Business Licenses You Need To Launch Your Startup
The initial enthusiasm and positivity of starting something new and bringing it to reality can sometimes be mired by the harsh realities of running the business. The first brush with this reality comes when, as a newbie entrepreneur, you do not have enough information on the types of permits and licenses that your business might require.
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The following are the primary certificates and registrations needed to start a company.
DIN Application: Obtain Director Identification Number (DIN) online from the Ministry of Corporate Affairs website (National).
Digital Signature Application: Obtain Digital Signature Certificate online from a private agency authorized by the Ministry of Corporate Affairs (National).
Company Name Registration: Reserve the company name online with the Registrar of Companies (ROC) (National).
Certificate of Incorporation: Get Form 1 for the Certificate of Incorporation from the Registrar of Companies, Ministry of Corporate Affairs (National).
Registered Office Verification: Get Form 18 for the address of the proposed company. It can be a commercial space, home of the director or a rented property.
Letters of Appointment: Obtain Form 32 for letters of appointment of directors, managers, and secretaries.
Seal: Make a seal (Private).
Various other certificates, registrations and permits that a startup in India requires are:
Service Tax Registration
Paying service tax on gross revenue exceeding Rs 10 lacs in a year is mandatory. Its registration fee is Rs 1,850. These are to be filed every half year. You may apply for registration once the Rs 9 lacs threshold is crossed. Currently export of services is exempted from this tax.
Mandatory for all tax filings and identified by the Central Board of Direct Taxes, obtain a Permanent Account Number from an authorized franchise or an agent appointed by the National Securities Depository Ltd. (NSDL), or the Unit Trust of India (UTI) Investors Services Ltd.
TAN (Tax Collection & Deduction Account Number)
Important to be acquired by all persons responsible for collecting tax deducted at source. It is registered with an amount of Rs 63. It is compulsory to quote this number in TDS/TCS certificates and challans. All payments such as salaries, rent, contractual fees, and consultancy fees need to have tax deducted at source.
VAT/ CST Registration
With a minimal fees payment that varies from state to state, VAT registration is compulsory for multi-point tax on each value-addition, which is collected at each stage with a provision for set-off for tax paid at the previous stage (inputs).
CST is similar as VAT for inter-state sales only. This is a state-based tax and the exemption limit varies from state to state and also on the nature of entity and activities.
Shops & Establishment License
This is important for any commercial outlets and establishments (hotels, eateries, theaters , amusements etc) to keep in check that minimum benefits are being offered to unorganized sector employees. It is to ensure safe and hygienic working conditions. This is issued per premises.
Central Excise License
This duty is for goods manufactured in India and payable once goods leave the premises. This is mandatory for all producers of goods and products.
Importer Exporter Code
The import export code is essential for a producer who wants to do international business to comply with customs.
Every company transacting business and every actively engaged person in any profession, trade, is liable to register for Professional Tax at the Professional Tax Office (State) and pay this tax.
Employee Provident Fund Registration
Register with Employees’ Provident Fund Organization (National). This is a mandatory fund for employers having more than 20 employees and voluntary for less than that. This is a fund to establish welfare needs of the employee post-retirement.
Employee State Insurance Registration (ESI)
Register for medical insurance at the regional office of the Employees’ State Insurance Corporation (National).
If applicable, register documents with the Software Technologies Parks of India (STPI).
Many of these licenses are easily granted with the help of a filing company/chartered accountant and will establish the right way to start a new setup.
The following are other permits that your startup needs before it starts operations (for brick-and-mortar startups only):
City planning and zoning requirements demand permits for operations in certain areas. For instance, residential areas have strict rules regarding business operating out of them. A zoning permit is required as areas are zoned for specific businesses according to set parameters. Zonal permits can be gained as Variance or Conditional-use permit by presenting your plan to the city’s planning commission.
Fire Department, Air and Water Pollution Control Permit
If your business uses any flammable material or if your business space (such as restaurants, retirement homes, day-care centres, schools, etc.) is open for public, a permit from the Fire Department is mandatory.
Any paints or materials that burn, if discharged into the sewer, waterways or air require certain special permits.
Health Department License
Public places require clearance from health department about the cleanliness, hygiene, maintenance and potential health hazards that might occur from an eatery or a wholesale foods business, depending upon the size of business.
We have tried to enumerate a broad outline of the common permits most businesses are likely to need. However, for your specific business, its best to reach out to the local registrar of companies or check out government websites for accurate information.
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