An Overview
Shops Establishment registration is a state-based requirement for businesses such as shops, hotels, or any commercial establishments operating within a particular state. This registration must be obtained under the Shops and Establishment Act, and the license should be acquired within 30 days of starting operations.
The registration is regulated by the labour departments of each state, and the Shops and Establishments Act is designed to ensure a proper work environment while establishing the rights and privileges for employees working in various establishments. This law is applicable to all types of shops across India, including businesses like retail shops, hotels, cafes, restaurants, cinemas, and public places of entertainment.
Key objectives of Shop Establishment Registration include:
- Ensuring compliance with state law.
- Securing uniform benefits for employees across different establishments.
What are the Records to be maintained Under the Shops and Establishment Act?
Employee register and full details
Payroll records – salary details, deduction, leave, overtime, fines, holidays, advance salaries
Attendance
All other details related to an employee
All other allied registers
Why is it required to obtain Shop and Establishment License?
Every shop and commercial establishment requires obtaining this license for the following reasons:
Bank Account: A bank account opened for business purposes typically requires this form of license. Therefore, it is essential for the applicant to ensure the application is filed within the prescribed time. The applicant must register under the shop and establishment license within 30 days of commencing the business.
Inspection: In addition to the bank account requirement, businesses with this license will face minimal issues during inspections by the department inspector. It is crucial for businesses to apply for this license immediately after starting operations.
Compliance: Compliance with this registration is mandatory. Any shop or establishment that meets the above requirements will experience fewer issues with government agencies and departments.
Top Four Features of the Shops and Establishment Act
The Fundamental Objective of the Act:
One of the primary goals of the Shops and Establishments Act, which mandates establishment registration, is to ensure that all employees are granted equal rights and benefits across all establishments, including offices, movie theatres, and other places of entertainment.
Protocols of the Shops and Establishments Act and Establishment Registration:
The Shops and Establishments Act falls under labor laws and sets the guidelines for employers to follow regarding the number of working hours each day and the designated times for opening and closing establishments. The act also requires businesses to observe national and religious holidays, regulate the employment of juveniles and women, and set policies for maternity and casual leaves.
Upkeep of Records under the Shops and Establishments Act:
All organizations must request approval or endorsement from the labor department and maintain up-to-date records regarding hiring, pay, credit deductions, leaves, and other personnel matters under the Shops and Establishments Act. However, these rules may vary from state to state.
Authorized Prerequisite for the Shops and Establishments Act & Establishment Registration Process:
As per labor laws, a license issued under the Shops and Establishments Act is a mandatory requirement. Therefore, all shops and establishments must register under the Act within 30 days of starting operations.
What Are Essential for Obtaining Shop Establishment in India
Name of both the Employee and the Manager
Postal Address of the said Establishment
Name of the Establishment
Category of Establishments such as the restaurant, amusement park, hotel etc.
The number of Employee working.
Documents Required
The Documents Required for Registration Under the Shop and Establishment Act Are as Follows:
- Employer’s identity proof in the form of Aadhar Card, PAN (Permanent Account Number) Card, Driving License, or Voter ID.
- Employer’s passport-sized photograph.
- A photo of the establishment or shop.
- Copy of Rent Agreement or Lease Deed (if the property is rented).
- Any utility bill (Electricity Bill, Water Tax Receipt) for the working premises, not older than two months.
Other Documents Required (Depending on the Type of Business or Establishment):
- In case of a Trust, a list of the number of Trustees.
- Memorandum of Association (MOA).
- Partnership deed with all essential details, including the firm’s name, signatures of all partners, and their respective share percentages.
- A copy of the permission granted by RBI (Reserve Bank of India).
- A copy of the Certificate of Incorporation (COI) issued under the Companies Act, 2013.
- A copy of the Certificate of Registration (COR) granted by the Charity Commissioner.
- A Resolution listing the Designated Directors.
- A Resolution concerning the commencement of the society’s business.
- RTO Transportation Permit, FSSAI license, Drug license.
- A copy of the permission granted by the collector.
- NOC (No-Objection Certificate) issued by the Police Department for the opening of a Cybercafe.
- IEC (Import Export Code) certificate.
- NOC (No-Objection Certificate) issued by the Municipal Corporation for opening a Flour and Masala Mill.
- Excise License required for opening a beer bar, restaurant, or wine shop.
- A Certificate issued by SEBI (Securities Exchange Board of India) for a Share Broker.
- License issued by the Police Department for the opening of Security Services.
The Procedure for Obtaining Shop and Establishment License Is Discussed Below
Download the Application Form: The first step is to download the application form for registration from the official website of the respective state in which the shop or establishment is located.
Fill in All the Required Details: In the next step, the owner of the business is required to fill in all the necessary details. The required details include:
- Name of the Proposed Shop and Establishment
- Name and Details of the concerned employer
- Name and Details of all employees working at the time
- Address proof of the Registered Establishment, along with the NOC (No-Objection Certificate) or the Rent Agreement, if the premises are rented
- PAN card details of the concerned employer
Submit the Application Form: After filling out the required details, the owner must submit the completed application form to the Inspector in charge or the Chief Inspector of the Shop and Establishment Act, along with the prescribed fee.
Verification of the Application Submitted: Once the application is submitted, it will be verified by the higher authorities, ensuring all the documents and information are accurate.
Issuance of License: If all the documents are in accordance with the requirements of the act, the certificate of registration will be issued to the shop or establishment.
Note: The registration process typically takes about 15 to 20 working days in major city areas. However, the duration may vary depending on the state or region.
Benefits Related to the Shop and Establishment License
Shop License provides Legal Acknowledgment to the specific shop or establishment, making it a crucial form of registration for businesses.
Essential for Further Registrations: This license is an essential registration for obtaining other registrations in India. It serves as proof of the establishment’s legitimacy and can help in acquiring additional business licenses.
Business Proof: The Shop and Establishment License acts as a valid proof of business, facilitating the process of obtaining further registrations and approvals.
Bank Account: A shop or establishment cannot open a bank account without a Shop and Establishment License. Therefore, securing this license is mandatory for opening a business bank account in the shop’s name.
Raising Investments: Having a Shop and Establishment License is crucial for raising investments, whether through venture capital or loans, as it validates the establishment’s legal standing.
Compliance: All businesses and shops must secure this license to comply with the legal requirements of the Shops and Establishments Act. The specific requirements may vary by state, but registration is mandatory.
Simplifies Further Registration: Securing a Shop and Establishment License simplifies the process of obtaining additional business registrations, making it easier for businesses to expand.
Proof of Establishment: A shop or establishment with this license gains recognition and credibility in the public eye, serving as a formal proof of its existence and operation.
Bank Account: This license is a prerequisite for opening a business bank account. Banks often require it as part of the account registration process, and in some cases, may offer incentives to businesses with this license.
Raising Loans: Registered shops and establishments find it easier to secure loans from banks compared to unregistered businesses. Additionally, businesses can access various benefits by registering under the Shops and Establishments Act.
Why Legal Tax?
Our experts offer a comprehensive explanation of the registration process and required documentation.
We assist in preparing your application and help you gather all necessary information about employees and the shop.
We handle the entire shop registration process, submitting the application to the labor department, either online or in person, as required.
We keep you informed throughout the process with regular updates.
Once approved, the shop license certificate is delivered to you either by courier or in person.
The fee charged by Legal Tax is minimal compared to other organizations, at just ₹1499.
EPOS stands for Electronic Point of Sale. It refers to a computerized system used to record sales transactions and manage inventory.
These are brands owned not by the manufacturer, but by a retailer or supplier. Retailers and suppliers purchase the goods and then label and market them under their own name.
It will take 5 to 7 working days to file the documents with the respective authorities and complete the registration process.
The validity of a shop license depends on the specific state’s Shop and Establishment Act.
Factories are not covered by the Shop and Commercial Establishments Act regulated by the Factories Act.
Almost all shops and businesses are required to obtain a shop license under the respective state’s Shop and Commercial Establishment Act.
The documents required for registration under the Shop and Establishment Act are as follows:
- Employer’s identity proof, such as Aadhar Card, PAN (Permanent Account Number) Card, Driving License, or Voter ID.
- Employer’s passport-sized photograph.
- A photo of the establishment or shop.
- Copy of Rent Agreement or Lease Deed (required if the property is rented).
- Any utility bill, such as an Electricity Bill or Water Tax Receipt, for the working premises. However, the utility bill should not be older than two months.
Shop License provides legal acknowledgment to a particular shop or establishment.
It serves as an essential registration for further registrations.
This license acts as proof of business, helping in obtaining additional registrations in India.
Moreover, shops cannot open a bank account without a Shop and Establishment License. Therefore, a Shop and Establishment License is mandatory for opening a bank account in the name of the shop or establishment.
Shop License also helps in raising investments through venture capital or loans for the business establishment.
Compliance: All businesses and shops secure this license to comply with the requirements of the Act. Additionally, every individual is required to obtain this registration based on state requirements.
Simplifying Further Registration: Securing this license makes future registrations simpler and more streamlined for the business.
Proof of Establishment: Any shop or establishment with this license gains credibility in the public eye. It serves as proof of the establishment’s legitimacy.
Bank Account: This license is compulsory to open a business bank account. Banks typically require this license for account registration. Furthermore, banks may offer various incentives to licensed shops and commercial establishments.
Our experts provide a detailed explanation of the registration process and required documentation.
We assist in preparing your application and work with you to gather all necessary employee and shop information.
We handle the processing of your shop registration and submit it to the labour department, either online or in person, as required.
We keep you informed and updated on the status of your application.
Once accepted, the shop license certificate will be sent via courier or delivered in person.
The fee charged by Legal Tax is very affordable compared to other organizations, at just 1499/-.
The fee charged is 1499/- only.
The documents and records that are mandatory to be maintained under the Shop and Establishment Act include Employment Register, Details of the Fine imposed, Advances Issued, Salary Details, Salary Deduction Details, and Holidays awarded.
A Sole Proprietorship Firm is ideal for unorganized and small businesses due to its easy incorporation process and minimal compliance requirements for the proprietor.
According to the provisions of the Shop and Establishment Act, the term“Commercial Establishment” refers to entities in the commercial sector such as banking, insurance, and trading establishments; hotels, eateries, cafes, and refreshment houses; establishments where employees perform office work or provide services; and places of amusement and entertainment, including cinema halls, theatres, and amusement parks.
Yes, all businesses registered under the provisions of the Shop and Establishment Act must obtain prior approval from the labour department before commencing their business operations and activities.
The primary objective of the Shop and Establishment Act is to ensure uniform privileges and benefits for all employees working in various establishments, including shops, commercial spaces, residential hotels, restaurants, theaters, and similar workplaces.
A Shop and Establishment License is typically valid for a duration of one year and must be renewed annuall
Yes, obtaining a Shop and Establishment License under the respective state’s Shop and Establishment Act is mandatory for nearly all shops and establishments.
The term “establishment” encompasses entities such as hotels, restaurants, theatres, and amusement parks. In contrast, a factory specifically refers to a facilit
According to the provisions of the Shop and Establishment Act, the term “establishment” refers to entities such as hotels, theatres, restaurants, and amusement parks. On the other hand, a “shop” is a premise where goods are sold or services are provided to customers, including locations like storerooms, offices, or warehouses.
Yes, a penalty is imposed for failing to obtain a shop and establishment license, and the amount of the penalty varies from state to state.
Starting a business without obtaining a Shop and Establishment License is highly risky and could lead to serious consequences. Regulatory authorities may seal or shut down your business operations. Additionally, you may face hefty fines, penalties, or even legal action if found operating without the required license.
Yes, an individual can open a current bank account using a Shop and Establishment certificate. Banks typically accept this certificate as valid documentary proof for the account opening process.
No, you do not need to be physically present at our office to obtain the Shop and Establishment License, as the entire process is online. You only need to submit the necessary documents through the portal.
Yes, the registration certificate issued under this act is subject to renewal.
