Have you ever asked this question of a small business owner?
“Do you have all the LICENSES and PERMITS for your business?”
Most business owners will pause; some might say yes… and then quickly follow it with, ‘I think so.’
This is not because they have not done that, but because they are not sure if they have done everything right.
For them, the licensing and permitting process feels like a maze.
In this blog, I have shared some of the most common types of business licenses and permits that every entrepreneur must know about.
This helps business owners navigate the process more confidently and ensure they are operating legally.
A business license is a legal document that provides you permission to run a business within a specific industry, city, or state.
It is required to ensure that businesses operate ethically, safely and in compliance with local laws and regulations.
The business licenses and permits you need mostly depend on the type of your business and its location.
Many individuals think that licenses and permits are the same, but actually, they are not. Each has its own purpose. Let’s see their differences:
| Licenses | Permits |
| A license grants permission to do something legally, such as operate a business or engage in a specific activity. | A permit gives authorisation to perform a specific task or meet certain safety, health, or legal standards. |
| Example: Getting a business license to open a salon or spa. | Example: Getting a food service permit to run a restaurant. |
Business Licenses and Permits are like the “passport and visa” of a business.
Just like you need a passport to prove your identity and a visa to legally enter another country, your business needs:
A license to prove it is registered and legally allowed to operate.
A permit to show it meets specific rules or standards for its industry (like health, safety, or zoning).
However, it is not limited to that. Here are some reasons why you need it.
While this article will guide you on licenses, what about all the steps after that? Growing a business means getting every piece right, from paperwork to strategy.
Obtaining a business license and permits is necessary for you to legally function, and there are many different types of business licenses and permits in India. Here are the most common types.
The most important primary license is the company license. To get this license, you have to define your business under any of the following categories. This is based on the business structure and the partners involved.
If your business is gaining more than Rs. 40 lakhs per annum (for goods) and Rs. 20 lakhs per annum (for services), then GST is mandatory.
It not only keeps your business legally compliant but also helps you to claim input tax credit, reducing your overall tax burden and improving profitability.
Every Micro, Small, and Medium Enterprise (MSME) in India must register to gain recognition and receive certain benefits from the government.
In addition, Udyam Aadhar registration requirements are based on a combined criterion that considers both the business’s annual turnover and its investment in plant and machinery.
If your business is involved in the manufacturing, selling, or distributing of drugs and medicines, then a drug license is mandatory.
This license is necessary to ensure that the drugs and medicines being produced and distributed meet quality standards and are safe for consumption.
Many of you might be familiar with the FSSAI license.
If your business is based on food products, obtaining an FSSAI license is essential to ensure food safety standards are met.
This license is required for businesses involved in the manufacturing, processing, packaging, storing, and distribution of food products.
General business licenses are an essential document for running a business. Generally, it is issued by the Department of Revenue and the Secretary of State.
This license also allows businesses to open bank accounts, hire employees, and enter into contracts.
So, applying for a general business license is an important step in establishing the legal foundation of your business operations.
If your business is about importing and exporting goods, then you will need an Import-Export Code (IEC).
It is issued by the government authorities that allow your business to participate in international trade. Without an IEC, your business will not be able to clear customs and receive goods from foreign countries.
It is a 10-digit unique code that is mandatory for all businesses engaged in import and export activities, and it also has lifelong validity, so you only need to apply for it once.
If you’re running any kind of business, like a shop, office, or commercial setup, you’ll need a Shops and Establishment License.
The objective of the Shops and Establishment License is
It is a legal requirement that demonstrates compliance with labour laws and protects the rights of workers.
If your business has a significant number of employees, then a labour license is an important one that you can get from the Shram Suvidha Portal.
This license ensures you’re providing fair wages, safe working conditions, proper work hours, and benefits like leave and overtime pay. It protects both your workers and your business.
A zoning permit is important to obtain before starting any construction or renovation on a property to ensure that the business complies with local zoning laws and regulations.
It is also known as a land use permit and is necessary to avoid any legal issues related to the use of the property.
It enables businesses to operate in an environmentally responsible manner while following all the regulatory requirements of local, state, and federal authorities.
The following are some permits you need to get from the government:
These permits are necessary to ensure that businesses are not causing harm to the environment through their operations.
In India, it is mandatory for businesses to get a Fire Safety Certificate or a No Objection Certificate (NOC) to make sure that their premises are safe in case of a fire emergency.
These certificates are issued by the local fire department after inspecting the building for compliance with fire safety regulations.
Any person conducting business of manufacturing or trading of any item in India must obtain the necessary sales permits from the local authorities to operate legally.
These permits help regulate the sale of goods and ensure consumer protection in the market.
Many businesses, like restaurants or retail stores, may need sign permits to ensure that their signage complies with local regulations regarding size, placement, and aesthetics.
It is important to obtain these permits to avoid fines or penalties for non-compliance. Also, it is important to consider the impact of your signage on the surrounding environment and community.
Many business owners understand the importance and need for licenses and permits, but they often face difficulty in figuring out exactly which documents are needed and how to arrange them properly.
Here are some common documents required for a business license:
If you want to run your business legally in India, a business license is the first and most important step.
Before you apply for a business license, make sure you qualify by meeting these common conditions:
Applying for a business license involves several steps.
First, you need to know which type of business licenses and permits are required for your business to run in the specific location.
This can vary depending on the industry, location, and nature of the business.
You should collect all the documents, like your ID, proof of ownership, and required certificates, ready to meet legal requirements.
Once you have completed the details of the required documents, you can apply to the appropriate government agency for approval. For some licenses, you may also need to pay a fee in order to obtain the license.
Some business licenses require approval from the local authorities before they can be issued. It is important to be patient and prepared for any additional steps that may be necessary for final approval.
Many small business owners are not aware of the problems of operating without a license. They think their business is not eligible for regulation.
If you run a business without a license, it can lead to legal issues, including:
Penalties for operating a business without a license can include closure of the business, fines or criminal charges. It is important to ensure compliance with all licensing requirements to avoid these potential consequences.
Operating without a license spoils and damages the reputation of the business, as customers may question the legitimacy and credibility of a business operating without a license.
It is difficult to claim insurance coverage for a business that is operating without the required licenses, leaving the business vulnerable to financial risks in case of accidents or other incidents.
After getting the license and permit, you need to ensure that you keep track of the expiration date of your business license to avoid any disruptions in operations.
It is important to understand the renewal process and requirements to maintain compliance with regulations and continue operating legally.
Follow the steps below to renew your business license:
As a small business owner, it’s your responsibility to understand the steps and requirements involved in obtaining a business license in your area.
I hope this blog makes it a bit easier for you to understand what licenses and permits you need to run your business the right way.
And if you want to learn more about business and how to grow it in the right direction, check out the P.A.C.E. Program.
It helps small business owners develop their leadership skills and knowledge to succeed in today’s competitive market.
Your legal foundation is just the beginning. Explore our articles on how to build a stronger, more profitable MSME business.
None can destroy iron, but its own rust can! Likewise, none can destroy a person, but their own mindset can.
Former chairperson of the Tata Group
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