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What is Shop Establishment or Labor License Registration?

The Shop and Establishment Act is applicable nationwide, and all the commercial establishments, such as the hotels, and eateries, amusement parks, theaters, and other entertainment houses, as well as any other such public amusement places, come under the purview of the Act. Get to know what commercial establishment meaning is. The definition of a ‘Commercial Establishment’, as given in the Act is: Any commercial sector, such as banking, trading or insurance establishments any establishment where individuals are employed or engaged to do office work or provide service. The hotels, eateries and boarding houses or a smaller café or refreshment house. Amusement and entertainment places such as theatres and cinema halls or amusement parks all such above mentioned commercial establishments come under the Act and need to adhere to the norms and regulations set by the Act for the treatment of their employees. The exceptions to the Act vary in the States and each State has given a list of shops and establishments act that come into the Act, and who require the registrations under the Act to run their business in the State.

Benefits of Shop Establishment or Labour Licence Registration

  • The right of doing business:

If you can submit a legal entity proof for your business (such as a partnership firm or a proprietorship firm) you will obtain the right of doing business in your location or your state.

  • Ease of opening a current business account:

As per the RBI norms, every shop and establishment needs to open a separate business account. This is to make sure that it has to reflect its day-to-day transactions. The banks require you to submit a valid entity proof to open such an account. Perhaps, the shops and establishment license will help you to open this account with ease.

  • Facilitates smooth inspections:

The local municipality and the State Government authorities conduct visits and regular inspections to check whether the shops & establishments in a particular locality are functioning properly or not. If you have the shops & establishment license in place, you can get over such inspections quickly and smoothly.

  • Government benefits:

The State DIC Department is the policy-making body for all small businesses in a State. It comes up with certain schemes to benefit small businesses from time to time and businesses having the shops & establishment license can only avail of these schemes. Therefore, it’s imperative for you to obtain this license, if you have not got one so far.

Documents Required for Shop Establishment or Labour Licence Registration

  • Photo of the authorized signatory – proprietor/ managing partner / director – 2 photos are needed in this case
  • Statutory document – partnership deed / incorporation certificate
  • Identity proof of the authorized signatory – copy of PAN (Permanent Account Number) card / driving license / voter ID
  • Authorization letter – this is to be signed by the authorized signatory in accordance with the format that has been prescribed in this case
  • Address proof of the entity- rental agreement or property tax receipt (this is applicable in cases where the applicant owns the premises)
  • Employees – information on the number of employees you have to provide