When starting a business, one thing business owners shouldn’t forget it is obtaining a business license. A business license is a formal permit granted by governmental entities. This is a basic requirement for almost all businesses to ensure compliance with local regulations, thereby legitimizing the business and fostering trust among stakeholders. 

The process and requirements can vary significantly depending on the country and specific business activities. In Indonesia, obtaining a business license is obligatory for any business entity. Let’s delve deeper into the importance of business licenses in Indonesia, the types of licenses, and how to obtain them.

Why is a Business License Important?

A business license is a legal must-have for running a business. Here are several reasons why obtaining business licenses is necessary:

Legal Compliance

A business license is an official permit granted by the government, allowing a company to operate legally within a specific jurisdiction. Obtaining this license can help prevent potential legal issues and fines related to operating without legitimate authorization. Moreover, different types of businesses require different licenses based on local regulations. This will ensure that the business meets safety and operational standards set by local authorities.

Building Credibility and Trust

Customers and partners often prefer a licensed business, especially in sectors where compliance with regulations is crucial. A business license can also enhance the credibility of the business in the eyes of customers and partners. It shows that the business is legitimate and adheres to industry regulations, which can impact customer trust and brand reputation. 

Risk Mitigation

Unlicensed businesses are prone to several risks, including penalties, fines, lawsuits, and reputational damage. A valid license can protect businesses by ensuring that they operate within legal boundaries. The license also comes with regulatory oversight designed to protect customers from unsafe practices.

What are The Types of Business Licenses in Indonesia?

Both local and foreign business owners must obtain a valid license to ensure the legality of their companies in Indonesia. Here are some examples of business licenses in Indonesia:

• Business Identification Number (NIB): The Business Identification Number, also known as Nomor Induk Berusaha (NIB), serves as the primary identification for businesses and simplifies the licensing process. This fundamental license covers a broad spectrum of business activities, including trading and consulting.

• Commercial License (SIUP): A Commercial License, also known as Surat Izin Usaha Perdagangan (SIUP), is a must-have permit for businesses engaging in trading activities. This license is mandatory for any trading operations within Indonesia.

• Industrial Business License (IUI): The Industrial Business License, also known as Izin Usaha Industri (IUI), is a required license for manufacturing entities. It ensures compliance with safety and quality standards in production processes.

• Tourism Business License (TDUP): The Tourism Business License, also known as Tanda Daftar Usaha Pariwisata (TDUP), is required for businesses in the tourism sector, such as travel agencies and hotels.

What are the Requirements for Obtaining a Business License in Indonesia?

To apply for a business license, requirements may vary depending on the type of license. However, the general requirements needed to obtain business licenses are:

• Legal entity registration
• Business Identification Number (NIB)
• Company’s Article of Association
• Approval from the Ministry of Law and Human Rights
• A copy of the investment permit approval
• A copy of the business owner’s ID card, passport, or Limited Stay Permit Card (KITAS)
• A copy of the company’s domicile and tax ID (NPWP)
• A copy of the Deed of Establishment and its amendments
• A copy of the contract or rental of the business premises
• A certificate authorized by the building’s owner
• A Nuisance Act Permit and Location Permit (Surat Izin Tanda Usaha/SITU)

Where to Obtain a Business License in Indonesia?

Obtaining a business license in Indonesia can be done by filling out the form in the Online Single Submission (OSS) system, which simplifies the process. As part of the incorporation, businesses should file for a business license application via OSS, where a Business Identification Number (NIB) will be granted. Depending on the industry, it may be necessary to obtain more licenses before officially starting the business. 

How to Get a Business License in Indonesia?

To get a business license in Indonesia, you will need to follow several key steps, primarily through the Online Single Submission (OSS) system, which streamlines the licensing process. Here are the steps to get your business license:

Register Your Legal Entity

Before applying for a business license, ensure your business is established as a legal entity in Indonesia. This typically involves registering as a PT PMA (foreign-owned limited liability company) or a local PT (limited liability company). Without a registered legal entity, you can’t secure NIB or additional business licenses.

Apply For Business Identification Number

Once you’ve registered your business, the next step is applying for a Business Identification Number (NIB). You can apply for it through the OSS system, which requires you to submit your company details digitally. NIB serves as a unique identifier for your business.

Determine the Relevant KBLI Code

Next, identify the appropriate Indonesian Standard Industrial Classification (KBLI) code that corresponds to your business activities. Indonesia’s licensing system follows a risk-based approach, meaning that the type and number of additional licenses required depend on the potential risk associated with your business activities. High-risk sectors may require more permits than low-risk sectors. 

Prepare and Submit Documents

Prepare and submit all necessary documents, which may include company registration certificates, tax ID numbers (NPWP), articles of association, and other relevant paperwork. Later, you will need to pay any required fees associated with your license application. The costs may vary depending on the type of license being applied for.

Expand Your Business in Indonesia with a Hassle-Free Office Solution by Effist Suite Office!

Obtaining a business license is a crucial step for local companies or foreign companies looking to expand their operations to Indonesia. However, handling the process can be complex without a proper business address. Effist Suite Office provides the perfect solution through the serviced office and virtual office services that meet legal requirements for obtaining a business license while offering a prestigious business presence.

Effist Suite Office offers a ready-to-use premium working space equipped with modern facilities, including high-speed internet, executive office equipment, meeting rooms of all sizes, a business lounge, a pantry, and secretarial and cleaning services. Alternatively, Effist Suite Office also offers a virtual office solution for businesses that are looking for a more flexible solution. Our virtual office service includes a prestigious business address, professional secretarial support, mail handling, and a cost-effective way to establish a local presence. Located in strategic South Jakarta locations, Gandaria 8 Office Tower and 88Office Kota Kasablanka, Effist provides an ideal environment for businesses of all sizes.

Contact us today at contact@effist.com to learn more about our serviced office and virtual office, or visit our “Book Tour” page.

Editor: Irnadia Fardila