{"id":6256,"date":"2019-09-11T17:05:56","date_gmt":"2019-09-11T11:35:56","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=6256"},"modified":"2021-04-05T15:22:03","modified_gmt":"2021-04-05T09:52:03","slug":"difference-between-trade-license-and-company-registration","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/","title":{"rendered":"Difference between Trade License and Company Registration"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Starting a business in India is a complex procedure. Right from implementing the business plan to finding a suitable location, the business procedure consists of a linked chain of multiple activities. In addition to hiring employees, finding new clients, new business owners require proper registration with government authorities and acquire necessary licenses. Without the proper license, new businesses are exposed to fines &amp; penalties. Provisions of registration &amp; license vary as per the state. There are two important things where everybody confuses- company registration and trade license. Know about Difference between Trade License and Company Registration.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2f3ba815acf\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2f3ba815acf\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#Defining_terms_%E2%80%9CCompany_Registration%E2%80%9D_and_%E2%80%9CTrade_License%E2%80%9D\" title=\"Defining\nterms: \u201cCompany Registration\u201d and \u201cTrade License\u201d\">Defining\nterms: \u201cCompany Registration\u201d and \u201cTrade License\u201d<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#Company_Registration\" title=\"Company Registration\">Company Registration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#Trade_License\" title=\"Trade License\">Trade License<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#Understanding_Key_Points\" title=\"Understanding Key\nPoints\">Understanding Key\nPoints<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#Number_1_Procedure_to_obtain_CertificateLicense\" title=\"Number 1: Procedure to obtain Certificate\/License\">Number 1: Procedure to obtain Certificate\/License<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#For_Company_Registration\" title=\"For Company Registration:\">For Company Registration:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#For_Trade_License\" title=\"For Trade License:\">For Trade License:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#Number_2_Documentation\" title=\"Number 2:\nDocumentation\">Number 2:\nDocumentation<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#1-_For_Company_Registration\" title=\"1- For Company Registration\">1- For Company Registration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#2-_For_Trade_License\" title=\"2- For Trade License:\">2- For Trade License:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#Number_3_Validity\" title=\"Number 3: Validity\">Number 3: Validity<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#1-_For_Company_Registration-2\" title=\"1-&nbsp;For Company Registration:\">1-&nbsp;For Company Registration:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#2-_For_Trade_License-2\" title=\"2- For Trade License:\">2- For Trade License:<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#How_is_Trade_License_different_from_Company_Registration\" title=\"How is Trade\nLicense different from Company Registration?\">How is Trade\nLicense different from Company Registration?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-trade-license-and-company-registration\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Defining_terms_%E2%80%9CCompany_Registration%E2%80%9D_and_%E2%80%9CTrade_License%E2%80%9D\"><\/span>Defining\nterms: \u201cCompany Registration\u201d and \u201cTrade License\u201d<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Company_Registration\"><\/span>Company Registration<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Company registration in India is governed under the provisions of Companies Act, 2013. It&#8217;s a process of starting up the new business entity. Company registered under the Companies Act, 2013 is the organized structured entity through which any type of business can be conducted by taking suitable licenses. Following six types of companies are incorporated under Companies Act:<\/p>\n\n\n\n<ul><li>Private Limited Company<\/li><li>Public Limited Company<\/li><li>One Person Company (OPC)<\/li><li><a href=\"https:\/\/swaritadvisors.com\/nidhi-company-registration\" class=\"text-primary\"><strong>Nidhi Company<\/strong><\/a><\/li><li>Section 8 Company<\/li><li>Producer Company<\/li><\/ul>\n\n\n\n<p>Certificate of Incorporation is the Certificate for <strong><a href=\"https:\/\/swaritadvisors.com\/private-limited-company-registration\" class=\"text-primary\">Company registration<\/a><\/strong> and is received once the registration process is completed. This certificate is issued by the Registrar of Companies. It gives a separate legal entity to the Registered Company. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Trade_License\"><\/span>Trade License<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Trade license is an authorization through which government authority approves any Company for conducting a particular type of business. There are following different types of <strong><a href=\"https:\/\/swaritadvisors.com\/trade-license\" class=\"text-primary\">trade license<\/a><\/strong> depending upon the different types of trade such as:<\/p>\n\n\n\n<ul><li><strong>OSP license<\/strong>\nto authorize IT services<\/li><li><strong>FSSAI license<\/strong>\nfor Foodchain operators <\/li><li><strong>Drug License<\/strong>\nfor manufacturing and selling of medicines, sanitation, etc. <\/li><li><strong>Ayush License<\/strong>\nfor the trading of Ayurvedic products. <\/li><\/ul>\n\n\n\n<p>Trade Licenses are mandatory and are issued by state government authority for initiating new business activity.<\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/documents-required-for-trade-license-in-india\">Documents Required for Trade License in India<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_Key_Points\"><\/span>Understanding Key\nPoints<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Number_1_Procedure_to_obtain_CertificateLicense\"><\/span>Number 1: Procedure to obtain Certificate\/License<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><em>These are two entirely different certificates and both are acquired from government authorities following different steps:<\/em><\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"For_Company_Registration\"><\/span>For Company Registration:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul><li>Apply the name online through web service available at<strong> MCA&#8217;s online portal<\/strong><sup><a href=\"http:\/\/www.mca.gov.in\/\" class=\"text-primary\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> by using Reserve Unique Name (RUN). After the name is approved, the Name Approval Letter is allotted to the applicant with a name reserved for 20 days. <\/li><li>Apply DIN online and make an application to the Central Government in the form of DIR-3 with necessary documents such as Passport size Photograph, Identity Proof, Address Proof properly scanned as an attachment. <\/li><li>Further after name approval, the next step is to apply for registration of a company. Application for incorporation has to be made online through the MCA portal using three linked forms:<\/li><li>E-Form INC-32 (SPICe)<\/li><li>Form INC-33 (SPICe MoA)<\/li><li>Form INC-32 (SPICe AoA)<\/li><li>On and from the date of receipt of the application, Registrar based on information and documents provided will scrutinize the forms. After that registrar will provide a Certificate of Incorporation (CoI) if all the necessary details are accurate.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"For_Trade_License\"><\/span>For Trade License:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p><em>Obtaining trade licenses differ from state to state. Although the common step for obtaining the trade license is:<\/em><\/p>\n\n\n\n<ul><li>Fill the application form online with all the necessary details.<\/li><li>Submit the form to state government authority or corporation or municipality. <\/li><li>Jurisdiction &amp; procedure for approval of an application varies as per the rules and regulations prevailing in that particular state.<\/li><li>The normal processing time for the application of a trade license is 7 to 10 days.<\/li><li>Trade license is issued after in-person verification by the concerned authority.<\/li><li>Trade license issued is valid for 1 year that can also be renewed. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Number_2_Documentation\"><\/span>Number 2:\nDocumentation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1-_For_Company_Registration\"><\/span>1- For Company Registration<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul><li>Memorandum of\nAssociation (MoA) &amp; Article of Association (AoA) with brief details of the\nCompany Name, Capital, Registered Office signed by all the subscribers or\npromoters.<\/li><li>A duly signed\ndeclaration that has to be given by an advocate, Chartered Accountant, Cost\nAccountant or Company Secretary in Practice.<\/li><li>An affidavit in\nform INC-9 which is a declaration by subscribers and first directors which\nstate no- conviction of any offense and\/or they are not found guilty of any\nfraud\/ misfeasance\/or any breach of duty<\/li><li>Address of its\nregistered office where it has to be situated<\/li><li>Complete details\nof each subscribers and first directors such as Full Name, Fathers Name, DIN\nnumber (If already allotted to them), Date of Birth, Present Address, Permanent\nAddress along with Address proof such as Electricity Bill, Bank Statement, or\nany Mobile bill (Any One amongst these three), and Identity Proof such as Voter\nID, Passport or Driving License (Any One amongst these three).<\/li><li>If any of the\ndirectors already hold directorship in any other company apart from the\nProposed Company in which being appointed, such interest in other entities has\nto be attached as a declaration.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2-_For_Trade_License\"><\/span>2- For Trade License:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul><li>Application as\nper the prescribed format<ul><li>COI in case an\napplicant is a company<\/li><\/ul><ul><li>Aadhaar card in\ncase an applicant is individual<\/li><\/ul><ul><li>Lease certificate\nin case of rented premise<\/li><\/ul><ul><li>Sanction plan<\/li><\/ul><ul><li>Katha Extracts\n&amp; certificate<\/li><\/ul><ul><li>Occupancy\ncertificate<\/li><\/ul><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Number_3_Validity\"><\/span>Number 3: Validity<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1-_For_Company_Registration-2\"><\/span>1-&nbsp;For Company Registration:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Certificate of Incorporation\nwill be valid for a lifetime once allotted.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2-_For_Trade_License-2\"><\/span>2- For Trade License:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Trade License is valid for 1 year from the date of issue of license.<\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/apply-for-trade-license-in-uttar-pradesh\/\">How to Apply for Trade License in Uttar Pradesh?<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_is_Trade_License_different_from_Company_Registration\"><\/span>How is Trade\nLicense different from Company Registration?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>To sum up in one line: <\/em><\/strong><\/p>\n\n\n\n<p>&#8220;Company\nRegistration gives the new structure of business while the Trade License is an\nauthorization to an already running business for starting new activity or\nbusiness.&#8221; Differences based on validity, authority, documentation, etc\nare briefly discussed henceforth.<\/p>\n\n\n\n<p>Any\nrunning business can register itself as a legal entity or any individual can\nalso form a new structure in the form of a registered company. Trade License is\none of the certificates obtained by an already registered company if it was\nwilling to carry on any additional activity. Investors usually hesitate for\ninvesting in any sole-proprietor ventures as compared to the entity baked by a\nlegal structure like Company, LLPs, etc.<\/p>\n\n\n\n<table>\n<tbody>\n<tr>\n<td><strong>Basis of difference<\/strong> <strong>&nbsp;<\/strong><\/td>\n<td><strong>Company Registration<\/strong><\/td>\n<td><strong>Trade License<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong>Structure<\/strong><\/td>\n<td>The new business entity is formed to carry on the business.<\/td>\n<td>The existing entity takes the approval for carrying a particular type of activity &nbsp;<\/td>\n<\/tr>\n<tr>\n<td><strong>Validity<\/strong><\/td>\n<td>Valid for lifetime once allotted &nbsp;<\/td>\n<td>Valid for one year<\/td>\n<\/tr>\n<tr>\n<td><strong>Renewal<\/strong><\/td>\n<td>They are not renewed as they are valid for a lifetime. &nbsp;<\/td>\n<td>They are renewed after their expiry by submission of necessary documents.<\/td>\n<\/tr>\n<tr>\n<td><strong>Processing time<\/strong><\/td>\n<td>ROC takes 3-4 days to issue Certificate of Incorporation<\/td>\n<td>Concerned authority takes 7 to 10 days for processing of an application &nbsp;<\/td>\n<\/tr>\n<tr>\n<td><strong>Types<\/strong><\/td>\n<td>Following are the types of Company:<br> Private Limited, Public Limited, OPC, etc &nbsp;<\/td>\n<td>Types of trade license: OSP license, Drug license, etc<\/td>\n<\/tr>\n<tr>\n<td><strong>Eligibility<\/strong><\/td>\n<td>Directors should not be minor.<br>The company should be registered with a minimum requirement of capital &nbsp;<\/td>\n<td>The applicant must have crossed 18 years of age with no criminal record. Business shall be legally authorized by its object to carry on such other activity for the trade license is acquired. &nbsp;<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It is important to choose the right business activity for obtaining trade license or right structure for company registration in the perspective of taxation also. Each business activity has its form of compliance that is mandatory. Registered company has to file Income Tax Return as well as Compliances as per Companies Act, 2013. Thus both the acts prevail on it. And there will be an addition in the compliance list if any trade license is acquired by such a company for carrying on the business activity. <\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/which-is-better-partnership-firm-or-private-limited-company\">Partnership Firm vs Private Limited \u2013 Which One is Better?<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Starting a business in India is a complex procedure. Right from implementing the business plan to finding a suitable location, the business procedure consists of a linked chain of multiple activities. In addition to hiring employees, finding new clients, new business owners require proper registration with government authorities and acquire necessary licenses. Without the proper [&hellip;]<\/p>\n","protected":false},"author":7,"featured_media":6259,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[168,523],"tags":[817],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6256"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=6256"}],"version-history":[{"count":28,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6256\/revisions"}],"predecessor-version":[{"id":18555,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6256\/revisions\/18555"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/6259"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=6256"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=6256"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=6256"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}