reserve Bank of India, IRDAI, Fire Station, Pollution Control Board, RTO, and so on.
All are based on the type of business in which you will engage. As a result, before starting a business, consult with an expert to determine and know the legal formalities associated with obtaining a business license and permit in India.