Starting a business of your own could be an overwhelming feeling especially when you have invested a lot of your time and energy in developing the business idea and giving it a shape. However, before you start your entrepreneurial journey, it is important to acquire certain licenses and permissions through the local governing body. You may wonder why State/Local authorities and not Central Government? The answer for this lies in the fact that State/local government has foremost priority to uphold benefit of the local population and save them from any unnecessary nuisance. Therefore, Trade License is a necessary approval for the purpose of commencing any trade which is applied and issue to a business for carrying certain trade by the local municipal body of the concerned state.
Holding a Trade License ensures that the business owner shall operate his/her business with strict adherence to applicable State Municipal rules & regulations and does not pose any risk to the people located around the area. Further, Trade License has also been made necessary so that no business owner carries out business in unethical manner or any unethical business and could be punished and penalized if such person carries on business without possessing a Trade License.
The permission so received is only applicable for the business functions applied and not in case for every business, where the business owner carries for more than one businesses. The License so approved is granted by way of certificates or letter of approvals for the business to initiate such business.
Trade License Registration with Legalmart
The process of acquiring a Trade license is a simple process which includes preparation of documents and submission of requisite documents along with application for the grant of approval. However, to avoid rejections of application, it is important to choose someone who is experienced in acquiring the same and can complete the task quickly and efficiently for you, so that you could move further with the launch of business activities. Thus, Legalmart can help you to do all of this within a reasonable time frame along with reasonable charges.
Benefits of Trade License Registration
The Government of India has made it mandatory for businesses to acquire trade license approvals. However, following are the advantages linked to trade license for your business-
- Upsurges Business Credibility: Though the Government of India has made it compulsory for any business owner to get a Trade License before initiation of business activities, however, a business holding a valid trade license, in itself is a business indicator of standard preparation processes through quality and safety checks. Thus, the prospective consumers are assured of the fact that the products/services offered are authentic, has passed quality checks and credible. Thus, holding a trade license builds consumers trust, increases market visibility and clearly establishing the authenticity of products offered and hence better profit prospects.
- Greater exposure to investments & financial assistance: Not every business is bigger from the beginning. Only through efficient products and services and market goodwill, a business can grow bigger and bigger. Thus, possessing a Trade license can help you to establish business credibility, achieve financial avail loans and generate funding’s for business expansion.
- Increases Goodwill: A Trade License is granted to a business on the basis of adherence to safety and quality standards. Thus, every entity possessing a trade license provides a safety and credibility assurance among consumers in the concerned market and thus, it increases their profits and distinguishes them from other entities who deliberately sell their products without obtaining proper trade license certifications. Though such notorious entities may earn quick profits in the short run, but businesses who have earned profits and consumer trusts with valid trade licenses can only stand with stronger market goodwill in the long run.iv.
- Attracts Investors: A business may seem to be earning stronger profits but lack of proper approvals may make these high profits a dream in the long run, as if on investigation if it is found that the business is deliberately risking lives of consumers, they can be subject to penalties and prosecution. Only a business holding a valid trade license can offer quality and safe products, gain consumers trust and make goodwill in the market leading them an attractive choice for sponsors, capitalists and investors to make investments.
- Legal Immunity: Unfortunate events can occur at any time and sometimes may deeply affect the business goodwill and consumer profits in the markets. However, holding valid certifications like trade license can provide legal advantages against baseless claims and can save a lot of time, energy and money against such claims as compared to an entity not holding the same unless there is any actual evidence about the intentional non-adherence of the applicable guidelines.
- Standard procedures & sanitation arrangements: Having proper food preparation techniques and proper sanitation arrangements in the business place has gained special importance lately due to the COVID-19 pandemic. Thus, it is obvious that a consumer aware of the safety protocols and sanitation facilities, will prefer to purchase products or procure services from such places where the sanitation and preparation processes are standardized. This also has a direct bearing on the productivity and goodwill of the organisation. Therefore, an entity possessing trade license has to follow standard guidelines for sanitation and preparation of products/services, otherwise such entity shall be subject to prosecution.
- Discourages Corrupt Practices: As said before, it is compulsory for every organization to hold a valid trade license. And once a business is legally certified with a trade license, it becomes the obligation of the entity to follow standard practices in its business operations as applicable under relevant municipal rules. If an organization holding trade license is found to be not complying with the applicable standard practices on inspection, it can lead to hefty penalties including immediate cancellation of the approved trade license. Thus, holding a valid trade license discourages unethical practices such as exploitation of workers at work, tax avoidance, water & air pollution etc.
- Standardizes Business Locations: One of the main objectives behind making necessary trade license compulsory is to standardize business locations and discouraging people from running businesses from their homes and uphold safety of the environment and unnecessary nuisance from people.
- Sign of Core Competency: A trade license is an indicator of the intention of a business to produce standardized products and services and complying with local laws and rules necessary to running business operations smoothly. Thus, adherence to the same makes a business confident and competent to work efficiently and away from the fear of being shutting down.
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Eligibility criteria of Trade License Registration
Following are the criteria of eligibility for application and grant of trade license–
- An entity can avail trade license only if the business is proposed to run in the permitted area i.e. either a commercial space or local, notified, mixed land, or a residential area with smaller shops up to 20 sq. on ground floor.
- All commercial establishments falling under the following categories are eligible to apply trade license–
- Businesses involved in any administrative service where persons are involved in any clerical or office work.
- Any entity involved in serving customers as a hotel, restaurant, boarding or eating house, a cafe or any related services.
- Any theatre, cinema, malls or any other similar places of public amusement or entertainment.
- Other than this, the principal owner or representative of the business should have-
- Is a major as per the Indian Majority Act 1875.
- Such business should have a legal objective and not for an illegal motive.
- Such person should not be disqualified legally to start such business.
Documents required for Trade License Registration
Though, documents required for trade license may vary from state to state, however, following are the documents generally required for acquiring a trade license-
- Identity proof of the principal owner/proprietor in case of sole proprietorship/authorized partner in case of partnership firm and director in case of a company.
- Proof of address of the concerned business.
- PAN card of the proprietor in case of sole proprietorship /PAN card of the firm of company in any other case.
- Documents of constitution i.e. Partnership deed in case of partnership firm or Memorandum of Association (MOA) in case of a company.
- Certification of incorporation in case of a partnership firm or company.
- Tax receipt from the concerned municipal area in case the property premises are owned by the business owner and/or where the property is rented, rental or lease agreement of the property where the business is located.
- NOC by way of letter of consent of the neighbours or people living nearby.
- A self-certified clean layout of the proposed business area.
- Duly filled and self-certified form 353.
- Any other document as required by the concerned municipal department from time to time.
Trade License type and Renewal Process
CATEGORIES OF TRADE LICENSE
Depending upon the type and business activities of the business, a trade license could be classified into three activities-
- INDUSTRIES LICENSE: Business entities operating either as small, medium or large scale manufacturing factories are required to acquire Industries license.
- SHOP LICENSE: Business activities involved in the manufacture of dangerous items such as firewood, crackers, candle, barber shop, laundry (dhobi) shop etc. and similar businesses.
- FOOD ESTABLISHMENT LICENSE: As the name suggests business items involved in the business of serving consumers such as eateries, restaurants, hotels, food stalls, canteen, bakery etc. and other related businesses.
- PROCESS OF RENEWAL: Every license issued is issued with a certain period of validity and needs renewal after the expiry of such period. Similarly, a trade license is valid for one year and needs renewal and must be applied at least 30 days prior to the end date of such validity. If the applicant fails to apply renewal before the last date of validity of such license, such applicant shall be subject to additional fine as per the applicable municipal rules.
Thus, for renewing trade license, an application should made between January to March every year, in the format provided along with the following documents attached with the following documents the concerned municipal office either online or offline-
- Original trade license whose validity has been expired.
- Altogether tax receipts providing details about payments till date.
- Challans related to prior payments.
How to Register a Trade License Online
- An entity shall be required to apply for the trade license at least 30 days before initiating the concerned business.
- To apply for trade license visit the official website of the concerned State government portal (i.e. such as www.mcdonline.nic.in in case of Delhi).
- Create a user Id & Password and load the application for “Trade License”.
- Click Trade License and select New License.
- Select the type of trade license required, fill requisite details.
- Upload all attachments including Form 353.
- Submit all documents to the Municipal website.
- After submitting the application, the State Government will go through the application and will either approve or reject the application.
- Check the status of the application from time to time through the application number.
- The authorities may require submission additional demand and if found satisfactory the municipal authority may issue trade license in around 2-3 weeks.
Why you Choose Legalmart
Trade License is an important and compulsory business requirement for any entity to initiate and maintain efficient business services, absence of which can make such business subject to hefty penalties, lesser market visibility, lower profits and prone to legal complications for baseless claims. On the other hand, holding a valid license can do the opposite and helps to earn profits, market visibility, consumer trust and greater prospects for business expansion. Being someone unaware of the complete process and required information, can make the process time-taking and tedious for you. Thus, for acquiring trade license efficiently, including services like documents preparation, collection, submission and receipt of trade license in a quick and efficient manner, please refer to Legalmart and forget all your worries in one go!