Licenses and Registrations Required to Operate a Business in India

 

Starting and running your own business can be a rewarding and exciting experience if done properly.

 

But obtaining the required business licences is crucial to being able to run a firm legally.

 

The government of a given state or town gives licences to let firms operate. For a specific person to open a business in India, they must have a business licence. 

 

These licences are also used to monitor businesses to make sure they are abiding by the legal requirements. Every state has its own unique set of regulations.

 

Depending on the number of employees, kind of business, sector, location of the organisation, and other variables, the licencing process varies per industry. 

 

In this article, we will discuss the most common business licences required for operating in India.

 

Why Do You Require a Company License?

 

The nation has used business licences for the past 40 years; they are controlled by state governments through municipal corporation laws. 

 

This guarantees that no one is harmed in any way due to health risks or business disruption. 

 

Additionally, it guarantees that the firm or trade is carried out in a specific location and area and that no one is engaging in unethical commercial methods.

 

Eligibility Criteria to apply for a Business License: 

 

The following requirements must be met before applying for a business licence:

 

• The applicant must be at least eighteen years old.
• There should be no criminal past for the candidate.
• The business must conduct legitimate operations.

 

Business License List

 

To form and start any firm in India, a specific set of actions must be taken. 

 

These are listed below:

• Business Registration Certificate
• GST Registration
• Shop and Establishment Act License
• Udyog Aadhaar Registration (MSME)
• FSSAI License (Food-related Business)
• Import Export Code 

 

 

Business Registration Certificate

 

The first and most crucial step for a new business organisation in India is company registration online. The following are the categories of new business registration: 

 

Sole-Proprietorship Firm

 

A proprietary business is run by a single person, and the owner of that proprietary business is known as the proprietor. A proprietorship is a common business structure in India. 

 

The business can be started and operated with minimum regulatory interference. 

 

The Indian government, however, does not offer a thorough procedure for registering your proprietorship. 

 

The proper method to prove the existence of your private company is to register for taxes and other types of business registration.

 

A sole proprietorship has no separate legal status, hence the owner frequently signs contracts in their name. 

 

Even if a fictitious name is used for the company, customers will typically write checks in the sole proprietor’s name. 

 

LLPs, Partnerships, and Private Limited Companies are not permitted to combine business and personal assets, whereas sole proprietorships are.

 

Partnership Firm 

 

A partnership is one of the most basic forms of economic organisation, after all. 

 

Starting a business with two or more people and dividing the profits according to a predetermined ratio. 

 

Compared to a corporation, a partnership is easier to establish and has lower compliance rates. The issue becomes significant when many partners concur on guidelines for a company's commercial operation. 

 

This variety of viewpoints has several legal and regulatory ramifications.

 

Constraints of the proprietorship kind of ownership include limited human resources, a narrow range of job-related skill sets, and unlimited liability for losses. 

 

Business expansion is aided by increased funding, more qualified personnel, and limited liability. The owner learns that he is unable to achieve these requirements. 

 

This asks for a larger group of people from various backgrounds to come together and start a business, for instance. Although they might not have managerial skills, they might have money that could benefit your company.

 

One Person Company

 

A sole proprietor can register their corporation and legally carry on their business operations thanks to the One Person Company registration, which was launched in 2013.

 

Limited Liability Partnership

 

General partnerships or sole proprietorships, which require no central government licencing, make up the bulk of enterprises in India. 

 

Concerning limited liability partnerships and business, the Ministry of Corporate Affairs is in charge. 

 

It is advised for business owners who plan to operate with an annual revenue of over 20 lakhs to register as a firm or an LLP.

 

A corporation or LLP has legal existence once it is registered, and the promoters are immune from liability. 

 

Moreover, the corporation would be easily transferable and it would always be open for business. As a result, consulting an expert before starting a business is crucial.

 

Private Limited Company

 

This type of company registration online limits the ownership to particular socioeconomic levels. Indian law treats a company that has been registered as a PLC, or private limited company, as a completely independent legal person from its founders. 

 

This type of business has shareholders and directors, and any person or thing that is a part of it is regarded as a member of the staff.

 

GST Registration

 

In most places, enterprises and individuals with yearly revenue of more than 20 lakhs and 10 lakhs in Special Category Provinces must register for GST. 

 

In addition, whomever ships goods for intra-state sale must register for GST regardless of revenue.

 

The GST Act includes several other conditions that create the prerequisites for GST registration in addition to the ones described above. All entrepreneurs must comprehend the requirements and obtain GST registration within a month of starting a business.

 

Shop and Establishment Act License

 

This specific law was passed to control workplace activities like working conditions, wage rates, the use of child labour, general health, and worker safety. 

 

State governments provide Shop and Establishment Act licences or registrations, and they differ from state to state. 

 

As a result, the appropriate State Public body for acquiring a Shop and Establishment Act License should be contacted based on the state where the business is located.

 

Udyog Aadhaar Registration (MSME)

 

Small, medium and micro businesses that want to launch and run a small business in India can apply for this licence. 

 

The investment in machinery and plant by a manufacturing company or the investment in machinery by a service provider will determine the eligibility conditions for acquiring this registration.

 

Once a business has secured a Udyog Aadhaar licence, it becomes eligible for several government benefits and initiatives designed to help India's small companies.

 

FSSAI License (Food-related Business)

 

Look no further if you're wondering how to obtain a business licence for the food industry.

 

The government-run FSSAI, or Food Safety and Standard Authority of India, is in charge of ensuring the safety and uniformity of all food goods imported into India. 

 

You need to obtain an FSSAI licence if you want to start a food business, whether it be a restaurant, cloud kitchen, packaged food, or any other type of food business model.

 

Import Export Code 

 

An Import Export Code must be obtained from the DGFT Department by anyone who exports or imports products or services from India. 

 

A PAN and a bank account are required for the company to receive an Import Export Code.