In India, there are different types of businesses starting every day. One thing that is common between them is the legal licenses and registrations required to run them. Every kind of business has its specific legal requirement with respect to licenses and registrations like a food business needs an FSSAI license, a pharma business needs a drug license etc., which must be fulfilled by the owner of the business. Some registrations, as well as licenses, are mandatory, whereas some are direct. The owner of the business analyses the business requirement and as per the requirement, one should take the legal registration or license or both.
License and Registration a Legal Compliance
Legal compliances with respect to licensing as well as registration are compulsory, and every business owner has to comply with them. Noncompliance with such legal compliances may result in heavy penalties or fines, or sometimes it may attract penal offences. Therefore, it is always suggested that all the new businesses or the businesses that already exist must take legal licences as well as registrations according to your business requirements. They came up with various benefits and advantages that can save you in many situations. Hence, businesses must comply with them.
Licenses and Registrations for a Business in India
There are various types of business licenses and registrations as per the requirements of the business. One has to take them from the respective competent authority. Some are compulsory, and some are directory in nature. Directory may not be taken by the business owner, but compliances that are compulsory cannot be ignored. Some of the legal licenses and registrations that are required by the different types of businesses are given below:
General Licenses and Registrations
A list of some general licenses and registrations, which are mostly applicable to all types of businesses, is given below:
Entity Registration
The first and foremost requirement of any kind of entity is to register the entity. The entities can be registered in different forms. After the registration of the entity, an incorporation certificate has been provided to them. Some of the different types of entities are given below:
- Private Limited Company
- Public Limited Company
- One Person Company
- Holding Company
- Subsidiary Company
- Banking Company
- Limited Liability Partnership Firm
- Partnership Firm
- Proprietorship Firm
Goods and Services Tax Registration
GST Registration is an indirect tax registration under the Goods and Services Tax Act of 2017. It is the biggest tax reform in the history of India. India is not the only country where this is applicable. With India, there are 160 more countries where it is applicable. Under this, there are four eligibility criteria according to which one needs to take this registration. The four eligibility criteria for this registration are given below:
- Businesses deal in goods, and their turnover is up to Rs. 40 lakhs or more than that.
- Businesses that provide services and their turnover is up to Rs. 20 lakhs or more than that.
- Businesses deal through e-commerce platforms, and for such businesses, turnover is not relevant.
- For businesses whose transactions are interstate, turnover is not relevant.
Shop and Establishment Certification
For the proof of commercial establishment or the commercial establishment of any kind of shop, it is mandatory to all kinds of businesses to take a shop and establishment certificate from the respective authority. It is given by the state authorities and, hence, needs to be taken from the state government. In most states, the procedure is online, but still, there are certain states where the physical application needs to be filed. One such state is Gujarat.
ISO Certification
The International Organization for Standardization, which is ISO, gives the ISO certification for businesses. Mostly, it is applicable to all businesses. It is for the purpose of maintaining standards with respect to goods and services one is providing. This helps to acquire the trust and reliability of the consumers. International Organization for Standardization certification gives credibility to the business. Hence, although it is not mandatory for all businesses, one must take it.
Specific Licenses and Registrations
Some of the specific licenses and registrations that are applicable to particular types of businesses are given below:
MSME Registration
Micro, Small and Medium Enterprises, which is commonly known as the MSME among the laymen, are required to take MSME registration. This registration is also known as udyog or Udyam registration. It is suggested to all the MSMEs to take this registration because without this they cannot be eligible to get benefits of various government schemes which are specifically for the MSMEs.
Startup India Registration
Under the Startup India scheme of the government, it is mandatory for all the startups to take Startup India registration to avail the various benefits of the scheme. As per this scheme not all the newly started falls under the category of startups. Only those who fall under the eligibility criteria for the startups given under the Startup India scheme need to register themselves as startups. Some of the key points to be called a startup in India are given below:
- The entity must not be older than ten years, and these ten years will be counted from the date of incorporation.
- It must be an original entity.
- Must not cross the turnover of Rs 100 crores in the last ten preceding financial years
- To be called a startup in India, an entity must be either LLP, Partnership firm or Pvt. Ltd. Company.
- It must be a scalable business
- It must be an innovative business
- Businesses must have the capacity to generate wealth as well as opportunities.
FSSAI License
Under the food safety law that is Food Safety and Standards Act of 2006, a business owner who is running a food business in India needs to take this license called FSSAI or Food License. FSSAI is the authority that provides this license to the applicant. This license is of three types, which are given below:
- General Food License
- State FSSAI License
- Central FSSAI License
Drug License
For doing business related to medicine and drugs, one needs to take a drug license. There are different types of drug licenses. Which type of license will be applicable to which drug business depends on the type of business. Drugs can be allopathic, ayurvedic or homoeopathic and accordingly, different licenses are applicable. Some of the types of drug licenses are mentioned below:
- Wholesale Drug License
- Retail Drug License
- Loan Drug License
- Manufacturing Drug License
- Ayush License
Conclusion
Operating a business in India necessitates obtaining a range of specific legal licenses and registrations tailored to the nature of the enterprise, including entity registration, Goods and Services Tax (GST) registration, shop and establishment certification, ISO certification for maintaining standards, and specialised registrations like MSME and Startup India for accessing government schemes, FSSAI licenses for food-related businesses, and various types of drug licenses for pharmaceutical enterprises. These legal compliances are not only essential for smooth operations but also for eligibility for government benefits and protection, making it imperative for both new and existing businesses in India to prioritise their acquisition to operate within legal parameters.
