Tuesday, March 22, 2011
Licenses Required for a Restaurant Business
One area everyone is really worried about is the various licenses/government approvals required for running a restaurant. These are not as complicated as you think or as consultants make them out to be:
Here are the licenses you need to get in Bangalore - other locations will be similar.
1) Trade License for running a restaurant - from the BBMP (Municipal Corporation) office for your location.
2) Health Certificate - again from the health department of BBMP (Municipal Corporation).
For these 2, just ask a restaurant/fast food joint near where you are planning to start and they will give you a contact at BBMP to help you - depending on the size of your project, these 2 will cost you between 10K and 1L (fine dining) with the unofficial fees being the big component - actual license fee is 5K-8K for a small restaurant/fast food joint. You do not need to hire consultants for this. I would strongly recommend that you befriend a fast food/restaurant owner in your area, ask him how much he paid and then request him to help you out with the licneses.
3) VAT registration - your accountant can help you with this. The actual terms vary by state. You have 2 options in Karnataka - composite where you pay 4% of the sale value as VAT - no input credit adjustments need to be made. The other option is to charge the customer 13.5% VAT and then pay the VAT after adjusting for input credit. For a new business, I would recommend the Composite option as no documentation needs to be maintained - so it will be easier to manage when you start afresh. You can always move to the other model later.
4) Shops & Establishment License - your accountant can get you this.
5) Labour License - again your accountant can help you with this.
4 & 5 comes from the Labour department for your area.
These are the 5 licenses you would need to get started. Once you identify the premises, you can work on these licenses (should not take you more than a month to get all these in place).