Every small hotel and shop must obtain a Shop and Establishment License to carry out business activities. However, the registration process and requirements vary from state to state. For example, the process in Rajasthan differs from that in Uttar Pradesh. It is crucial for applicants to understand both the central and state-specific regulations before applying.
This Act regulates working conditions for employees in both organized and unorganized sectors. It also governs the terms of employment, working hours, rest intervals, wages, and holidays, making compliance essential for businesses.
What is Shop and Establishment Registration?
Shop and Establishment Act registration legally permits businesses to operate in India. It is regulated by the Department of Labour, and all shops and establishments must register under this Act within 30 days of establishment. This registration serves as proof of business existence.
Businesses can register in multiple ways, including:
- As a business entity in India.
- As a startup.
- As an MSME enterprise.
- Under the Shop and Establishment Act of the respective state.
Who Needs Shop and Establishment Registration?
The following businesses require registration under this Act:
- Commercial establishments such as trading companies, insurance firms, and banks.
- Service providers, including call centers.
- Food businesses such as cafés, hotels, restaurants, and boarding houses.
- Entertainment businesses, including theaters, amusement parks, and cinemas.
When to Apply for Shop Act Registration?
Any shop or establishment that employs people (whether full-time, contractual, or casual workers) must register under this Act within 30 days of commencing operations.
How to Determine if You Need Shop and Establishment Registration?
To check if your business requires this license:
- Review the definitions of "shop" and "commercial establishment" in the Shop and Establishments Act.
- If covered under the Act, comply with employee welfare norms.
- Check the state-specific list of covered businesses.
- File for registration online within 30 days of establishment.
Employer's Declarations at Registration
At the time of registration, the employer must declare the following:
- Employee working hours and rest intervals.
- Number of employees.
- Opening and closing hours.
- Health and safety measures.
- Overtime wages.
- National and religious holidays.
Documents Required for Shop Act Registration
- Photo of the establishment with name board and director.
- List of directors/management with ID and address proof.
- Company details, employee list, and salary information.
- Establishment’s address proof.
- Affidavit.
- PAN card copy.
How to Apply for Shop and Establishment Registration?
- Visit the state government’s website for Shop and Establishment Registration.
- Fill in the application form with the required details.
- Attach necessary documents and pay the prescribed fee.
- A Labour Department inspector will verify your establishment.
- Upon approval, the registration certificate/license will be issued.
Benefits of Shop and Establishment Registration
Helps in Opening a Current Business Account
- Required by banks as legal proof for opening business accounts.
Serves as Proof of Legal Entity
- Essential for business recognition in the respective state.
Smoothens Inspections
- Helps avoid penalties during government inspections.
Government Benefits
- Allows access to state government schemes for small businesses.
Less Compliance
- One-time registration with minimal legal formalities.
Records to Maintain under Shop and Establishment Act
Every registered business must maintain up-to-date records on:
- Employee details
- Fines, deductions, and advances
- Salaries and holidays
Annual records must be submitted to the Municipal Corporation. However, no regular returns are required under this Act.
Amendment in Shop & Establishment Registration
Any changes to the registration details must be reported to the relevant authority within the prescribed period. If a business closes, the employer must inform the authorities and request cancellation of the registration. Upon verification, the registration will be revoked.