Starting a startup business in India is an adventure, and success does not entirely rely on a great business idea. It is also vital to make sure that everything has been done according to the law, and the first and foremost procedure to accomplish this is to acquire a set of licenses and registrations. Failure to obtain a proper license as a business or startup can expose it to legal problems, fines, or even closure. This blog will shed light on the most significant requirements for startups in India and the ways entrepreneurs can remain compliant.
The Importance of Business Licenses for Startups
A business permit is a license issued by the government to enable a business to legally practice in a particular industry at any location. It dictates that the business operates under the guidelines and in the interests of the consumers and employees. Those startups, which run without the right license, face the threat of fines, criminal prosecution and reputational loss. The appropriate start-up license is not only protective of the operations, but also acts as a confidence measure towards the clients, investors, and authorities.
Essential Licenses and Registrations for Startups
1. Company Registration
Any business start-up should start by registering the business under the right structure. The mode of organization can be a Private Limited Company, Limited Liability Partnership (LLP), One Person Company (OPC), or a normal Partnership Firm. This registration, by the Ministry of Corporate Affairs, will grant your start-up the legal identity and will allow it to sign contracts, open bank accounts, and capitalize.
2. GST Registration for Tax Compliance
All startups whose business has an annual turnover of more than 20 lakhs (or 10 lakhs in special category states) must have GST registration. This registration enables the business to charge Goods and Services Tax and make the input claims and remain in line with its national tax regulations. It also makes your business more credible and less cumbersome when doing transactions with other registered companies.
3. Udyam Registration for MSME Benefits
The entrepreneurs whose start-ups are categorized as micro, small, or medium enterprises can be registered under the Udyam scheme. It provides access to a range of benefits, including government subsidies, easy access to loans, tax waivers, and the opportunity to receive orders under various government programs. The process of Udyam registration is not complicated and it is quite effective in enhancing the growth of small companies.
4. Shop and Establishment License
Occupants of commercial facilities, such as shops and establishments, should be established in the form of an office, retail outlet, or cafe. This license is provided by a local municipal authority and it regulates such aspects as conditions of working time, pay regulations, holidays and working conditions. In almost all states, acquiring this kind of license should be within a period of thirty days after starting up the business.
5. Trade License for Commercial Activities
A Trade License is required in case a startup is involved in trade or any sort of commercial activity. It is a notification issued by the local municipal corporation that ensures the business is run in accordance with safety, health, and ethical principles. This license is specially applied to the startups in retail, manufacturing and enterprises of service type.
6. FSSAI License for Food Startups
FSSAI license is mandatory for startups producing, processing, packaging, or distributing food. The Food Safety and Standards Authority of India issues this license, which will ensure that your food business meets standards of hygiene and safety. A valid FSSAI license also increases consumer confidence and body credibility in the food sector.
7. Import Export Code (IEC) for International Trade
Startups that are involved in exporting or importing goods or services should apply for an Import Export code at the Directorate General of Foreign Trade. In the absence of an IEC, transactions between businesses across borders cannot be made, and profits on exports cannot be claimed. This code plays an important role for startups who plan to go global.
8. Startup India Recognition for Government benefits
The Department for Promotion of Industry and Internal Trade (DPIIT) offers startups the opportunity to be recognized in the Startup India initiative. Various rewards that accompany this form of recognition include being tax-exempt, simplified patent applications, not having to comply with a lot of formalities, and being able to obtain government funding programs. Becoming a part of Startup India also enhances the credibility of your startup in the investor circle.
Conclusion
Establishing a business is not only about innovation and funding. A sustainable business is based on legal compliance. Be it the registration of companies, GST, FSSAI, or the professional tax, all these startup licenses individually and together assure the safety of the business against possible intrigues and impositions in the future. Knowing the licenses your startup requires and when to get the licenses is the key to eventual success.
When you need a trustworthy service provider to assist with startup registrations and licenses, Kanakkupillai can help take an entrepreneur through all the necessary steps. From GST and Udyam, FSSAI and IEC, Kanakkupillai simplifies the legal process so you can relax knowing that the legalities are taken care of, and you can move on to make your business.
