7 Legal Licenses That All Indian Small Businesses Need (But Most Are Ignoring!)
Entrepreneurship in India is an age-old wish of the majority of entrepreneurs. But in the excitement of initiating a brand, most forget to do one of the most essential steps—being compliant. Be it opening a bakery shop, a consultancy firm, or doing business online, you need to undergo the legal approvals. Avoiding any one of them would invite hefty fines, business stops, or closure by court decrees.
Here in this blog, we’re going to walk you through the 7 most important licenses that all Indian small businesses need to be getting—and why not getting them is a big mistake.
1. FSSAI License – For Food Businesses
If your business is food-based—like restaurants, home kitchens, food trucks, or packaged food—FSSAI (Food Safety and Standards Authority of India) registration is required.
Why it’s important:
It makes sure your food is clean and safe.
Increases consumer trust, especially while shopping online.
It is a mandatory requirement under the FSS Act, 2006.
Forms:
Registration: Turnover is less than ₹12 lakhs.
State: Turnover between ₹12 lakhs–₹20 crores.
Central: More than ₹20 crores or interstate transactions.
Actual example:
Many Instagram home bakers were fined or account suspended for failing to display their FSSAI numbers.
Tip: Display your 14-digit FSSAI number consistently on packets and on promotional media.
2. GST Registration – For Tax Compliance
Goods and Services Tax (GST) is mandatory if your turnover in the year crosses the threshold amount:
₹40 lakhs for goods
₹20 lakhs for services (₹10 lakhs in a few special category states)
Even below these amounts, voluntary registration is availed by many to avail input tax credit or in case of dealing with GST-registered parties.
Why it is important:
In the absence of it, you cannot legally charge GST from customers.
Fines for non-enrollment of ₹10,000 or 100% of the payable tax.
Bonus benefit:
Your enterprise looks more formal to customers and suppliers with GSTIN.
✔ Tip: File your monthly or quarterly returns in time to avoid interest and penalty.
3. Shop and Establishment License
For Brick-and-Mortar Offices or Shops
Also known as Gumasta License in other states, it is mandatory if you have a physical setup—like a shop, office, or even home office.
Purpose:
Regulates working hours, rights of employees, wages, and holidays.
Enforced by state governments, hence rules vary.
Why most people ignore it:
Solo owners or home businesses think it is not necessary. Without this license, however, banks can reject current account sanctions or funding.
Tip: Get this license within 30 days of starting business.
4. MSME/Udyam Registration – For Small Businesses
Although voluntary, MSME (Micro, Small, and Medium Enterprises) Registration, now rechristened as Udyam Registration, is very useful.
Benefits:
Makes government subsidy easily accessible.
Government tender priority.
Lower rate of interest on loans.
Swifter loan sanction under CGTMSE scheme.
You simply require basic business data, Aadhaar, and PAN to get registered. Whether manufacturer or service provider, this is your pass for official recognition.
Tip: Get your MSME certificate printed and utilize it while obtaining loans, tenders, or government schemes.
5. Trade License – For Local Business Legality
Trade License is issued by the local civic body of where your business operates. It vouches that your business can operate there and meets local laws.
Who needs it:
Salons, coaching classes, warehouses, restaurants, etc.
Those with physical businesses open to customers.
Why it is important:
Without it, your business would be sealed down by the government or face penalty.
Tip: Get trade license before commencing operations. Renew annually to stay in accordance.
6. Trademark Registration – To Protect Your Brand Name
Business name registration is commonly erroneously assumed by small businesses to be adequate. Trademark registration by itself, however, gives legal protection to your business name, logo, slogan, or even product name.
Why trademark is worthwhile:
Deters others from copying your brand.
Bestows legal weight to your intellectual property.
Improves credibility when raising capital or seeking business partners.
Real life example:
A bakery company “Crumbs & Cream” was running successfully for 2 years when some other company borrowed the name and sent them a legal notice.
Tip: Do a trademark search as a onetime investment prior to finalizing the name of your business or product.
7. ISO Certification – For Global Trust & Quality
The International Organization for Standardization (ISO) ensures your organization is of international standard quality, safety, and efficiency.
Most in-demand licenses:
ISO 9001: Quality Management System
ISO 22000: Food Safety
ISO 14001: Environmental Management
While not mandatory, it’s often required for:
Government contracts
Export transactions
Collaborations with foreign firms
Tip: ISO-certified companies stand out in B2B sectors and attract serious clients.
Why These Licenses Are Important (Beyond Compliance)
Protects Your Business: Prohibits you from being caught off guard by surprise shutdowns or fines.
Assists in Building Customer Trust: Customers are geared towards lawfully registered and verified businesses.
Encourages Growth: MSME and ISO licenses support government incentives and trust.
Shields Your Brand: Trademarks protect what you’ve worked hard and invested for.
Ease of Operations: Legal documents make it easy to open bank accounts, raise funds, or get listed on Amazon, Flipkart, or Swiggy.
Conclusion
All Indian small businesses, whether you’re one man and a plan or you’re recruiting staff, need to take legal licenses seriously. These 7 licenses are not red tape forms—these tools protect your operations, protect your brand, and position your business for growth.
Don’t wait until you get a notice from a lawyer or lose customers to move. Move now.
