What Is Trade License

When starting a firm, numerous document compliance requirements must be met. A trade license is one of the necessary documents for operating a business or trade. It allows a person or corporation to conduct business or trade within a specific municipal limit.

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What is Trade License

A trade license is a document/certificate that authorizes the applicant (person wishing to create a business) to conduct a specific trade or business in a specific area/location. The state’s Municipal Corporation offers trade licenses to applicants.

A trade license assures that the firm or trade follows all of the safety criteria set by the State Municipal Corporation. It protects residents from health hazards. All enterprises governed by the State Municipal Corporation Act of the state in which they operate must apply for a trade license. However, the license does not permit the holder to engage in any other trade or business than that for which it was issued. Furthermore, the holder of this license receives no property ownership rights.

Why do you need a trade license?

A commercial license was first issued in India 40 years ago. The individual states’ Municipal Corporation Acts govern trade licenses. It ensures that no one is adversely affected by the nuisance and health hazards of any trade or activity.

The state governments require a trade license to conduct any specific business or trade in a certain area and to ensure that no one engages in unethical business practices. It enables the government to regulate numerous commercial operations in the country. This license promotes social peace by ensuring that all businesses adhere to the relevant regulations, guidelines, and safety measures.

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What are the main purposes of a trade license?

The major purposes of a trade license are as follows:

To govern and monitor the activity of enterprises in a specific area, neighborhood, or municipality.
To ensure that enterprises within a specific locality or municipality do not engage in anti-competitive behavior.
To ensure that a business adheres to corporate or government regulations.
To determine whether a firm breaks the law or generates a societal nuisance.
To govern the use of hazardous and other chemical chemicals in business while ensuring that they do not harm people or the environment.
To ensure that enterprises employ eco-friendly products and protect the environment.
To guarantee that enterprises take all required measures when carrying out business activities.

What are the different types of trade licenses?

Industries license: Manufacturing firms of various sizes require small, medium, and large licenses.
Shop license: This category includes dangerous and objectionable operations such as selling firewood, making crackers or candles, operating a barbershop or laundry (dhobi), and other similar companies.
Food Establishment Licence: A license to run a food establishment, such as restaurants, hotels, food stalls, canteens, meat and vegetable enterprises, bakeries, and so on.

Who can issue a trade license?

The Municipal Corporation’s licensing department issues it in a variety of departments, including industries, engineering, and health. It grants authority to conduct any business or trade in the area where it is located via a document/certificate. The license granting process differs by state, depending on the norms and regulations of the local government agencies (Municipal Corporation).

Eligibility to apply for a trade license.

The applicant must be over 18 years old.
The applicant should not have any criminal background.
The company should be legally permitted.