Running a Beauty parlour/salon is one of the hottest trends in business today, as many women especially millennials are launching their own beauty parlour and salon. But starting a beauty parlour is not so easy at it looks. Because it requires certain legal and regulatory registrations that many don’t follow and run into troubles.
The first step you will need to complete is finalizing a corporate structure for your beauty parlour/salon ie whether the business will be a Company, Partnership Firm/ Limited Liability Partnership (‘LLP’) or sole-proprietorship depending on the Capital size, ownership, management and expansion plans of the business.
Based on the chosen business form, you must obtain a registration from the registrar of companies for a Company/ LLP or sub registrar’s office for a partnership firm. A sole proprietorship doesn’t require any registration in India to run as a business.
Every business including beauty parlours and saloons will need a PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) in the name of the business, and in the case of a Sole Proprietorship, PAN/ TAN will be in the name of the owner of the business.
PAN and TAN are two ten-digit unique alphanumeric numbers issued by the Income Tax Department. Every person who deducts or collects tax at source needs to apply for the allotment of TAN. As per the recent changes, AADHAR can be used in place of PAN for filing IT Returns but PAN is still essential when it comes to making payments exceeding Rs 50,000.
A salon is also required to obtain an NOC from the Chief Fire Officer before commencing business. To obtain the same, it has to submit building plans, model of the building and certificate from the Architect, Electronic appliances used, and also fill out a questionnaire related to fire safety rules and regulations.
The Shops and Establishment Act gives the list of norms for employing any person in the shop/ establishment such as opening and closing time, holidays, permissible working hours, overtime policy, rest intervals, paid leave, allocation of work, display of notices, etc.
Within 30 days of starting a business, obtain a license under Shops and Establishments Act from the particular State labour department, by submitting an application under FORM A along with the Legal ID, occupancy evidence, PAN, authority letter for Business and details of employees.
Under the GST regime, tax is payable if the turnover of Rs.20 lakhs (Rs. 10 lakhs for North Eastern states & Special Category States) is achieved. All business liable to pay GST shall register and obtain GSTIN – a unique Goods and Services Tax Identification Number (GSTIN).
Professional Tax is levied by the local municipality on the salary paid to every individual. The tax rate differs from state to state. For payment of the professional tax, most states issue a registration certificate or an enrolment number, which will be used as a reference for remitting the tax.
Before commencing your business, you will need to get a trade license from the local authority, which is usually the municipal corporation or panchayat. This license is issued after ensuring that the trade is carried on safely and does not harm the public. An application for obtaining the same can be submitted through the online portal of the municipal corporation along with required documents such as incorporation certificate/ firm registration certificate, Property Tax payment receipt, Fire NOC, identity proof and address proof of the application etc. A NOC from police and the corporation’s health department is also a pre-requisite in order to get this trade license.
ESI (Employees State Insurance) Registration is to be obtained by all establishments, including salons in the ESI notified areas, which have more than 10 employees. Employees earning less than Rs 21,000 per month are covered under this scheme. Any establishment that is exempted from obtaining ESI registration shall obtain an Exemption Certificate.
EPF (Employees Provident Fund) registration is mandatory for all salons having 20 or more persons (10 persons in some states in India). In such cases, employees with monthly income less than Rs 15,000 shall be mandatorily covered under EPF.
A beauty Parlour/Salon falls under the white category of the industry as per the Pollution Control Board’s notification. Hence, it does not require a pollution control board license. You will have to intimate the concerned PCB about setting up of the beauty Parlour/salon under the white category and obtain an acknowledgment from the board.
In case you are planning on playing pre-recorded music at your Beauty parlour/salon you will require a public performance license issued by Phonographic Performance Limited to evidence that you comply with copyright requirements.
We hope this blog would have given a clear idea about the necessary legal approvals and requirements for starting up a beauty parlour/Salon in India. But still, before proceeding with the above legal requirements, we recommend you to take proper consultation from corporate legal experts for a better understanding of business legal requirements and registrations.