Business Licence: Explore Types, Eligibility and Process

Starting a business in India requires various processes, including obtaining the necessary business licences. Completing the mandatory licence procedures is crucial to avoid hefty fines and at times, potential closure of the business by the government.

This article explores the different types of business licences in India, their eligibility and application processes.

Why Are Business Licences Important for Companies?

Business licences are essential for the smooth operations of any firm and a better entrepreneurial atmosphere due to the following reasons:

• Legal Compliance

  A business licence proves that the company operates within the legal framework set by the government. Without a licence, the business may face financial implications like fines and penalties, and the risk of closure in extreme cases. Moreover, a licence simplifies interactions with regulatory authorities, thus ensuring the smooth functioning of the business.

• Customer Trust

  Maintaining a valid business licence boosts customer confidence and thus, helps in increased customer loyalty and repeat business. Additionally, it helps build investor trust facilitating access to funding and other business opportunities.

• Public Safety

  Certain business licences like the FSSAI licence are made mandatory to maintain health and safety standards, preventing health hazards and accidents. This helps keep a safe environment for employees and customers alike.

• Taxation

  Licences such as GST registration and professional tax registration are proof of tax compliance by the firm. Such business licences also avoid legal issues and penalties from tax authorities.

• Employee Welfare

  Business licences like labour licences ensure that a company complies with labour laws and provides a fair working environment for its employees.

• Regulation of Market Competition

  Trade licences and import-export licences are business licences that regulate market entry and competition.

Eligibility

To start the business licence registration process in India, the applicant must meet the following eligibility criteria:

• Must be of legal age i.e. 18 years or older.
• Have a legally recognised business entity with a registered business name and physical address.
• Should be an Indian citizen or a foreign national with a valid visa.
• Must not have any criminal history or be under legal probation for severe offences.
• Specific educational qualifications may be required for certain business licences.

Business Licence Registration in India

The business licence registration process in India consists of several steps that are listed down below:

1. Understand Your Business Type

   There are different types of businesses based on the number of owners and their legal and financial responsibilities. This step is crucial to understand your business licence requirements. Some common business categories are:

   • Public Limited Company
   • Private Limited Company
   • Partnership Firm
   • Limited Liability Partnership
   • One Person Company
   • Sole Proprietorship
   • Nidhi Company
2. Business Registration

   Register your business name with the Registrar of Companies (ROC) or other relevant authorities. Having a legally recognised business entity with a registered name and address is one of the eligibility criteria for a business licence. Additionally, it helps avoid potential legal conflicts in case the business name is already in use by another entity.

3. Application of Mandatory Business Licences

   The list of mandatory business licences depends on the structure, nature, type and location of the business. Some standard business licences are:

   • GST Registration
   • Shops and Establishment Licence
   • FSSAI Licence
   • Professional Tax Registration
   • Import Export Code
   • MSME Registration
   • Drug Licence
   • Labour Licence, etc.

   Obtain the required business licences to prove your company complies with all relevant laws and regulations.

Though this process may seem time-consuming and overwhelming, registering for licences helps the business avoid any financial and legal complications in the future. It is best to seek professional advice for business registration services and ensure a hassle-free procedure.

How to Apply for a Business Licence?

A business licence application process varies depending on the area, industry, and licence type. However, the general procedure for how to get a business licence is as follows:

1. Determine the Type of Business Licences Needed

   The specific registrations or permits mandatory for your business depend on the area and industry it operates in. Research and make a list of relevant business licences beforehand to avoid unnecessary delays and legal issues during the application process.

   For instance, if you operate a business in edibles, an FSSAI licence becomes mandatory for you. Similarly, shops require a Shop and Establishment Licence. Moreover, if the business is located in Maharashtra, you’d need a Gumasta Licence.

2. Meet the Eligibility Criteria

   Ensure that you and your business meet the set eligibility requirements for each licence before applying.

3. Gather Necessary Documents

   Keep the necessary documents ready such as identification, business plans, and proof of address. Be thorough and ensure that they are up-to-date and accurate. This not only prevents issues during verification but also demonstrates your preparedness.

4. Complete the Application

   The application form can be obtained from your local municipal office or online portal. Make sure you have provided all the requested information and that the form is free of errors and omissions.

5. Submit the Application

   Pay the required fees for your business licence and submit the application. Keep copies of all submitted documents and receipts for future reference.

After completing the application process, await approval and any additional inspections or verifications by the relevant authorities.

What Is the Price of a Business Licence?

The cost of a business licence depends on factors such as:

• The type of business and its location.
• The specific licencing requirements of the industry.
• Regulations and fees set by the local authorities.

Generally, the price of a business licence may be between INR 1,500 and INR 15,000. It is best to check with your local authorities for accurate pricing.

Business Licence Acquisition and Business Loan Guidance

A business licence is legal proof that your business complies with all relevant laws and regulations. Furthermore, it increases your chances of obtaining a business loan as a business licence demonstrates your credibility.

A business loan can prove to be beneficial in many ways, some of which include:

• Helps meet working capital requirements
• Provides funds for buying new machinery and equipment
• Finances business expansion

Conclusion

A business licence is crucial for sustaining a legally sound company and avoiding financial and legal complications.

To manage licencing costs and other operational expenses, or launch business expansion initiatives, consider securing a business loan. SMFG India Credit provides collateral-free business loans up to INR 75 lakhs* at attractive interest rates and repayment tenures of up to 48 months*. Apply for a business loan online to experience a stress-free application process from the comfort of your home or office.