Setting up of Business Entities: the Ultimate Guide to Registration and Licenses

Setting up of Business Entities Starting a business involves several legal and regulatory requirements, including entity registration and obtaining necessary licenses. Proper registration ensures compliance with the law and provides legitimacy to the business. This guide explores the various registration processes and licenses required for setting up a business entity in India.

Setting up of Business Entities Registration and Licenses   

Before commencing operations, businesses must complete mandatory registrations and obtain relevant licenses. These registrations help businesses operate legally, comply with tax regulations, and gain access to financial and government benefits.

Business Entity Registration

Registering a business entity is the first step in formalizing a business. The choice of entity structure depends on factors such as liability, taxation, and compliance requirements. Common business structures include:

• Sole Proprietorship – Simplest form of business owned and operated by an individual.
• Partnership Firm – Formed by two or more individuals sharing profits and responsibilities.
• Limited Liability Partnership (LLP) – Combines benefits of a partnership and limited liability.
• Private Limited Company – A separate legal entity with limited liability to shareholders.
• Public Limited Company – Suitable for large-scale businesses planning to raise public funds.

Mandatory Registrations

Some registrations are compulsory for businesses to function legally in India. These include obtaining a Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), Goods and Services Tax (GST) registration, and various industry-specific licenses.

Permanent Account Number (PAN)

Significance of PAN

PAN is a unique 10-digit alphanumeric identification number issued by the Income Tax Department. It is essential for financial transactions, tax filing, and opening bank accounts.

Application and Registration of PAN

1. Visit the NSDL or UTIITSL website.
2. Fill out Form 49A (for Indian citizens) or Form 49AA (for foreign entities).
3. Submit identity, address proof, and a passport-size photograph.
4. Pay the processing fee and submit the form online.
5. Receive PAN via post after verification.

Linking PAN with Aadhaar

Linking PAN with Aadhaar is mandatory for tax filing. It can be done online through the Income Tax Department’s portal by entering PAN and Aadhaar details and verifying with an OTP.

Tax Deduction and Collection Account Number (TAN)

Persons Liable to Apply for TAN

Any entity deducting or collecting tax at source (TDS/TCS) is required to obtain a TAN.

Relevance of TAN

TAN is mandatory for filing TDS returns, issuing TDS certificates, and depositing tax with the government.

Procedure to Apply for TAN

1. Visit the NSDL website.
2. Fill Form 49B online.
3. Submit required details and documents.
4. Pay the processing fee and receive TAN via mail.

Goods and Services Tax (GST) Registration

Businesses with an annual turnover exceeding the prescribed limit must register for GST.

Procedure for GST Registration

1. Visit the GST portal and create an account.
2. Fill out the GST registration form (GST REG-01).
3. Upload business and identity proof documents.
4. Receive the GST Identification Number (GSTIN) after verification.

Registration under Shops and Establishment Act

This registration is mandatory for businesses operating in commercial establishments. It regulates working hours, employee rights, and workplace conditions.

Setting up of Business Entities: MSME Registration

Micro, Small, and Medium Enterprises (MSME) registration provides businesses with financial and tax benefits.

Benefits of MSME Registration

• Access to government subsidies.
• Lower interest rates on loans.
• Protection against delayed payments.
• Tax rebates and exemptions.

Clearance from Pollution Control Board

Industries involved in manufacturing, processing, or waste management must obtain a No Objection Certificate (NOC) from the Pollution Control Board. This ensures compliance with environmental regulations.

FSSAI Registration and License

Food businesses must obtain an FSSAI (Food Safety and Standards Authority of India) license to ensure compliance with food safety standards.

Types of FSSAI Licenses

• Basic Registration – For small businesses with turnover below ₹12 lakh.
• State License – For businesses with turnover between ₹12 lakh and ₹20 crore.
• Central License – For large businesses operating across multiple states.

Trademark, Patent, and Design Registration

1. Trademark Registration – Protects business logos, brand names, and symbols from unauthorized use.
2. Patent Registration – Grants exclusive rights to inventions and prevents unauthorized replication.
3. Design Registration – Protects the visual appeal of products and industrial designs.

Procedure for Trademark Registration

1. Conduct a trademark search to check availability.
2. File an application with the Trademark Registrar.
3. Examination and publication of the trademark in the journal.
4. Registration granted if no objections are raised.

Setting up a business requires multiple registrations and licenses to ensure legal compliance and smooth operations. Understanding and completing these processes efficiently can help businesses establish a strong foundation and access government benefits, tax exemptions, and legal protections.

Read also: Limited liability partnership and joint venture the key differences that could make or break your business