If one is incorporated as a private limited company does he need to get a trade license from the municipality?

Trade license is permission granted in form of a certificate by State government to carry on any business/trade for which it is issued. Trade license is regulated to ensure that the citizen is not adversely affected by Health Hazard & Nuisance by the improper carrying of a trade.

The trade license is a means to ensure that the manner and locality in which the business is being carried on is according to the relevant rules, standards and safety guidelines. It is issued by the municipal corporation of the place where business is located. A trade license is a permission to carry on a specific trade or business at the premises for which it has been issued. Any unauthorized running of trade is an offense which may result in a substantial penalty and subsequent prosecution.

The business owners must apply for trade license is required in particular area without any delay. An application must be made before the commencement of the activity. However, some state governments allow up to 3 months’ time to seek a trade license. License once issued requires periodical renewal on annual basis. Application for renewal must be filed at least 30 days before expiry of license.

As per shops and establishment act, it is mandatory for three kinds of business:

1. All the eating establishments like hotels, restaurants, canteen, food stall, bakeries, the sale of vegetables, meat, provisions store, etc.

2. Trades which use motives like manufacturing industries, factories, power looms, flour mills, cyber cafe, etc.

3. Offensive and dangerous trades like a barber shop, dhobi shop, timber wood, sale of firewood, candle manufacturer, cracker manufacturer, etc.

Documents required for obtaining trade license:

1. Pan card of the establishment in case of company, LLP or Firm;

2. Canceled Cheque and bank statement of the establishment;

3. Certificate of Incorporation, MOA, and AOA of the company or LLP/ Partnership Agreement as the case may be;

4. Premises proof of the establishment in the form of Sale Deed, Electricity Bill/water bill and NOC from the owner;

5. Colour photograph, Pan card and ID Proof and Address Proof of all Directors/ Partners;

6. Photograph of the establishment with the display of goods traded from the premises; and

7. Site/Key plan showing the area under the occupation of the applicant earmarking the neighborhood of the site.