Trade licenses are permissions granted by the state government to carry on a particular business or trade. State laws govern it under the Municipal Corporation. To ensure that unethical business practices are not being engaged in, it is enacted. Licensing is handled by the municipal corporations’ authorized departments. It is possible for a business to be penalized or even closed if it operates without a trade license.
Following relevant rules, safety measures, and guidelines to ensure one is not engaging in unethical business practices. Your business can operate in a particular area if you have a trade license. Trade licenses are similar to driver’s licenses, which are required to drive a car. The government department will fine and penalize a person who operates his business without a license.
What Are the Different Types of Trade Licenses?
There are three main types of businesses that require a trade license:
- Hotels, restaurants, canteens, food stalls, bakeries, etc.
- Industrial licenses include manufacturing, cyber cafés, factories, flour mills, etc.
- These trades include the Arber shop, the Dhobi shop, the timber wood, the sale of firewoods, etc.
The main objective of the Trade license is to prevent people from conducting any business activities in residential areas while they are in possession of the license. As a result, the business environment is maintained, and the members of society don’t face hurdles and nuisances. It is only possible to obtain a trade license in commercial premises where no restrictions have been placed on commerce. The government has framed safety guidelines for some industries that are involved in hazardous activities to only operate in specific zones that are a certain distance from the city.
What are the eligibility criteria?
- It is necessary for the person to be over the age of 18.
- There must be no criminal records on a person
- It must be legal for the business to perform legal services
How Do I Get the Documents I Need?
- Documents proving ownership if the premises are owned by the person and a rent/lease agreement if the premises are leased
- Proof of identity and address of applicant
- Certificate of registration from the relevant authority
- The Memorandum of Association and Certificate of Incorporation in the case of a company
- Tax receipts from the municipality
Trade Licenses Are Necessary
Obtaining a Trade License is different from registering a business. To start a business, you need a trade license from the government. By doing so, the government regulates trade, ensures compliance with safety guidelines, and protects the public from potential health hazards and inconveniences caused by businesses.
Obtaining a trade license is required by the government to ensure that one is not engaging in unethical business practices and following relevant rules, safety measures, and guidelines. For the government to be able to regulate various trade activities in the country, a trade license is compulsory. An important purpose of a trade license is to control the location of businesses by prohibiting people from operating certain types of businesses from their homes.
As part of the entrepreneur’s business, it controls the number of specific responsibilities.
How Does a Trade License Benefit You?
- In comparison to an unregistered entity, a licensed business will enjoy greater goodwill and will attract more customers and investors.
- Certain types of liability are protected by it
- Investment groups and other business organizations are attracted to companies with better business practices
- To practice ethical business, a person can obtain a Trade License Registration, which ensures safety measures and guidelines
- Governments can impose fines and penalties on people who start businesses without a trade license as required by law. It can also lead to the closure of such a business.