Starting a new business is a big step that requires a lot of preparation, both in terms of capital, human resources, and business legality. One of the most important aspects of starting a business in Indonesia is ensuring that your business is properly licensed in accordance with the prevailing regulations. Without the right license, your business could face costly legal issues.

The licensing process for new businesses in Indonesia is not as simple as one might think. You need to understand the various procedures and types of permits required to run a business legally. This article will provide a complete guide on the steps to take to apply for a new business license in Indonesia, from the initial preparations to the official license application.

Why are Business Licenses Important?

A business license is proof that your business is in compliance with the applicable laws and has the right to operate in Indonesia. Some of the reasons why licensing is very important include:

1. Business Legality:
   A business license gives your business a legal status. Without a license, your business could be deemed illegal and in danger of being prosecuted by the authorities.
2. Consumer Trust:
   Having a complete and valid license increases consumer confidence in the quality of the products or services you offer.
3. Ease of Access to Financing:
   Many financial institutions and investors are only willing to provide financial support to businesses that have an official business license.
4. Avoid Fines or Business Closure:
   Unregistered and unlicensed businesses risk being fined or even shut down by the government.

Therefore, it is crucial to understand and follow the right steps in applying for a business license for your new venture.

Step 1: Determine the Type of Business and Business Location

The first step in applying for a license for a new business is to determine the type of business and business location. Both of these will affect the type of license you need to apply for. For example, are you opening a retail store, restaurant, or factory? Each type of business requires a different type of license.

In addition, the location of the business also greatly affects the license. Is your business located in an urban or rural area? Is it located in an industrial zone or a commercial area? All of these factors will determine whether you need special permits, such as a Building Construction Permit (IMB) or a Business Location Permit (SITU).

Step 2: Register a Business Through Online Single Submission (OSS)

In Indonesia, the process of applying for a business license is done through the Online Single Submission (OSS) system provided by the government. OSS is a platform that simplifies the business registration and licensing process for entrepreneurs in Indonesia. Through OSS, you can obtain a Business Identification Number (NIB) and other business licenses online.

Here are the steps to register through OSS:

1. Go to the OSS Website:
   Visit the official OSS website at https://oss.go.id/.
2. Account Registration:
   If you don’t have an account yet, register first by filling in the required data, such as KTP, NPWP, email address, and phone number.
3. Fill in the Company Profile:
   After creating an account, you need to fill in your company profile, including your business name, business address, business type, and line of business.
4. Select Permit Category:
   Based on the type of business you choose, OSS will direct you to select the appropriate type of license. Some of the licenses that can be obtained through OSS include:
   – Business Identification Number (NIB): As the legal identity of the company.
   – Trading Business License (SIUP): For businesses engaged in trading goods and services.
   – Company Registration Certificate (TDP): As proof that your company is registered with the government.
5. Verification and Permit Submission:
   After filling in all the data, you will be asked to verify the information that has been entered. If it is correct, apply for the license.
6. Get NIB and License:
   Once the application process is complete, you will receive an NIB and other business licenses electronically that are valid for use in business operations.

Step 3: Apply for Additional Business License

In addition to NIB, some businesses require additional licenses depending on the type of business and sector you choose. Some of the licenses you may need to apply for include:

1. Surat Izin Usaha Perdagangan (SIUP)

SIUP is a license required by entrepreneurs engaged in trading goods or services. This license is issued by the local Trade Office. Based on the scale of the business, SIUP is divided into several types:

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

2. Company Registration Certificate (TDP)

A TDP is proof that your company is registered with the government. To obtain a TDP, you can apply at the local Trade Office after obtaining an NIB.

3. Building Construction Permit (IMB)

If you are opening a business that requires a physical building, such as a restaurant, office, or shop, you need to apply for an IMB. The IMB is granted by the local government and must ensure that the building meets applicable safety and spatial standards.

4. Surat Izin Tempat Usaha (SITU)

SITU is a license required for businesses that are located in a certain place, especially if the place is at risk of causing disturbance to the surrounding environment. This permit is usually issued by the local government or Trade Office.

5. Environmental Permit

For businesses that have the potential to negatively impact the environment, such as factories, restaurants, or businesses that produce waste, you need to obtain an environmental permit. This includes an environmental impact assessment (AMDAL) or environmental management and monitoring (UKL/UPL).

6. Special Business License by Sector

Certain business sectors also require special licenses, such as:

• Tourism License:
  For businesses engaged in tourism, such as hotels or travel agencies.
• Health License:
  For businesses engaged in the health sector, such as hospitals or clinics.
• Food and Beverage Product License:
  For businesses that produce food or beverages, such as restaurants or food manufacturers.

Step 4: Complete Supporting Documents

Each type of business license usually requires supporting documents. Make sure you prepare the following documents before applying for a business license:

• Owner’s ID Card:
  Identity card (KTP) of the business owner or manager.
• NPWP:
  Taxpayer Identification Number, which is mandatory for every business in Indonesia.
• Land Title:
  Proof of ownership or lease of land or building used for business.
• Company Establishment Deed:
  A deed made by a notary to establish a business entity, such as a PT or CV.
• Domicile Certificate:
  A letter issued by the urban village indicating that your business is located in that area.
• Other Evidence:
  Depending on the type of license, you may need to attach additional documents, such as environmental permits or other technical documents.

Step 5: Wait for Approval Process and License Issuance

Once all the requirements have been submitted, the relevant government agency will verify your documents. This process can take a few days to a few weeks, depending on the type of license and the completeness of the documents you are applying for.

If your application is approved, an official business license will be issued. This permit is usually received in a physical or electronic form that is valid for business operations.

Step 6: Start Business Operations

After receiving your business license, you can start operating your business with peace of mind and in compliance with the law. Make sure to keep your license up to date if there are any changes in your business, such as a change in address, company name, or business sector.

Conclusion

Applying for a license for a new business in Indonesia requires several steps that must be followed carefully and thoroughly. The process starts with registration at OSS, applying for the appropriate business license, and completing the necessary documents. Having a complete and valid business license is an important step to running a business legally and avoiding legal issues in the future. Make sure you follow the procedure correctly to obtain the right license according to the type of business you are running.