1. How the Shop Establishment License Helps to Open a Current Account

Holding a valid shop license demonstrates your business is legally registered with the respective state government. This certificate serves as evidence of the company’s legitimacy. This license is utilized in a number of contexts, such as when opening a bank account. However, have you ever learned how the business bank opening is connected to the license? Let’s examine this guide to know what the link is between having this license and the ability to open a business current account at a bank. 

2. Understanding the Role of Shop Establishment License

The license demonstrates that the business has been registered legally and is operating within the set standard framework. For example, in India, the license plays a crucial role for businesses that are complying with local municipal rules and regulations. To put it briefly, this license is necessary for commercial establishments in India, including the opening of stores, eateries, and offices. The major role of a license is to encourage businesses to align with the state’s specific labor laws. In the meantime, this license is granted in accordance with the state’s Shops and Establishments Act, which governs employee wages, leave, and working hours. 

3. Apply for the Shop Establishment  Certificate Online 

To obtain the shop establishment certificate, follow these steps: 

• Step 1: Visit the state labor department’s official website to register. 
• Step 2: Visit the option of “Shop and Establishment Registration.” Complete the application form by mentioning the critical details in it. 
• Step 3: For the shop registration cost, pay through the online mode. The number of employees and the length of the registration period affect the license registration fee. 
• Step 4: Your application will be reviewed by your state’s Labor Department. Your business location will be scheduled for an on-site inspection to ensure compliance with the Shop and Establishments Act. 
• Step 5: Once your application is approved, you will be able to download your Shop Establishment License from the Online Portal.

4. Why Do Banks Require a Shop License to Open a Current Account?

The shop registration is a key requirement that fulfills all bank requirements. The major roles played by the license during the opening of the current account are

• Legitimacy Proof: The shop establishment is a government-issued certificate. It is the proof that the business is operating legally within a legal framework. 
• Legal Requirement: The banks ensure, with this certificate, that the business is adhering to the labor law’s set regulations. 
• Business Existence: Registration is crucial for the physical existence of the company. It ensures the existence of a commercial establishment at a specific address. 
• Business Image: Through the registration, the business gets a unique number, which is used by the banks for linking the account to the right commercial entity.

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5. Key Documents Banks Typically Request

When businesses approach the bank for opening a current account, they ask for multiple documents as proof. The key documents you need to provide are

• Shop and Establishment registration certificate as the primary document.
• Copy of Permanent Account Number (PAN) Card 
• Registration certificate of Goods and Services Tax (GST)
• Other business-specific licenses/registrations (depends on the nature of the business)
• Business Address Proof and Identity Proof

6. How to Open a Current Bank Account with a Shop Establishment License?

Follow the process with a shop license to open your current business bank account:

I. Required Documents

Must gather all the supported documents in advance. The bank will ask you to issue the shop or Gumasta registration license, GST certificate, PAN card, business address proof, identity proof, business registration documents, partnership deed, professional tax registration, and other licenses.

II. Select Bank and Account Type

Choose the right bank account and the account type. Most banks offer online services or video KYC options for faster processing.

III. Fill out the Application form 

Fill out all the details on the bank’s application form. 

Mention the details of the business and its signatories.

IV. Attach  Documents

Attach the scanned copies of the documents as prescribed by the banks.

V. Complete Verification

The bank will verify the information on documents. This process further includes the video KYC call for the digital process.

VI. Finalize Account Opening

Once the verification process is complete, the bank will open the current business account.

7. Shop Establishment License Simplifies the Account Opening Process

Holding the valid shop establishment certificate makes the current bank account opening process quicker and easier. The license is the proof that signifies that the business has met all the legal requirements upfront. Beyond a simple bank account opening, the shop and establishment license is further used to obtain business loans or higher credit limits. 

8. Final Discussion | Commercial Bank Account Opening with Shop License

In essence, getting the valid Gumasta registration license (also known as the shop license) is not only a legal formality but also a requirement to comply with standard rules. The registration is crucial for providing the legal status to businesses in front of regulatory authorities, clients, etc.  It boosts the business’s credibility in competitive locations, which enables it to secure loans from financial institutions. If you haven’t applied for the shop and establishment license, make a better choice with fast application submission. Visit your nearest bank to open a current account. 

9. Got Questions? Resolve with Our Top-Searched FAQs

1. Why is opening the current business account important?

Ans. To manage the daily transactions, separating personal and business finances generally requires the current business account.

2. Is Udyam registration compulsory to open a current account?

Ans. No, there is no need for Udyam registration, as it is only required for the MSMEs who want to avail themselves of the government benefits. 

3. How does a shop license help during bank account opening?

Ans. The shop and establishment license serves as the official document proof of the business’s existence. It is used as the primary document that helps during the opening of a current account. 

4. Can you open the current account without a shop license? 

Ans. No, you will not be eligible to open the current bank account without a shop and establishment registration certificate for a registered business.

5. Do you need a business to open a current bank account?

Ans. No, the individuals can also open a current bank account without having any business.