Top Differences Between Trade License & Shop Establishment License
Every commercial enterprise and organization must be aware of underlying legal issues for their company journey to continue smoothly. Several legislative frameworks govern the operation of working entities & commercial enterprises in India. The two primary government registrations that control how these organizations operate are the trade & shop establishment registrations. Although they have the same functions, they serve different reasons. You must comprehend the fundamental distinctions between these two licenses if you are prepared to participate in business activity.
What is a Trade license?
Businesses with trade licenses are not authorized to participate in illegal commercial activities. Additionally, these businesses must function without impeding the interests of the broader public. The Municipal Corporation of the relevant state is responsible for issuing the trading license. Additionally, organizations with a trade license must conform to underlying standards and laws governing work ethics & safety procedures.
What is Shop and Establishment License?
A shop and establishment license denotes the legitimacy of a particular trade or business. The Shop & Establishment Act applies to this license in its entirety. The state’s labor department distributes it.
Differences: Trade License and Shop and Establishment
Who Does It Cater To?
A person who wants to start a business or a store must register it with the local government as a Shop Establishment. In contrast, a trade license is an authority given to a person to carry out a certain business or trade.
Types of Establishments Covered
Shop and Establishment licenses are also available for residential properties, while Trade licenses are exclusively available for commercial properties. Trade licenses are mainly required for establishments like hotels, restaurants, canteen, food stalls, manufacturing industries, cyber café, etc.. In contrast, Shop Establishment is required for every shop and commercial establishment that is doing business or providing any services.
Objective Purpose
A Trade license is required by law to ensure that a person is not engaging in unethical business operations and is adhering to the laws and safety recommendations given by the government from time to time. Shop Establishment is mostly essential for small business owners and traders that engage in any type of commercial activity and regulates salary, work hours, rest times, lunches, breaks, leaves, and other work situations for employees employed in various locales. Each company location must be registered, with the exception of those that are already registered under the Factories Act of 1948.
The ambit of the Licenses Vary
A trade license is essential for any legal business or service activity, while a shop establishment license is required for the tiny unorganized sector. It safeguards workers’ and employees’ working conditions by establishing working hours, opening and closing hours, wage rates, and weekly holidays, among other things. It also establishes working hours for women in the workforce, as well as child labor.
Conclusion
The shop act license and trade license has got to be obtained within 30 days of the commencement of the business. If the conditions of the licenses are violated, then the license is going to be revoked or canceled. The Shops and Establishment Act governs the working conditions and, therefore, the rights of workers, including wage payments, leaves, work hours, etc.