Trade License

Trade License is a certificate/document which grants the permission to carry on a particular trade or business for which it is issued.

Trade License is one of the most important licenses to start a trade business in a particular municipal limit.

What is trade license and is it mandatory to obtain a license?

A trade license is a certificate or a document that provides the permission to the person seeking to open a business to commence a particular trade business in a particular location or an area. This license has been made mandatory by the government to ensure that no one is carrying the illegal or unethical business practices in a particular area or locality. The main objective of the government for issuing a license is to control the locations by restricting the people from carry out certain types of businesses from their home location to maintain proper business and locality environment. Proprietorship business requires obtaining a trade license to run their business in a smooth way. According to law, it is mandatory for them to get the trade certificate. In case they don’t have a trade license they will be considered as illegal and need to pay penalties in form of massive amount of money according to the type or nature of their business performed.

What are the Different categories to obtain the trade certificate?

There are basically 3 different categories in which the license can be obtained:

• Industries license: It is for small, medium and large scale manufacturing industries.
• Shop license: It is for the business involved in Dangerous and Offensive trades like a cracker manufacturer, sale of firewood, candle manufacturer, dhobi shop, barber shop etc.
• Food establishment license: It is for the Restaurants, hotels, canteens, food stall, bakeries, the sale of meat & vegetables etc.

Important points that need to be kept in mind while going for trade certificate:

• The Trade license is issued by the municipal authority and is exclusively for the Trade or business carried out in a particular locality.
• Rules and regulations vary from state to state in relation to the issuance of a trade license in different localities.
• The fee structure of the license differs on the basis of the nature of the business carried out by the applicant.
• A registered business entity granted with the license enjoys a greater goodwill as compared to the unregistered entity and subsequently it attracts more investors and customers.
• Trade registration license ensures ethical business practices performed by the traders as they have to follow all safety measures and guidelines as per the rules and regulations.
• In case a person does not apply for the license or starts performing his business activities before the grant of the license as required under law and commences any business or trade activity then the relevant government can impose penalties and fines as per their rules and regulation. In case of failure to comply with pre-requisites of the trade license can result in to the closure of a business.