Shop and Establishment licence
All states have their own Shop and Establishment Acts but adhere to the same general provisions. State Labour Departments regulate Shop Act. According to this shop act registration, licenses are issued by the respective states. Therefore they differ slightly from state to state. The shop and establishment registration Act regulates all shops and commercial establishments within the state.
As defined by the Shop and Establishment Act, a shop is where goods are sold or provided, whether retail or wholesale or where services are rendered. Commercial establishments generally employ people for office work, such as commercial, financial, trading, or insurance companies. Offices, godowns, storerooms, and warehouses are examples of commercial establishments. The term includes hotels, boarding houses, restaurants, cafes, theatres, and other public entertainment venues. However, factories and industries are not covered by this shop act registration. They are governed by the Factories Act 1948 and the Industries (Development and Regulation) Act 1951.
Who all come under the Shop and Establishment Act?
A shop is considered to be any premise where retail or wholesale goods are sold or services are provided to people. Under this banner, the following establishments fall under the Shop and Establishments Act
1. Godowns
2. Storerooms
3. Warehouses
4. Restaurants or eating places
5. Workhouses
6. Residential Hotels
7. Theatre and other places of public entertainment
What are the objectives of Shop Registration?
The main objectives of Shop Establishment Registration are:
1. To work according with the state law.
2. To secure uniform benefits for employees working in different establishments.
Benefits of Obtaining Shop and Establishment License
Legal Recognition- the Shops and Establishment license provides legal recognition to the respective establishment/shop.
Acts As a Business Proof- For further business registrations in India, the Shops and Establishment license acts as a business proof.
Helpful in Opening the Bank Accounts and Other Formalities- The registration of Shops and Establishments becomes necessary for reasons like opening a bank account in the name of an establishment/shop.
Provides a Platform for Raising New Investment- The Shops and Establishment license helps the proposed entrepreneur in raising investments through loans or venture capital for the proposed business establishment.
Avails The Government Benefits- By getting the shop and establishment license, the entrepreneur can avail of the government benefits in a different stage of business.
Saves Time- As the process of shop act registration has turned online, it saves time in the registration procedure as well as creates less hectic while in operation.
Eligibility Criteria for the Shops and Establishments Licence
Shop refers to any premises or facilities used by companies to carry out operations that help customers. These include office spaces, stores, godowns, warehouses, and other premises used in connection with a company or trade. A commercial establishment refers to any shop, residential hotel, restaurant, café, eating house, theatre, public leisure, or entertainment facilities used by customers.
Owners of all such establishments must submit a registration application within 30 days of the start of their new business. Since this Act is a mandatory requirement for commencing a business in India, all entrepreneurs must apply for it without fail. Failure to register under the Shops and Establishments Act can lead to hefty fines, penalties, and legal repercussions.
Documents Required
Address proof and identity proof of the applicant
Affidavit
Certificate of Incorporation
Memorandum and articles of association of the company
Cancelled cheque and bank statement
IT returns
Legal occupancy document proof or allotment letter from a government agency
Documentary proof of establishment of trade
Lease deed, property ownership documents or property tax payment receipts
No objection certificate from the land-owning agency.
Other Documents Required as Per the Establishment or Business Entity
1. In the case of a trust, a list of the number of trustees
2. Certificate of incorporation, MOA, and AOA as per the Companies Act,
3. In the case of co-operative societies, a list of the number of members and chairman
4. Partnership deed with all the important information such as the name of the partners along with their signature and share percentage of partners.
Penalties for Shop and Establishment Act
It is compulsory for the entire establishment under the Act to obtain Shop and Establishment registration and comply with all the rules and regulations prescribed under the Act.
However, in case of any failure in getting registration and following the rules and regulations of the Act, the establishment would be liable to pay the penalty. The amount of penalty would vary from state to state.
Registration procedure to obtain Shop and Establishment License in India
Any commercial shop or establishment or entity has to apply for the shop act licence online, license to the chief inspector of that particular location within 30 days of incorporation of business operations. It is applied through a specified form which needs some important documents and information such as the name of the applicant, name and address of the shop or establishment, the total number of workers in the establishment and category of the establishment and some other information which varies from state to state. Once the application is reviewed by the authorized inspector then the license is issued to the establishment. The renewal of shop and establishment must be exhibited at the business premises and should be renewed regularly at the prescribed time. According to the act, any establishment or shop or business in case of winding up the business has to inform formally to the chief inspector in writing copy before 15 days of winding up. The chief inspector then cancels the license or registration certificate of the establishment or shop by removing its name from the register. Importantly, it is mandatory to get the Shop and Establishment License in India for all the establishment or business entities even if it is a home-based work.
Steps Involved In Shop Act Registration
The online procedure for obtaining a Shop and Establishment License is discussed below
Step 1: Visit the Official Website: First of all, the applicant needs to visit the official website of the labour department of the respective State where you want to set up a shop or establishment
Step 2: File the Application: Then the applicant need to fill out the application form correctly with details regarding your business and details differ depending on the State & type of company.
Step 3: Upload Documents: After completing the form successfully, upload the vital documents online. In some states, physical submission of documents & a printout of the application form is required.
Step 4: Fee Payment: The fee depends on the type of License and company. Many states have an online payment option.
Step 5: Inspection: The labour department verifies your application and if they believe an inspection of your business premises is required to verify the particular you filled & documents attached, an inspector might be appointed to carry out an inspection and in the majority of cases, inspection is not required.
Step 6: Approval & Issuance of License: Once all the above steps are completed, the authorities will issue a valid Shop and Establishment License (the License is valid for 1 year with renewal every year).
Note: However, the process of getting registration might take around 15 to 20 working days in the major cities in India. However, the same may vary from one State to another.
Why The Startup Trends?
No matter where you are located, The Startup Trends can assist you with registering your business online. No doubt obtaining a shop and establishment license requires multiple professionals' input. The Startup Trends can make the whole shop act registration process simple and hassle-free. Our experts can help you with all the shop Act registration process and have more than a decade of experience in Procuring shops and establishment.