What is Trade License - Benefits, Documents, Procedure, Renewal

What is a Trade License?

A Trade license is simply a license or certificate that a company or individual needs to conduct business. This approval is usually granted by the respective state government for a specific municipal boundary. This license allows the applicant to open a business in a specific region. The applicant must ensure that the business is conducted in accordance with the requirements of the license.

This license does not entitle the applicant to engage in any business other than that for which it was issued. Apart from that, the license does not permit the person to secure ownership or any form of legal ownership in the place of business.

Why do I need a trade license?

For 40 years, the government has enacted regulations on how private companies can operate. Therefore, this form of license is only used by a company to carry out a specific activity. These  licenses would only be issued by the government to individuals to carry out specific activities in a specific location.

The government of a particular municipality or state would issue these licenses to companies to allow them to operate. Obtaining a business license is mandatory for a specific person. This license is an essential and mandatory document issued by a specific municipality. Companies can carry out specific activities in a specific area. These licenses are also provided to verify that the company is acting in accordance with legal requirements.

     

What are the main purposes of a Trade license?

For example, the government issues a trade license to meet business requirements. Other than that, the commercial license is granted for the following reasons:

1. Regulate business in a given locality or community.
2. Ensure that anti-competitive practices are not used in a particular locality or community.
3. Monitor the activities of a company. Apart from this, local authorities can constantly monitor the activities of a company.
4. The issuance of such a license would indicate the company's compliance with government regulations.
5. A local authority can verify whether the business is breaking any law or causing harm to society through this license.
6. Companies with such a license are more respected in the eyes of consumers. Consumers would have more confidence in their services.
7. By obtaining a license, companies would not use their home to do business. This form of regulation thus ensures the regulation of companies.
8. This form of license also regulates the use of environmentally friendly substances to conduct activities in a given location. Hazardous chemicals and the like are not permitted as far as residential and community boundaries are concerned.
9. Companies with this form of license would take necessary precautions when carrying out a particular activity. Companies that hold this license also follow guidelines issued by the city or state government from time to time.

 Types of businesses requiring a Trade license

    

Food Business

Food companies are all companies that deal with food. This includes a facility that offers food and serves food. The following businesses require a commercial license to operate:

• Hotels, restaurants, canteens
• Shopping centres, theatres and nightclubs
• Bakeries, pastry shops and cafeterias
• Dairies, retailers and any other establishment that serves food

Trade and Other Related Services

Any trade or profession that involves personal services will also require obtaining some type of license. The following trades require this license:

• Hair salons and barbershops
• Internet cafes and lounges
• Small production units
• Average production units
• Small industries

Manufacturing Industries

Any type of industry involved in manufacturing products would also need this license. The following industries would need this license:

• Medium manufacturing industries
• Large manufacturing units and industries
• Classification of commercial licenses

Depending on the level of risk posed by the organization, Trade licenses are classified as follows:

         

Low Risk License

This form of license would cover any form of business that does not involve high risks. Restaurants and other types of eating places usually take this license into account.

License based on medium risk

This type of license is usually issued to establishments such as small and medium-sized businesses.

License based on high risk

This type of license is usually granted to industrial companies and large companies. Normally, this type of operation would carry a higher risk of handling other types of materials and substances. Normally the standards of supervision in these premises would be higher than a low and medium risk license.