Online Business

What Licenses to Get Before Starting A Business?


By Divijaa

  • 4 Min Read
  • 3rd January, 2023
What Licenses to Get Before Starting A Business?

Everything you need to know

Running a business is heavily reliant on acquiring the business licences and permits necessary to operate legally. If you have any questions concerning licence obligations or fulfilment, you should consult with an expert.

What exactly is a business licence?
A business licence is any sort of permit or licence required by a state or other government agency for enterprises to begin trading. Federal, state, and municipal governments provide many types of business licences and approvals for a variety of commercial businesses.

Why are business licences necessary for enterprises?
The government requires business licences in order to improve responsibility, clarity, and consumer protection. The government has the authority to levy penalties or even shut down non-compliant firms.

A home-based or internet-based business may also require business licences, hence, they aren't just required for businesses with a physical storefront. Even though it takes time, doing things correctly may decrease stress and expenses in the long term.

Company types as defined by the Companies Act of 2013.
Under the Corporations Act of 2013, company owners can also form several sorts of organizations to provide them with legal standing and shape.

One person company
-It just has one member, therefore the name.
-The member may also serve as a director of the company.
-It can have a maximum of 15 directors.

Private limited company
-It can have no more than 200 members.
-At least two members are necessary.
-Members are not permitted to transfer their stake.
-At least two directors are necessary (a maximum of 15 directors allowed).

Public limited company
-The company's stock is owned by the general public.
-The maximum number of stockholders is unlimited.
-These corporations must have a minimum of seven members to be formed.
-It is necessary to have at least two directors (maximum of 15 directors).

Section 8 Company 
-It refers to the charity organisation of persons registered under Section 8 of the Act.
-In India, these corporations are prohibited from paying dividends to their members.

In India, there are many types of business licences.
The registration of a business guarantees its continuity, a distinct legal personality, and private limited protection. After the company's revenue exceeds a certain level, licensing will aid it in progressively developing and growing.

1. Registration for GST
Companies with inter-state supplies and corporate entities with revenue over a certain level must apply for the Tax on Goods and Services. Companies must apply for GST in order to fulfil a variety of additional obligations.

2. Registration for Udyam Aadhar
The Udyam internet store serves small enterprises in India. Though registration for Udyam Aadhar is not needed, there are various benefits to doing so, such as government credit facilities, incentives, and so on.

3. Registration or License with the FSSAI (In case you wish to start a business of edibles)
This is India's national body for guaranteeing food safety and standards. FSSAI is an abbreviation for Food Safety and Standard Authority of India. All commercial shops, sales outlets, diners and restaurants must adhere to FSSAI laws, get permits, and update their licenses on a regular basis.

4. Code for Import and Export (For businesses doing import and export of goods and services)
In India, export and import enterprises must obtain special permission known as the Import Export Code, which is given by the Ministry of Commerce's Directorate General of Foreign Trade.

5. A licence is required to open a retail store in India.
A licence is necessary to run a retail business in India under the "Shop and Establishments Act." Because registrations are issued by state governments, the laws in India differ from one state to another. The Act supervises all local shops and enterprises and monitors their behaviour to guarantee that there is no child labour, long working hours, unsafe working conditions, unjust payment practices, etc.

6. Licenses Required for an Indian Factory Site
To run a factory in India, registration is necessary under the Factories Act of 1948, which is issued by the state government.

How Do I Get a Business License?
While the process for obtaining a business licence differs depending on the location and sector, it often goes as follows:

1. Begin by becoming familiar with all levels of government rules governing business licencing in your industry. Determine which organisations will control your activities and approach them to provide for the necessary documentation.

2. Be careful when filing documentation. Provide photocopies of all required documents, answer to any questions, and settle all expenses on time. If you don't comply with this, your efforts to establishing or building a business may be pushed back.

3. If your application is approved, you will receive a copy of your licence as well as information on whether you need to reapply it.


Frequently Asked Questions

What is the difference between a business licence and a permit?

A permit is not the same as a business licence. A business licence certifies that your company complies with state legislation, whereas permits ensure that your organisation adheres to safety and preventative measures.

To obtain a business licence, go to the office or website of the state regulatory authority where the business is located.

In the event of non-compliance, the regulating authority may punish the company or even order its closure.

Various fees apply to different types of enterprises. The following are the usual fees for all company types: Sole Proprietor Company- Rs. 2500 Partnership Firm- Rs. 5000 Private (LLP or LLC) Company with 1 Lakh Capital- Rs. 7000

Any individual or company planning to do business in a certain region or who already runs a firm must get a small business licence.


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