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Registration and Licenses for your business

Registration and Licenses - Registration and Licenses for your business

Registrations

It is essential and mandatory to have some registration and licenses for the business. as we know there 5 types of business structures for any business and they are all different from each other in respect of ownership, risk, etc. Corresponding to the business structure we have different types of registrations and licenses. Let’s categorize types of business structures. 

Types of Business Registration

Mandatory Registration

The government requires certain licenses and registrations under several ACTs. All sorts of enterprises require it. following are the licenses and registrations which are included in mandatory registration. 

  • PAN 

PAN is necessary for all individuals who are obligated to pay income tax, and it is assigned by the central board of direct taxation so that an individual can file his or her income tax directly to the government. A company can have a PAN in the same way that a person does. It is required for all businesses except proprietorship firms because a proprietorship firm’s PAN is regarded as a firm’s PAN. An individual’s PAN is issued by the central board of direct tax on a physical card known as the PAN card. The PAN card contains information such as the holder’s PAN number, picture, name, and date of birth.

PAN has the standard format ABCTY1234D. The first three characters of the above number, i.e. ‘ABC,’ are an alphabetic sequence running from AAA to ZZZ. The fourth letter, ‘T,’ reflects the status of the PAN holder. The letter ‘T’ stands for Trust, ‘F’ for Firm, ‘H’ for HUF, ‘P’ for Individual, ‘C’ for Company, and so on. The fifth character, ‘Y,’ denotes the initial letter of the PAN holder’s last name. The next four characters are sequential numbers ranging from 0001 to 9999. The tenth character, ‘D,’ is an alphabetic check digit ranging from A to Z.

  • TAN

The following is the TAN structure: ABCD12345E: The first four characters are letters, followed by five numbers, and the final character is a letter. Each tax deductor is identifiable uniquely by his TAN. If the TAN does not conform to the aforementioned structure, it will be deemed invalid. The city or state where the TAN was issued is represented by the first three letters. In the table below, the first three letters of the TAN ‘BLR’ indicate that the city in which the TAN was issued is Bangalore. The first letter of the tax deductor is the fourth character of the TAN. This means that the name of the Tax Deductor begins with this letter. The next five characters are numeric numbers created by the system. A final character is an Alphabetic Number, also known as a check digit, and created by the system.

  • Area and Municipal Registration

Well, the market consists of shops where buyers and sellers meet to complete a transaction. Therefore a business must have registered with their municipal area office. It can be a group or an NGO where all shops are registered from the same market or complex. 

  • Professional Tax 

It is necessary for every sort of business that engages in a trade/service or profession, subject to the threshold limit. It is a state government registration. It mainly consists of two different certificates are Professional Tax Registration Certificate which is to pay tax on the behalf of a firm on the trade, or profession and other is Professional Tax Enrolment Certificate for deducting tax of its employees and labors. 

  • GST 

Well, it is the most essential registration for a business to have. It is allotted by the Central Board of Indirect Tax. Since you are paying GST on the behalf of your consumer or customer or we can say that the consumer or customer is paying tax to the government through you. 

It is a tax levied on the provision of goods or services. If the annual turnover surpasses Rs.20 lakhs, it is required. Furthermore, even if turnover does not exceed the maximum, it is required in the following conditions. Some firms and individuals who require this registration are e-commerce operators, input service distributors, non-resident taxable persons, persons or firms deducting TDS or TCS in GST, agents of suppliers/franchisors, persons providing online information or database services whether outside or within India, and so on.

  • Provident Fund
A company with 20 or more employees must register for a provident fund. Such a company is required to contribute to its workers’ provident fund accounts. The wage slip of a person plainly shows how the corporation has set away some monetary worth for the individual’s future. 

Industry Based Registration

This sort of regulation is based on the entity’s business activity, which simply implies the domain in which they function. Firms functioning in the QSR (Quick Service Restaurant) category may have different licenses than firms working in the real estate industry. It is required for your company if you are carrying out any activity relevant to a certain industry. 

  • FSSAI- Food Safety and Standards Authority License. 

This license is required to start a food-related business, such as food manufacturers and merchants, as well as restaurants and cafés. You must have seen this certificate on the food joint where you routinely consume fast food or the FSSAI mark on the label of the chips packet that you commonly eat.

  • Factory License

When it comes to factories, there will undoubtedly be some production or manufacturing activity going on. This license is required for every facility with 10 or more employees if the production process includes electric-powered equipment or 20 or more in any other scenario. This license has something to do with employees or laborers who work in manufacturing.

  • No Objection Certificate (NOC)

When we are in the domain of manufacturing or production, we may harm the environment in other ways, and the pollution control board will object to our operations; thus, to have smooth operations inside the factory, every manufacturing industry must obtain a NOC from the state pollution control board to declare that its unit is free of air and water pollution.

  • Import Export Code (IEC)

Import and export are related to global business management. It might be inside an organization with units in various countries. To do overseas commerce, online registration with the Directorate General of Foreign Trade is necessary (DGFT). It is a one-time registration that is valid for life. Furthermore, there are no post-compliance duties.

  • Registration of Real Estate Projects (RERA)

We are now in the infrastructure realm. When it comes to real estate, it is divided into two groups. One form of property is commercial (typically located in a market location, and this sort of property is usually bought or rented by some kind of business or store), and the other is residential (primarily for living, but the owner may use it for personal use). Rental revenue is a form of passive income. Every builder, developer, and development authority must carry out real estate projects. Real estate projects include the construction or development of a building, as well as the conversion of a whole or a portion of an existing structure into flats, as stipulated in the ACT.

  • Indian Regulatory and Development Authority of India (IRDAI)

One of the most successful company models is the insurance business model. LIC is a terrific illustration of this, but if every firm adopts this strategy, there will be no competitive edge. To provide insurance-related services, an IRDAI license is required. A license can be obtained for several types of insurance, such as life insurance or general insurance.

  • Reserve Bank of India (RBI)

We’ve arrived at the money portion, and when it comes to money and finance. Banks and non-banking financial companies are two examples. The RBI is the bank’s regulator. A license from the RBI is necessary to conduct banking operations, provide loans and advances, or provide financial assistance, such as NBFCs. It is also essential for offering e-wallet-related services. The fundamental distinction between banks and NBFCs is that banks allow you to create a savings account, whilst NBFCs do not. All banks must contain the term “BANK” in their business name; however, NBFCs cannot have the keyword “BANK” in their company name. 

  • Securities and Exchange Board of India (SEBI).
SEBI is the market regulator for the exchange of all financial products. Every individual who provides stockbroking, sub-broking, or any other financial service must have a SEBI license. It may also involve counseling and advice on financial instruments and investments.

Credibility Registration

The government has mandated this sort of registration for manufacturers of specific items that must meet the requirements specified. It boosts the entity’s credibility.
 
  • ISO and ISI mark

ISO is an international certification that verifies that the products or services are of high quality. ISI is an industrial product certification based on Indian Standards. Many businesses exclusively do business with ISO or ISI-certified enterprises. You’ve probably seen the ISI mark on the product label.

  • AGMARK

India is an agricultural country, and agriculture accounts for almost two-thirds of our GDP. The government of India provides the AGMARK certification mark for agricultural products. It demonstrates the product’s quality in comparison to established criteria. It is required for various crops.

  • BIS Hallmark

Now, this form of licence is usually associated with jewellery. It is intended for gold and silver jewellery. It indicates the purity of gold and silver used in jewellery. Using such a symbol promotes client trust. So, the next time you go shopping for jewellery, keep this characteristic in mind.

Other Registration

Several voluntary licenses are not required but will benefit your startup if you obtain them.

  • Micro, Small, and Medium Enterprises

It is for the development and growth of small and medium-sized businesses. Only manufacturers and service providers may register under it, hence a firm engaged solely in commerce is ineligible for MSME registration. Furthermore, the government has classified the businesses based on their investment, such as micro, small, and medium firms. Only such entities are eligible to register under this scheme. Entities registered under it can profit from things like a loan on intellectual property registration costs, protection against late payments from consumers, and so on.

  • Start-up India

Under the Startup India initiative, a private limited company, an LLP, or a registered partnership business can be recognized. Furthermore, an organization must meet the standards outlined in the plan. By registering under it, an entity can obtain the following benefits. Let’s go through some of the advantages. Income tax will be waived for three years. Income tax exemption on capital gains received in excess of fair market value. When applying for a patent, a fast-track method and an 80 percent reimbursement is available. It has access to alternative investment funds.

  • Stand-Up India

Its purpose is to help SCs and STs or women entrepreneurs by giving low-interest bank loans. Other than individuals, such advantages can be obtained only if a schedule caste or schedule tribe or a woman entrepreneur owns at least 51 percent of the shares or control.

Final Words

Once the company is formed, all additional necessary registrations and/or licenses must be obtained to conduct business legally. Otherwise, the government may levy a fine for failing to follow the laws and regulations.

I hope, I gave you some insights about the registration and licenses related to business and delivered it in the best possible way. 

If you have any queries related to the same then do leave a comment, and I will respond to it. 

DO SHARE THIS ARTICLE with your friends or family who is going to start their own business.  You can tweet out your thoughts by tagging me @rajatinr on Twitter.

To your entrepreneurial Success

-Rajat Negi, Logging Out 🤗

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Rajat Negi

Compound Investor (Who loves to talk to stock)
Digital Marketer (Who loves to make brands)

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