A trade license regulates trading businesses and ensures their compliance with the rules and safety guidelines issued by the government. It safeguards society against the health hazard and nuisance that a trader or business may cause. The trade license can be obtained online by filling out the online trade registration application or offline from the respective government authority.
The authorised state government entity (usually a local municipality) issues the trade license to businesses carrying out trading activities. It is a legal certificate granting permission to carry on the specific trade or business for which it is issued at the respective premises. It allows the applicant to operate a business within a certain place or area of the respective state.
The trade license certifies that the business does not use unethical practices that may endanger residents of the territory or locality. This license does not allow the applicant to operate any other business than the one for which it is issued. The businesses that must obtain the license should abide by the authority’s rules and regulations. The application for obtaining the trade license must be made before or within 30 days of the commencement of business, as per the respective State's Municipal Corporation Act or Rules.
All traders involved in a general trading activity or business within the territorial boundaries of a municipal corporation are mandatorily required to get a trade license. The type of trade license to be obtained varies depending on the business’s nature.
Usually, all manufacturers and factories, including small, medium and large industries, firewood, cracker, candle manufacturers, etc., should have a trade license. All shops, such as barber shops, laundry shops, medical shops, restaurants and hotels, food stalls, canteens, bakeries, etc., must also have a trade license.
The municipal corporation of the respective state issues the trade license. Only government and municipal bodies regulate the issuance of this license. Thus, the applicant must apply for a trade license with the respective state government authority, depending on where he/she intends to start the business.
For example, when an individual wants to start a restaurant business in Bangalore, he needs to file an application for a trade license with the Bruhat Bangalore Mahanagara Palike (BBMP). It can also be applied online on the BBMP website.
There are three types of trade licenses issued by the municipal authority:
Below are the steps to apply for an online trade license:
Step 1: Visit the respective city municipal corporation website. For example, in Karnataka, the applicant must log in to this website.
Step 2: Click on the ‘Citizen online services’ option.
Step 3: Click on the ‘Apply for Trade License’ option.
Step 4: Fill out the registration form by providing the required details, such as personal details, address and business details.
Step 5: Upload the required documents and click on the ‘Submit’ button.
Step 6: The local body officials will verify the application and documents.
Step 7: After verification, a unique application number is generated.
Step 8: Pay the fee, and the license number will be issued.
The trade license is valid up to 31st March every year. The applicant must renew the license before its expiry by filing an affidavit stating that the business owner is still running the trade/business and intends to continue it. The procedure for renewal of the trade license is the same as the application process for the trade license. It can be renewed online through the municipal corporation website or by filing an application offline to the respective office of the municipal authority.
A trade license proves that a business is legally established and is considered a legal entity. It ensures to the proposed or interested customers that the business follows the local authority’s laws and regulations, making it safe to be associated with the business. It permits the business to function effectively within a commercial space without the fear of being forced to close by external entities. It helps to safeguard the business owner’s dignity and competence.
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Trade licenses are legal documents required for businesses to operate and help regulate trading activities to ensure compliance with government rules and safety guidelines. They are issued by the local municipality and are essential for a variety of businesses. Applicants must meet certain eligibility criteria and follow the specific application process for obtaining and renewing trade licenses.