Trade, as well as business licenses, are the two different names of one single license. There are many compliances of a business, and license and registration are one of them. One such compliance also includes a Trade License. This is applicable to almost all business entities whether they are Pvt. Ltd. Company, OPC, LLP or sole proprietorship firms. The current blog will discuss in detail the trade or business license for sole proprietorship firms. If you are a sole proprietorship firm, you must go through this blog till the end. This will help you to understand whether a sole proprietorship firm needs a business license or not because there are many myths regarding the same in the market.
What is a Sole Proprietorship Firm?
Sole Proprietorship Firms are the kind of an entity which has been started by only one individual. Such kinds of entities are for those businesses which are small and are set up in the local area. These businesses do not have any plans for expansion, and they are just limited to a particular area. For example, local bookshops, vendors and hawkers, local cafes, etc. They are a self-funded business that does not want to attract any funding or investors for their businesses. There is no need for registration of such businesses. They will be considered registered if they have GST registration or MSME registration. But this does not mean that they are exempted with respect to legal compliance hence, if required, business owners have to take trade or business licenses for sole proprietorship firms.
Is it Necessary for Sole Proprietors to obtain Trade License?
Yes, if the business falls under the criteria of a trade license or it is mandatory as per the government requirement to hold this license for any business, then they cannot ignore it. Sole proprietorship firms that are in the business of commercial or local shopping complexes, metropolitan districts, as well as community centres, pedestrian shopping streets, service markets, service centres, businesses involved in mixed-use land, commercial zones, etc, must have obtained this trade or business license. This license has been issued by the local municipal corporation. Government fees for this license can vary from state to state. It is not similar for all the states.
Key Benefits of Trade License
If we see the benefits of trade licenses it will be clear that it is beneficial for both governments as well as the applicant. Certain key advantages of a business license are mentioned below:
- Compliance with the law
- Authorities can keep an eye on the business activities
- Security has been provided to the consumer’s interest
- This license is very useful while building the trust of the consumers or customers in the market among the competitors
- Improves the work environment and culture
- Safeguard the rights of the employee as well as an employer in the business place
- Fair and ethical business promotion
- Increases business credibility as well as reliability
- Helps in the growth as well as development of the business
- Ensures that the objective of the business is lawful
Who Needs to Get a Trade License in India?
All the businesses falling under the categories given below need to take trade or business license in India. This is not an exhaustive list of categories; there are many more things that should be included here. These are just the key businesses that need the above-mentioned license.
- Commercial as well as local shopping complexes are bound to obtain this license
- Metropolitan, district, as well as community centres need to hold this trade or business license
- Pedestrian shopping streets also need to obtain this license for trade
- Service markets, as well as service centres, also fall under the category of businesses that need to obtain this license
- It is also applicable to the businesses where there is a mixed-use of land
- Commercial zones must take this license for their business
- Food as well as drug businesses are included in this category of businesses that need to take this license
- Manufacturing, retail and wholesale businesses also need to take this license
Conditions to Obtain Trade or Business License
To obtain a business license, one must fulfil the criteria given below:
- Applicant must be a major
- He or she must be of sound mind
- There must not be any criminal record
- Eligible to enter into a contract
- Business must have the legal status
- The objective of the business must not be against the law of the land
- It must be a state-based business
Fees for Trade License in India
A business license is a license that is mostly applicable to all types of businesses. But simultaneously, it is not a central license, which means it is not provided by central authorities. It is a license that has been provided to the applicant by the local municipal corporation. Hence, we can say that it is a state license. If we look at the total states in India, there are almost twenty-eight plus union territories that will also be included when it comes to business licenses. Because of the number of states and UTs, there are no fixed fees for trade or business license. It varies from state to state or UT to UT.
Conclusion
Obtaining a trade or business license is a crucial requirement for sole proprietorship firms in India, particularly those involved in commercial or local activities, shopping complexes, and various other categories outlined by the government. This license not only ensures compliance with the law but also benefits business owners by enhancing credibility, promoting fair practices, safeguarding consumer interests, and fostering a positive work environment. It is essential to fulfil specific eligibility criteria and adhere to legal standards to obtain this license, making it an indispensable step for businesses seeking lawful operation and sustainable growth within their local areas. Hence the business owners are suggested or advised that they must obtain this business or trade license so that they can freely move ahead with their business.
