To start a business, one needs to have a license in India. Various certificates and licenses are required depending on the type of business, the business location, number of company owners and other factors. We will first look into the different kinds of business and the documents /licenses necessary for them. In the second part, we will see the how-to for these documents/licenses. We will look into the most common ones required to do business in India.
There are several types of business. They are mainly:
- Public Limited Company
- Private Limited Company
- Partnership Firm
- Limited Liability Partnership (LLP)
- One Person Company
- Sole Proprietorship
- Nidhi Company
To open any of these businesses, you need to submit some documents to the concerned department to register your company.
How to register your company to get a business license in India?
Public Limited Company & Private Limited Company
You can register a company online on the MCA (Ministry of Corporate Affairs) portal. To register, you will need:
- Digital Signature Certificate (DSC)
- Director Identification Number (DIN)
- Registration on the MCA portal
- Certificate of Incorporation
During registration, you will need to produce:
- ID proof of all directors
- Address proof of all directors
- PAN number
- Utility bill of the registered office
- No Objection Certificate (NOC) from the landlord of the office
- Director Identification Number (DIN)
- Digital Signature Certificate (DSC)
- Memorandum of Association (MOA)
- Articles of Association (AOA)
Partnership Firm
A partnership firm can be started by 2 or more people to manage a business. One needs to apply to the appropriate authority to register a partnership firm. The next step is to draft and register a partnership deed. Then one needs to obtain the PAN and TAN for the firm from the relevant authorities.
Limited Liability Partnership (LLP)
You can register an LLP online on the MCA (Ministry of Corporate Affairs) portal. To register, you will need:
- Digital Signature Certificate (DSC)
- Director Identification Number (DIN)
- Registration on the MCA portal
- Certificate of Incorporation
One Person Company
To register one person company in India, you need to have the following documents:
- ID proof of the owner
- Address proof of the owner
- PAN number
- Utility bill of the office
- No Objection Certificate (NOC) from the landlord of the office
Sole Proprietorship
It is the basic unit of a business that is owned, controlled and managed by one person. A sole proprietorship is opted for small businesses, and its registration is the simplest. The proprietor has to obtain the following:
- Shop and Establishment Certificate
- GST Certificate
- MSME (Small and Medium Enterprise) Certificate
Also Read: How to Apply for the Best Business Loan in India? - Types of Govt. Loan Schemes
Nidhi Company
A company incorporated with the object of cultivating thrift and saving amongst its members by receiving money and lending among themselves for their mutual benefit is called a Nidhi Company.
A Nidhi company has to fulfil the following conditions to incorporate itself under the Companies Act:
- Incorporated as a public company
- Minimum equity paid-up share capital of Rs 5 lakhs
- Minimum 3 and maximum 15 directors
- Must have the object of cultivating the habit of thrift and savings amongst its members by receiving money and lending among themselves for their mutual benefit
- Must suffix 'Nidhi Ltd.' as part of its name
- Must not have less than 200 members at any point in time
- Must have net owned funds of Rs 10 lakh or more, and the ratio of Net Owned Funds to Deposits should not be more than 1:20
Whatever be the type of business, more or less, the registration process and the documents required remain the same. Of course, a few documents and processes will change depending upon the nature and size of the Company.
Once your company is registered or incorporated, you will need a business license issued by the Government of India to start your business. Some licenses are issued by the Central Government, whereas the State Government issues some others. It depends upon the nature and type of business, location, number of employees or staff involved etc. There are various types of business licenses issued by the Government of India, such as:
- Shops and Establishment License
- GST
- FSSAI
- Udyog Aadhaar Registration
- Fire Department License
- Air & Water Pollution Permit
- TAN
- Professional Tax
- Import Export Code
Types of Business License In India
Shops and Establishment License
The State Government provides this license if you want to open any shop/business in that state.
Who needs to apply:
This license is required to open a shop, movie theatre, mall, restaurant, café, and administrative offices. Employers are employed for office work as a trading company, insurance company, etc. You will need to apply to the state government for the procurement of Shops and Establishment Licenses.
To apply for the license, you will need to submit the following documents:
- Front view photo of your shop
- Certificate of Incorporation
- AOA/MOA of the company
- PAN card
- Address Proof
- Details of owners and employees
How to apply:
The registration process varies from state to state. But, in most states, you may apply online directly. You will be asked to submit the details.
You also need to pay fees for this license depending upon the number of employees involved. The amount differs from one state to another. It could be Rs 100 for a shop with 0 employees and increase with the number of employees employed.
GST
Goods and Services Tax (GST) is a value-added tax. It is levied on most of the goods and services. It is paid by consumers and remitted to the Government by the businesses selling the goods and services. There are four types of GST in India:
- SGST (State Goods and Services Tax)
- CGST (Central Goods and Services Tax)
- IGST (Integrated Goods and Services Tax)
- UGST (Union territory Goods and Services Tax)
Who needs to apply:
Businesses having turnover of more than Rs 40 lakhs (Rs 10 lakhs for North-East and hilly states) are required to register as an average taxable person.
How to apply:
- Go to the online portal reg.gst.gov.in and go for Services– Registration– New Registration.
- Generate Temporary Reference Number (TRN) by providing OTP number
- Provide details and click on the Proceed button.
- Now use the TRN to start GST registration by providing Captcha.
- Submit business information
- Submit promoter information
- Submit authorized signatory information
- Provide information on principal place of business
- Provide information on additional places of business
- Details of goods and services
- Details of Bank Account
- Verification of Application
- Application Reference Number (ARN) will be generated
- Using this ARN number, you may track the status of your application.
Also Read: 10 Tips for Successful Money Management for A Profitable Business
FSSAI (Food Safety and Standards Authority of India):
The FSSAI act is meant to enforce the laws related to food and establish scientific standards of food to control their manufacture, storage, distribution and import. FSSAI and state food authorities are jointly responsible for implementing and enforcing the FSSAI act.
Who needs to apply:
All kinds of Food Business Operators (FBO), including manufacturers, whole-sellers, distributors, farmers, and suppliers, must get an FSSAI license as per their turnover.
One can apply for an FSSAI license from the website fssai.gov.in.
There are three types of FSSAI licenses:
- Basic registration
- State License
- Central License
Basic Registration: Small restaurants and food vendors need this license for an annual business turnover of less than Rs 12 lakhs. This is just a registration and not a license.
State license: This is generally required by small and medium FBOs whose annual business turnover is between Rs 12 lakhs and Rs 20 crore. If one has offices in more than 1 state, then one should take the central license.
Central License: This license is required by big FBO whose annual business turnover is more than Rs 20 crore. If one is doing an online e-commerce food business, one needs to have a central e-Commerce license mandatorily irrespective of turnover.
State and Central license applicants are inspected by state and central agencies before issuance of the license. But basic registration applicants are issued the license automatically in 3 to 7 working days.
The required documents for obtaining a Central FSSAI license are as follows:
- Form-B duly completed and signed by the proprietor or owner.
- Blueprint or layout of the location.
- Contact details of the Directors.
- List and details of the equipment and machinery types.
- Proprietor’s photo ID and address proof issued by the Government of India. In the case of a company, the Director's photo ID and address proof.
- Analysis of water report from a recognised/public health laboratory.
- Proof of possession of premises.
- Pesticide residues water report in case of units manufacturing mineral or carbonated water from recognised/public health.
- NOC and copy of the license from the manufacturer.
- Food Safety Management System plan or certificate.
- Source of milk, if applicable.
- Source of meat and meat processing units, if applicable.
- NOC from the municipality and local body, if applicable.
- MCA Incorporation Certificate, if applicable.
- If applicable, supporting proof of turnover.
- NOC/PA issued by FSSAI
- IE Code issued by DGFT for importers.
- A Certificate provided by the Ministry of Tourism, if applicable.
- Supporting proof of turnover for vehicles, if applicable.
- FSSAI Declaration Form
How to apply:
To apply for the same, please visit the website https://www.fssai.gov.in/
Udyog Aadhaar Registration
All new Micro, Small & Medium Enterprises (MSME) need Udyog Aadhaar registration to do business in India.
How to apply online:
https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm
Step 1– In the first step, the applicant needs to fill up the 12 digit aadhaar number. Aadhaar number is mandatory.
Step 2 – The applicant needs to fill up their name exactly as mentioned in the Adhaar card issued by UIDAI. The main criteria being that applicant’s name should match their aadhaar card name otherwise;, it will be rejected. After this step, the applicant has to click the button ‘validate Aadhaar’ to continue. And if they need any correction, they can use the reset button too.
Step 3– After Aadhaar card validation, the applicant has to provide information about their social category,
Step 4– The applicant needs to fill in the enterprise’s name and provide legal documents for that. If more than one enterprise is there, each can be registered, such as Enterprise 1 and Enterprise 2, etc., with the same Aadhaar number.
Step 5– The applicant needs to fill in the kind of enterprise, as provided in the form. The applicant must prove that a legal entity authorises them.
Step 6– The applicant must fill the postal address of the enterprise with Postal Pin Code, mobile no. and Email address.
Step 7– The candidate must mention the date of commencement of the enterprise.
Step 8– The applicant should indicate previous registration details of that particular enterprise, if any, and every appropriate detail should be filled up in the given box.
Step 9– The applicant needs to mention their bank account number and the IFSC code of the bank branch where the specified account exists.
Step 10– The main activities of your enterprise should be mentioned. In the main activity box, there are two types of options, manufacturing and servicing. The applicant can choose any of them.
Step 11– The applicant should mention NIC Code or National Industry Classification code. More than one classification code can be provided if any. For mentioning more than one NIC Code, one should click the button ‘add more’ and mention as required.
Step 12– The applicant must provide information about the total number of individuals who were paid wages by the said enterprise of the applicant.
Step 13– The applicant should specify the total investment expenditure on installing plants and machinery equipment. This excludes the cost of pollution control, safety devices, etc., as notified by the RBI.
Step 14– The applicant should mention the DIC based on its location. The box will show options only when there are more than one DIC in the particular district.
Step 15– After following all the points mentioned above, the applicant must click on the submit button to generate the Udyog Aadhaar registration number.
Fire Department License
The businesses dealing in the inflammable like restaurants, hotels, petrol stations, etc., must obtain Fire Department License to run their business. It is also essential to get the NOC from the Fire Department for all infrastructural facilities and buildings.
As these NOC/licenses are issued at state level fire departments, the procedure to obtain the same varies with each state.
How to apply:
- You can apply for the same online by logging in to your state’s Fire Department’s website.
- You can fill-up the form online or download it. Fill in the necessary details and submit the required documents.
The Chief Fire Officer (CFO) sends the application to the concerned Fire Inspector of the particular state. After proper verification of the premise, your license will be issued for 3 years for commercial purposes.
Air & Water Pollution Permit
The manufacturing businesses using natural resources & those dealing in construction must obtain Air & Water Pollution Permit. This permit is issued by the environment department governed by the State Pollution Control Board. The process to obtain the same varies with each state.
How to apply:
- Obtain a NOC/CTE
- Submit an application with site details, plans for pollution control, and industry registration certificates to the state pollution control board’s regional officer. NOC may be obtained from regional officers.
- You may submit your application online by logging onto your State’s pollution control board’s website.
TAN
Tax Deduction Account Number (TAN) is a 10 digit alphanumeric number. It is provided by the Income Tax Department under the Central Government.
Who needs to apply:
You will need TAN if you deduct/collect Tax at the Source. Without TAN, you cannot apply for a return of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). TDS is the tax which the company/proprietor deducts while making payments to its employees. TCS is the tax collected by the seller while selling something to buyers.
All the business houses usually require TAN as they are involved either in TDS or in TCS.
How to apply:
Applying for a TAN is very simple. You may apply for it online on the tin-nsdl website.
- Go to tin-nsdl website- https://www.tin-nsdl.com/
- Choose TAN services
- Apply Online
- You will be directed to fill Form 49B (Form 49B asks for simple details such as Name, address, phone number, PAN No. etc.).
- Fill the form and submit it.
- You will receive an acknowledgement. Save and print it. A hard copy of this acknowledgement has to be sent to the following address by post:
NSDL e-Governance Infrastructure Limited,
5th Floor, Mantri Sterling,
Plot No. 341, Survey No. 997/8,
Model Colony, Near Deep Bungalow Chowk,
Pune - 411016
You may track the status after 3 days.
Alternatively, you may also apply offline by visiting your nearest TIN-NSDL centre. You will still be required to fill Form 49B.
Professional Tax
It is a tax levied by the State Government. Not all states levy professional tax.
Who needs to apply:
All trades, businesses, organisations need to register this if they fall under the state which collects Professional tax.
Documents Required for Professional tax registration:
For Companies
- PAN card of Company: PAN card must be attested by the Director of the Company.
- Certificate of Incorporation of Company.
- Memorandum and Articles of Association of the company.
- Premises proof of Company: Ownership papers in case the premises are owned by the applicant, in other cases, rent agreement and no objection certificate from the premises owner.
- Bank Account of Company: Cancelled cheque and bank statement.
- List of Directors.
- Passport size Photographs of all Directors.
- Documents of the Directors: PAN card + I.D. proof such as Passport, Driving Licence, Voter Card, Aadhar Card is acceptable + address proof as Electricity Bill, Telephone Bills, and other utility bills.
- Aadhar Card of the Company.
- Board Resolution passed by the Director of the Company authorising Professional Tax Registration.
- Attendance Register & Salary Register.
- Authorisation Letter for obtaining user I.D. and Password of Professional Tax Department.
For LLP/Partnership
- PAN card of LLP/Partnership Firm: PAN card must be attested by the Designated Partner of LLP or any partner of the Partnership firm.
- Certificate of Incorporation of LLP or Registration of Partnership.
- LLP Agreement / Partnership Deed.
- Premises proof of LLP/Firm: Ownership papers in case the premises are owned by the applicant, in other cases, rent agreement and no objection certificate from the premises owner.
- Bank Account of LLP/Firm: Cancelled cheque and bank statement.
- List of Partners.
- Passport size Photographs of all Partners.
- Documents of the Partner: PAN card + I.D. proof such as Passport, Driving Licence, Voter Card, Aadhar Card is acceptable + address proof as Electricity Bill, Telephone Bills, and other utility bills.
- Aadhar Card of the Partners.
- Partners consent for the application to register under Professional Tax.
- Attendance Register & Salary Register.
- Authorisation Letter for obtaining user I.D. and Password of Professional Tax Department.
For Individuals
- PAN card of Proprietor, self-attested.
- Premises proof of Proprietorship: Ownership papers in case the premises are owned by the applicant, in other cases, rent agreement and no objection certificate from the premises owner.
- Bank Account of Proprietorship: Cancelled cheque and bank statement.
- Passport size Photographs of the Proprietor.
- Documents of the Proprietor: PAN card + I.D. proof such as Passport, Driving Licence, Voter Card, Aadhar Card is acceptable + address proof as Electricity Bill, Telephone Bills, and other utility bills.
- Aadhar Card of the Proprietor.
- Attendance Register & Salary Register.
- Authorisation Letter for obtaining user I.D. and Password of Professional Tax Department.
How to apply:
- Since it depends on the State, you may either go for online registration or the nearest tax office. You will be required to fill in the basic details.
- As States govern professional Tax, there are different websites to register for it state-wise.
- You need to search for their respective state Professional Tax site for registration and follow the instructions accordingly.
Also Read: Small Scale Business Ideas with Low Investment
Import Export Code
The Import Export Code is issued by the Directorate General of Foreign Trade (DGFT).
Who needs to apply:
The businesses importing or exporting goods need to apply for the Importer Exporter Code (IEC) from DGFT. Services or technology also need IEC when its provider benefits under the Foreign Trade Policy (FTP) or deals with specified services or technology. After the introduction of GST, the IEC number is the same as the PAN of the firm.
How to apply:
Following documents are required to apply for IEC:
- PAN
- Bank account in the name of the firm
- Valid address and its proof (address may be physically verified by DGFT)
To apply, one needs to login and register on the website- https://www.dgft.gov.in/CP/ to apply for IEC.
Conclusion
Having a business license is essential for conducting legal business functioning in India. For doing business properly and successfully, you need to register a business in India and abide by the legal formalities. We hope that through this article, you have understood the different types of business licenses and the registration process for different kinds of business.
