Why is the license required for business?
Example for a government business license, When you are born, you need to get a birth certificate, community certificate, and Aadhar card, and when you grow up as a person, he requires a Voter id, driving license, and Passport.
In the same way, once you have decided to start a business, you need to comply with plenty of legal compliances. In this article, we will understand what compliance we need to comply with when starting a Company.
A. Company Registration
Private Limited Company
Limited Liability Partnership
One Person Company
Public Limited Company
B. Compulsory Licenses
Pollution Control Board License
ESI & PF
C. Recommended Licenses
A. Company Registration
Registration is the primary process from when you are born, the parent first gets the Birth certificate, Which is conclusively prime proof of your existence.
In the same way, the prime registration for your business is Company Registration.
registration is where your business turns into an entity.
There are six types of Companies/business entities.
- Proprietorship Firm
- Partnership Firm
- Private Limited Company
- Limited Liability Partnership
- One Person Company
- Public Limited Company
B. Compulsory Licenses
Once the company formation is completed, the next activity would be obtaining the mandatory licenses.
These licenses vary from business to business. Certain licenses are issued by the Central Government and few are by the State Government.
These licenses are compulsory to obtain, failing which, there is a threat that even your business may be sealed by Government authorities.
Government has the responsibility to always safeguard the public’s interests so it has implemented many regulations to regulate business activities.
- GST Registration
- FSSAI Registration
- IE Code
- Pollution Control Board License
- Drug License
- ESI & PF
- Other Licenses
1. GST Registration
GST stands for “Goods and Service Tax” which was introduced in the year 2016 by the Government of India. This is considered the greatest tax reform in Independent India which compiles all the indirect taxes and is made as one common tax system named GST. Every business can obtain GST voluntarily. But it is compulsory in the following aspects,
- Businesses with turnover above the threshold limit of Rs. 40 Lakhs
- A casual trader
- A person who supplies via an e-commerce aggregator
- Supply of services or goods from one state to another
2. FSSAI Registration
FSSAI Stands for “Food Safety and Standard Authority of India”. FSSAI Registration is mandatory for every organization which is involved in the food chain. This certificate is to maintain the food quality and to ensure the safety of the food.
FSSAI is compulsory for everyone who wants to do a food business. This license is not only compulsory for organizations which involve in preparing food but for everyone who is in the food chain ie., whoever handles food at various stages before it reaches the end customer like raw materials suppliers, Manufacturers, repacker, hotels, and even the food delivery partner.
There are three types of FSSAI Registration
- FSSAI Central License
If the food-based entity annually yields more than 20 crores, then the company proprietor or partners shall apply for Fssai central license Form B.
- FSSAI State License
If the food-based entity annually yields 12 to 20 crores, then the company proprietor or partners shall apply for Fssai State License Form B.
- FSSAI Basic Registration
If the food-based entity annually yields less than 12 lakhs, then the food company proprietor or partners shall apply for Fssai Basic Registration Form A.
3. IE Code
IEC stands for Import and Export Code, which is a 10-digit code and a mandatory license for organizations that are involved in import-export activities.
Every exporter requires the IEC to send shipments and receive money from foreign banks.
4. Pollution Control Board License
The Tamil Nadu Pollution Control Board is created to ensure that the Industries are working within the permitted limits of pollution levels in the state of Tamil Nadu.
This Board issues NOC to every organization which is involved in manufacturing and also creates less pollution.
These No objection certificates are of two steps
- Consent to Establish
Before establishing the industry or process, consent is necessary to acquire from the State Pollution Control Board.
It acts as the primary clearance of the establishment of the industry
- Consent to Operate.
It is necessary to obtain consent to operate after the establishment of the industry to run it properly.
In this process, the respective control would physically inspect whether we follow the rules and regulations. These consents help them to issue the certificate.
5. Drug License
A drug License is permission from the government to an organization that deals with drugs.
No organization is entitled to carry on a business activity with drugs or cosmetics in India unless that organization holds a valid license that is obtained to carry out that activity.
6. ESI & PF
ESI Stands for “Employee State Insurance” which applies to any business organization with ten or more employees earning a monthly wage not exceeding Rs 21,000 covered under the scheme.
The Employees’ State Insurance Corporation is a statutory body established under the ESI Act 1948. And this ESIC is responsible for the administration of the ESI Scheme.
The ESI Scheme is to protect the employees covered under the scheme against financial distress arising out of events of sickness, disability, or death due to employee injuries.
7. Other Licenses
There are many other mandatory licenses also that are applicable for certain business activities in Tamil Nadu. They are,
- Trade License
A trade license is nothing but the certificate or document which enables the commerce of the product in a particular area, issued by a municipal corporation (given by various departments of the municipal corporation depending on the object of the industry).
- Shop and Establishment License
The shop and Establishment License act was introduced to protect the employee. This Act regulates the safety measure, working time, wages, lunch breaks, overtime wages rules, and regulations.
Grocery shops, garments, amusement parks, cinema theatres, and startups need this license. State Department of Labor regulated and issued the Shop and Establishment License.
- Fire License
Fire licenses were generally issued by the State government. The landlord must sign the agreement ( the agreement consists of the rules and regulations ).
By submitting the land ownership agreement or rental deed, we will apply for the fire license. It is necessary for public safety.
C. Recommended Licenses
The rich forms of MSME are Micro, Small, Medium, and Enterprises.
Manufacturing enterprises come under the development act of micro, small, and medium enterprises.
The Office of the Development Commissioner regulated the Micro, Small, and Medium Enterprises registration.
Trademark Registration is a simple process that helps to highlight your products or services from others.
This trademark registration forbids duplicate products. This registration grants the name production to your brand.
The rich form of ISO Certification is the International Organization of standardization.
This certificate was provided by checking the product’s quality and safety. This certificate increases the believability among the people.
Quality document of the product is necessary to obtain an ISO Certificate.
Why do You Need a Business License and Permits
It is necessary to justify that your commerce or firm didn’t harm the environment or humans. Also, business licenses or permits possess a lot of benefits.
A license ensures that you run your entity legitimately. To obtain licenses, the firm has to meet some criteria. Various types of companies have different types of licenses or permits.
Without the license, the firm is illegal and may cause the firm to be a seal.
Eligibility to Apply for a Business License:
- above 18 years
- never possess criminal records
- the products must be legitimate
Company Registration, Gross Sales Income ( GSI is optional till 40 lakhs turnover ), Trademark Registration, and ISO 27001 ( optional ) are enough to establish the Software Development Company.
To ensure that your goods and services didn’t harm anyone. ( for further information, go through the article )
It depends on the object of the business you run or plan to start. “Food-oriented businesses need FSSAI License and Medicines oriented businesses need DRUG License.
Construction and engineering, technology-oriented service, manufacturing, hotels and restaurants, medicine, and hospital and health care center need an ISO Certificate.
To know more about company registration in Chennai