How to Register your Business? Registrations and Licenses required to set-up new business?

Registrations and Licenses

(Step 7 of our how to set-up new business guide)


Here we have come to seventh step of our how to set-up new business guide i.e. Registrations and Licenses.

Based upon requirement of your business, you need to take license or do business registration. We have researched and prepared list of licenses and registrations required to start a business in our step 1 and 2 i.e. market research and business plan respectively. In this step, we will take these registrations and licenses.

Registrations and licenses are dependent of industry; you are going to set-up your business. Some industries fall under regulated category and licenses, and in some industry, there is no requirement of any type of business specific registrations and licenses. Some local and commercial licenses may be compulsory for all industries covered by territory laws and regulations.

For starting a business in India, there is requirement of commercial license i.e. Goods and Service Tax identification number (GSTIN). GST number is compulsory for businesses above 40 lakh annual turnover. Other than 40 lakh turnover, businesses having interstate selling and/or online selling also require to have GST number compulsory. Along with GST number, you may have to take local registration or noc if any applicable in your area. This is compulsory for all businesses.

If you are company then you may proceed for company registration. Company registration can be done as per your requirement as one person company registration, private limited or limited liability partnership (LLP) etc.

Most common types of licenses required to start a business in India are:

We can divide licenses and registrations in two categories. These licenses and registrations may vary according to state to state, business type, number of employee, turnover and licenses etc.
  1. Common Licenses and Registrations for businesses
  2. Business Specific Licenses and Registrations

Common Licenses and Registrations for Businesses:

These are the registrations and licenses that are required by businesses irrespective of their industry and business niche. Licenses and Businesses fall under this category are:
  • Company Registration or Business Registration
  • Goods and Services Tax Identification Number
  • Factory Act Registration
  • Udyog Aadhar Registration
  • Shop and Establishment Act License

Business Specific Licenses and Registrations:

These are the registrations and licenses that are required for only for a particular type of business. For example we need drug license only if we want to do business in pharmaceutical sector. Business specific licenses and registrations are:
  • FSSAI license and Registration
  • Drug Business Related Licenses
  • Import-Export Code Number
  • NBFC Registration for non-banking financial institutions or fin-tech companies.
  • Broadcasting licenses for multimedia broadcasting platforms.
  • Approval from regulatory bodies in case of certain businesses like insurance, financial services, defense related services etc.
Other registrations and licenses will depend at your industry and nature of business.

Type of businesses based upon business specific licenses and registrations:

We can divide businesses into three categories based upon business specific licenses and registration:
  1. Businesses required licenses at all stages i.e. manufacturing, distribution, retail etc
  2. Businesses required licenses at one or more stages i.e. manufacturing stage only
  3. Businesses required no licenses at any stages

Businesses required licenses at all stages:

These are the regulated businesses under a certain law and require licenses at every stage of business and supply chain. Most common example of these types of businesses is Pharmaceutical and Health related businesses. Pharmaceutical Businesses are regulated at every stage and license is required for each stage of business. For starting pharmaceutical manufacturing company, you will require to have drug manufacturing license. For wholesale, distribution or marketing company, you need to take wholesale drug license. For retail pharmacy and chemist shop, you require to obtain retail drug license.
Food supplements also fall under this category and require central license for manufacturing and state license/registration for wholesale, distribution and retail.

Businesses required licenses at one or more stages:

These are regulated businesses but one or more stage are under license requirement but some stages are free of any type of licenses and you can do businesses at that stages without obtaining any type of licenses. Most common example of this type of businesses is Ayurvedic industry and Cosmetic Industry. You need to take ayurvedic manufacturing license for manufacturing of ayurvedic and herbal medicines but doesn’t require licenses for distribution, wholesale and retail stage. Likewise in case of cosmetic products, only manufacturing license is required to obtain for manufacturing cosmetic products but doesn’t require license for selling and purchasing. Few FMCGs are also fall under this category.

Businesses required no licenses at any stages:

Some businesses don’t require any type of license or registration at any stage and can be started without them. Businesses like furniture, clothes, flowers etc fall under this category.

Brief explanation of Business Licenses:

Business Registration or Company Registration:

Before starting business in India, there may be requirement of business registration. In case of company, you may require to register your business under company act. Most common type of business registrations are:
  • One Person Company
  • Private limited Company
  • Limited Liability Partnership Company
  • Public Limited Company
  • Partnership Firm
  • Sole proprietorship firm
  • NGO/Trust/Society

Goods and Service Tax Registration:

As we have discussed above, gst registration is compulsory for businesses having more than 40 lakh annual turnover or having interstate/online sale with any turnover. We will advise you to take gst number at initial step without waiting for turnover to exceed if you are in business at supply chain above retail stage. You can apply for gst number by your own online at www.gst.gov.in or through chartered account or tax advocate.

Factory Act Registration:

Factory act is applicable to manufacturing units having more than 10 to 20 workers depend at nature of business. If your business falls under requirement of factory act then you need to take factory act registration.

Udyog Aadhar Registration:

Udyog Aadhar previously known as MSME registration, it is a unique 12 digit government identification number issued by the ministry of MSME for all small and medium enterprises and small scale industries.

Shop and Establishment Act License: 

The Shop and Establishment Act is applicable on all commercial establishments having more than 10 employees, such as the hotels, and eateries, amusement parks, theatres, and other entertainment houses, as well as any other such public amusement places, come under the purview of the Act. Every state has different rules and regulation for registration under shop and establishment act.

FSSAI Licenses and Registrations:

There are three types of licenses and registrations (depend at nature of business and turnover) are provided by Food Safety and Standards Authority of India to food business operators. Food Business Operators includes all business involve in business of food and related articles. FSSAI also covers supplements and dietary products.
  • Registration
  • State License
  • Centre License

Drug Licenses:

Pharmaceutical and Healthcare sector is regulated through certain laws and regulations, and requires different types of licenses to operate like drug manufacturing license, wholesale drug license, retail drug license etc. Associated sectors like alternative systems of medicines and cosmetic industry also require taking manufacturing license to manufacture these products.

Import Export Code:

If you want to start business related to importing any product in India or want to export any product from India then you require taking Import Export Code Number. Import Export Code (also known as IEC) is a 10 digit identification number that is issued by the DGFT (Director General of Foreign Trade), Department of Commerce, Government of India. It is also known as Importer Exporter Code.

Conclusion:

You can complete you licenses and registration part to complete all legal requirements to start a business.

Other Steps:


Hope above information is helpful to you….

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