Hotel, eateries, amusement parks, theatres, entertainment houses, and public amusement places are all covered by the Shops and Establishments Act, which is applicable nationwide. Business owners who fall under this Act must obtain the necessary documentation and shops and establishment certificate. In accordance with this Act, business owners must first understand what a commercial establishment is. Below you will find a quick overview of the Shops and Establishments Act’s eligibility criteria.
Commercial Establishments: What Are They?
Commercial establishments are defined in the Act as;
- The financial, insurance, or trading sectors of the commercial sector.
- An establishment where people are employed or engaged to perform office tasks or provide services.
- Small cafés, restaurants, boarding houses, and refreshment houses.
- Theatres and cinema halls, as well as amusement parks.
Therefore, all the commercial establishments mentioned above are subject to the regulations stipulated in this Act. In India, each state has a list of commercial establishments that must register under the Act, with exceptions varying between states.
To run a business legally in any location, business owners should consult with legal experts.
When to Obtain Registration
The Act requires that individuals who intend to start a commercial establishment under its purview register within 30 days of starting their business. This registration is mandatory for several reasons, including being necessary for opening a current account in a bank. For companies to apply for other registrations and loans, the Shops and Establishments Act license serves as an essential license or proof of business.
What to Know About the Shops and Establishments Act Registration
An address proof for the establishment and a copy of the lease or sale deed are required. To complete the registration process, they must also provide a copy of their PAN card and pay the prescribed fee. An inspector may visit the establishment to cross-check the details on the application. The registration certificate must be displayed prominently in the shop, and it must be renewed whenever there are any changes or when it expires.
Businesses that operate as shops or establishments are required to register under the Shops and Establishments Act. The license must be updated if the establishment undergoes any changes. In case of closure, or renewal, an application for the same must be made within 15 days of the said change or closure. Any business that has an office or establishment, even if run by a sole proprietorship or freelancers will require this license when trying to raise investment through loans or from venture capitals. The license helps prove the validity and credibility of the establishment, making it an integral part of running any business. The registration process takes around ten days for completion, following which the business receives a hard copy of the registration certificate. However, the process might take around 20 days in major cities due to a large number of applications.
Why Register Under the Shops and Establishments Act?
The primary objective of such a registration is to secure uniform benefits for employees serving different establishments across the country. The Act also regulates work hours, payment of wages, terms of service, and holidays that employees receive. It also lays down guidelines regarding the conditions of work, the number of people employed and helps in ensuring their wellness. The registration acts as a basic license that helps in securing further registrations and certifications. All commercial establishments, except those that fall under the purview of the Factories Act, 1948, must register under this Act. However, since the Act is a state-specific regulation, each state has its laws and guidelines regarding operating such establishments.
Documents Required for Shops and Establishments Registration
- Photograph of the shop and its name board
- Certificate of incorporation/ Memorandum or Articles of Association/ LLP Agreement
- Copy of PAN card
- List of directors and partners
- Identity and address proof of all directors and partners
- Copy of partners consent or board resolution
- Address proof of the establishment
- Details of all employees
How to Apply for the Shops and Establishments License
Individuals can apply for the Shops and Establishments license through forms available online on the government’s official website. However, each state has a different set of rules regarding the process of registration and the eligibility criteria for the same. Hence, entrepreneurs must seek legal help to ensure they get the required documentation ready for registration. A registration certificate from the Chief Inspector of Shops and Establishments will also be required from business owners.
Details such as the name of the establishment, the address of the owner, and the number of employees must be provided on the application form. The inspector in charge of your locality must receive these details in a format before the application can be approved.