Are you thinking about all the essential documents you will need when starting a new business? An important document for starting a business or a trade within a municipality.
Here is a brief overview of the trade license and its benefits.
What is a Trade License?
Basically, a trade license grants permission to an applicant (a person seeking to open a business) to operate in a certain area.
By adhering to all safety standards set by the State Municipal Corporation, it ensured that businesses or trades were carried out safely. Health hazards are prevented from affecting residents.
Nevertheless, the licensepermits the holder to carry out only the trade or business for which it was issued. A license holder does not receive any ownership rights to the property he or she is licensed to use.
Why Trade License?
State governments have regulated trade licenses through municipal corporation acts over the past forty years.
It helps prevent several people from being affected by nuisances and health hazards associated with trades and businesses.
Government regulations make it necessary for a business or trade to be conducted in a particular area and to ensure that unethical business practices are not being used.
This license creates harmony in society by ensuring that every business follows relevant rules, guidelines and safety measures. In order to regulate the country’s trade activities, the government made this license compulsory.
To maintain the business environment and the locality environment, issuing a permit restricts people from conducting certain types of business from their homes.
Trade licenses can be issued by whom?
In industries, engineering, health, and other departments of the municipal corporation, licenses are issued by the licensing department.
Licenses are authorized by the government of India in a manner that regulates the industry in cities throughout the country.
By letter or document/certificate, it grants permission for business or trade to be conducted where it is located. Depending on local government agencies (Municipals) rules and regulations, licenses are issued differently in different states.
Types of trade licenses
- The following industries are licensed: small, medium, and large-scale manufacturing factories
- A shop license is required for dangerous and offensive trades such as selling firewood, making crackers, making candles, running a barber shop, running a laundry (dhobi), etc.
- Restaurants, hotels, food stands, canteens, meat and vegetable stalls, bakeries are all required to have a food establishment license
Trade license eligibility
A trade license can be applied for if the following conditions are met:
- A minimum age of 18 is required for applicants
- Applicants should not have any criminal records
- It should be legal for the business to operate
Trade license application documents
The following documents are required to apply for a trade license registration:
- Proof of the business’s address
- A copy of the applicant’s ID
- Aadhaar card
- PAN of the proprietor if it is a sole proprietorship, otherwise PAN of the firm if it is a company
- In the case of companies, the Memorandum of Association (MOA)
- In the case of companies, a certificate of incorporation
- The latest municipal property tax receipt if the premises are owned, otherwise a lease agreement or consent letter from the property owner if the premises are leased.
- The NOC of the neighbours (neighboring property owners)
- Office layout plan certified by the architect
Through the local municipal corporation, you can apply online or offline for a trade license.
Trade License Fees
Since trade licenses are issued by the government agencies (Municipalities) of each state, they vary from state to state. Regulations and rules governing that state determine license fees. Trade license fees are charged annually in some states. Others calculate it based on the turnover percentage of their businesses.