Starting a business in Indonesia requires more than just capital and a strong business idea. One of the important things that every entrepreneur must consider is business licensing. A business license is a legal document that shows that a business has met the applicable legal requirements and is operating legally in the country.

For many entrepreneurs, understanding the different types of business licenses required is often a challenge. This is due to the complexity of the rules and regulations that apply in Indonesia. This article will take an in-depth look at the types of business licenses required in Indonesia, the steps to obtain them, and the importance of licenses in maintaining business continuity.

Why is a Business License Important?

A business license is not just an administrative formality, it also provides many benefits. Some of the reasons why a business license is so important include:

1. Business Legality:
   A license gives your business a legal status. Without a license, your business could be considered illegal and at risk of prosecution by the authorities.
2. Consumer Trust:
   Consumers are more likely to choose a business that has an official license because it shows that the business is trustworthy and quality assured.
3. Access to Financing:
   To get a business loan or work with investors, many financial institutions will ask for proof that your business is registered and licensed.
4. Avoid Fines or Closures:
   Operating without a license can lead to hefty fines and even business closure by the government.

Types of Business Licenses Required in Indonesia

In Indonesia, the type of license required depends on the type of business being run. But in general, there are several business licenses that almost all entrepreneurs must have. Here are some types of business licenses to know:

1. Business Identification Number (NIB)
The Business Identification Number (NIB) is one of the most important licenses for every entrepreneur in Indonesia. NIB is obtained after registering a business in the Online Single Submission (OSS) system. NIB serves as a business legal identity and is the first step to obtaining other business licenses.
The NIB registration process can be done online through the OSS portal. NIB is used for various administrative purposes, such as:

• BPJS Employment and Health Registration
• Environmental licensing
• Access to various other government facilities

NIB is a requirement to obtain further business licenses such as Trading Business License (SIUP) and Company Registration Certificate (TDP).

2. Surat Izin Usaha Perdagangan (SIUP)

SIUP is a license that must be owned by entrepreneurs engaged in trading goods and services. SIUP is issued by the Trade Office at the city or regency level and is valid for businesses that have a certain turnover.

Depending on the type and scale of the business, there are several categories of SIUP that can be applied for, including:

• SIUP Mikro:
  For businesses with an annual turnover below IDR 300 million.
• Small SIUP:
  For businesses with an annual turnover between IDR 300 million and IDR 2.5 billion.
• Medium SIUP:
  For businesses with an annual turnover between IDR 2.5 billion and IDR 50 billion.
• Large SIUP:
  For businesses with an annual turnover above IDR 50 billion.

By having a SIUP, entrepreneurs can conduct trading activities legally and registered.

3. Company Registration Certificate (TDP)

TDP is proof that a company has been registered with the authorized government agency. The TDP is issued by the Trade Office and is proof of the company’s legality. Although the TDP is now combined with the registration process through OSS, it remains an important document for companies that will operate legally in Indonesia.

The TDP contains information about the company’s identity, business address, and business sector. Every company must register to obtain a TDP, both large and small scale companies.

4. Building Construction Permit (IMB)

For entrepreneurs who open a business in a certain building or location, a building construction permit (IMB) is one of the must-have documents. The IMB is required to ensure that the building used for the business has met the technical requirements and applicable spatial regulations.

Entrepreneurs who open a business in a new location or build a new business facility are required to obtain an IMB before starting operations. The IMB is issued by the local government and must be in accordance with the applicable spatial planning in the area.

5. Surat Izin Tempat Usaha (SITU)

Surat Izin Tempat Usaha (SITU) is required for entrepreneurs who want to run a business in a certain location, especially for businesses located in areas that have the potential for disturbance to the surrounding community or are related to the environment.

SITU aims to ensure that the business does not cause disturbance to the environment and surrounding community. This SITU is often required by businesses located in commercial or industrial areas.

6. Environmental Permit

For certain types of businesses, entrepreneurs are also required to obtain an environmental permit. Environmental permits are required for businesses that have the potential to cause negative impacts on the environment, such as factories, restaurants, or businesses that produce hazardous waste.

This environmental permit includes several types of permits, such as:

• Amdal (Environmental Impact Analysis):
  For businesses that have the potential to have a major impact on the environment.
• UKL/UPL (Environmental Management Efforts/Environmental Monitoring Efforts):
  For businesses with lesser impacts on the environment.

Environmental permits are issued by the local Environment Agency and are usually required for businesses in the industrial, manufacturing sectors, or those that have a significant impact on the environment.

7. Micro Small Business License (IUMK)

The Small Micro Business Permit (IUMK) is intended for small and micro entrepreneurs who do not yet have a SIUP or TDP. IUMK is issued by the local urban village and is proof of legality for micro and small businesses.

Entrepreneurs who have an IUMK can access various facilities from the government, such as people’s business credit (KUR) financing and other assistance.

8. Special License Based on Business Sector

In addition to the general licenses already mentioned, certain types of businesses require special licenses that are tailored to the business sector or field. For example:

• Restaurant Operational License:
  Restaurant or food stall operators are required to have an operational license issued by the local Health Office or Trade Office.
• Tourism Business License:
  For businesses engaged in tourism, such as hotels, travel, or tourist attractions, a special license is required from the Ministry of Tourism or the local Tourism Office.
• Health Business License:
  Clinics, pharmacies, or hospitals must obtain a license from the Ministry of Health or the Health Office.

Process of Applying for a Business License in Indonesia

The process of applying for a business license in Indonesia often depends on the type of business and the location of the business. In general, the steps that need to be taken are:

1. Register Online through OSS:
   Entrepreneurs must register their business through the Online Single Submission (OSS) system to obtain NIB and other basic licenses.
2. Apply for Other Business Licenses:
   After obtaining NIB, entrepreneurs can apply for other necessary business licenses, such as SIUP, TDP, or environmental permits.
3. Complete Administrative Requirements:
   Make sure all supporting documents and administrative requirements are complete, such as KTP, NPWP, land title, and others.
4. Inspection and Verification:
   Some permits, such as IMB or environmental permits, require field inspection or document evaluation by relevant agencies.
5. Wait for Approval:
   Once all documents are complete and verified, the relevant agency will grant the necessary business license.

Conclusion

Understanding the types of business licenses required in Indonesia is important to ensure that your business is legally valid. Each type of business has a different license, depending on the field and scale of the business. The process of obtaining a business license can be done by following the procedures set by the government, either manually or through an online system such as OSS. By having a complete license, entrepreneurs can run their business more calmly, safely, and reliably.