Know everything about Trade Licenses

Many people starting a new business don’t know about one of the essential documents they need is a Trade License. Therefore, for everyone’s benefit in today’s article, we are going to discuss everything about trade licenses in detail.

So, without further ado. Let’s get started. Happy reading :)

First of all, let’s understand “What is a trade license?”

As we said, “Trade License” is one of the important documents needed by business owners for running a business in a specific area or location or of a specific trade in nature. It is a certificate issued by the State Municipal Corporations or State Local Bodies to ensure that business or trade is carried by the person while adhering to all the safety standards.

Please note, that you cannot carry out any other business or trade other than for which trade license is issued to you. Also, the trade license does not pass any ownership rights to the license holder.

Now, let’s discuss the most important question “Why is a trade license needed?”

As stated above, the trade license is obligatory to obtain for running a business or trade in Indian states. It is issued by the State Municipal Corporations or State Local Bodies and is regulated by the state governments. Therefore, in order to do business or trade in two different states, you need a trade license from the municipal corporation of both the states. Further, a trade license is issued after thorough verification and ensures that all safety standards, local guidelines, and rules are complied with and there is no health hazard to the people of the neighborhood. Also, it is ensured by the local authorities that no unethical business practice is followed by the business owners while issuing the trade license.

We hope, from the above explanation, you have understood the importance of a trade license. Now, let’s understand “Which category of trade license you can obtain as a business owner?”

The trade licenses vary from state to state depending on the rules and regulations of the respective state government. 

One person can obtain the following categories of trade business by applying to the different departments of the State Municipal Corporation. 

• Industry Trade License - Issued to the small, medium, and large-scale industries who want to set up the manufacturing factories in the specific area or locality of the state.
• Shop Trade License - Issued to the shop owners who want to do the trade of dangerous or health hazardous products such as the sale of crackers, firewood, toxic materials, cooking gas, etc. Also, local shop owners who are running their establishments like laundry shops, salons, etc in specific residential areas need to obtain a trade license.
• Food Trade License - Issued to all the food establishments such as hotels, restaurants, banquets, food stalls, canteens, cafes, bakeries, grocery shops, etc.

Please note that the above food trade license is issued in attention to the FSSAI License, which is also mandatory to obtain by the food business owners.

Read about FSSAI licenses in detail by clicking here (please link to the relevant article).

Once you have figured out which category of trade license is best for you to apply for. The next step is to ensure that you met all the eligibility conditions of a trade license as well, which are as follows:-

• People applying for the trade license should have the legal age of 18 years and should not have any criminal records.
• The incorporation of the business should have been done, in the case of the company.
• The business should be legally permissible by the state government.
• All property taxes must be paid by the applicant.
• All other local guidelines must be complied with.

Lastly, keep the below-mentioned documents handy while applying for the trade license.

The list of documents required for the application for the trade license is given as follows:

• The ID proof of the applicant such as Aadhar Card, Election ID, Passport, etc (in case of an individual).
• The certificate of incorporation of the business (in the case of a company).
• The PAN copy of the applicant (both in the case of individual or company).
• The address proof of the business for which license is needed. (both in the case of an individual or a company).
• Memorandum of Association (in case of a company).
• The latest municipal property tax receipt.
• If the property is owned then a no-objection certificate from the owner.
• The no-objection certificate from the neighborhood where the business is situated (nearby property owners).

Please note, that you can submit the application for the trade license to the State Municipal Corporation or State Local Body via both online and offline mode. But make sure to pay the trade license fee while applying.

What is the trade license fee?

The trade license fee is different in each state since it is under the purview of State Municipal Corporations. In some states, the trade license fee is paid up as a fixed amount, or in other states, it is paid up on the basis of annual business turnover and sometimes it is charged on a higher basis than usual if your business is situated in any specific area or localities.

So, make sure that before applying for the trade license you check your area or locality guidelines by visiting the municipal corporation office or their websites or else you can reach us at firststartup. Our team of experts can provide you with professional assistance in applying for a trade license or any other business compliances.

So, don’t worry much and ping us and get the best service :)