How to Register a Business License for UMKM in Indonesia

As a micro, small, and medium enterprise (MSME or UMKM in Indonesian) business owner, obtaining a business license is more than just fulfilling administrative obligations. Registering a business license opens up numerous business development opportunities, ranging from access to funding to partnership opportunities with other parties.

This article will guide you through the process of registering an MSME business license both offline and online via the Online Single Submission (OSS) system, which can be done with ease.

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What Is a Business License?

A business license is an authorization issued by the government that allows individuals or business entities to legally operate a business. For MSME owners, a business license is not just a formality but an important step in ensuring that your business complies with regulations in Indonesia.

The type of business license required may vary depending on the nature of your business. Generally, the licenses needed for MSMEs are the Trading Business License (SIUP) and/or the Business Identification Number (NIB). NIB is an identification number issued by the OSS system and serves as proof of your business’s legality in Indonesia.

Types of MSME Business Licenses

Here are some types of business licenses that MSME owners should know about:

1. Trading Business License (SIUP)

SIUP is required for MSMEs engaged in the trade of goods or services. It indicates that your business has met the requirements to operate and conduct trade transactions.

2. Business Identification Number (NIB)

NIB is a business license issued by the OSS system. All business operators, whether MSMEs or large corporations, are required to have an NIB to operate in Indonesia.

NIB serves not only as an identification number but also facilitates access to various administrative services, including other licenses.

3. Environmental and Special Permits

Certain businesses may require environmental permits or other special permits. For example, businesses that deal with hazardous materials or those that impact the surrounding environment. These permits ensure that business operations do not harm the environment or public health.

4. Company Registration Certificate (TDP)

TDP is proof that your business is officially registered with the government. Every company or business entity is required to have a TDP as valid proof that the business is officially recognized.

Why Do MSMEs Need a Business License?

Having a business license provides several benefits that business owners can directly feel. It provides legal protection when running the business and facilitates access to funding programs like the People’s Business Credit (KUR) with low interest rates.

A business license also makes it easier to open business accounts and participate in government tenders. Additionally, licensed businesses are more likely to establish partnerships with larger companies. The long-term benefits of what might initially seem like a mere ‘formality’ can actually be very promising.

Preparation Before Registering

Before starting the registration process, there are several documents that need to be prepared. The main documents required are:

• Valid ID of the business owner.
• Taxpayer Identification Number (NPWP) (either personal or business).
• Recent photo with a red background.
• Business domicile letter from the local subdistrict.
• Digital passport photo in JPG format, no larger than 1MB.

Additionally, you’ll need to prepare information about the business being registered, such as:

• Business name, as you want it registered.
• Business sector according to the Indonesian Business Classification (KBLI).
• Complete business address.
• Number of employees currently.
• Business capital value.
• Business contact data, such as an active email address and phone number.

Before uploading these documents to the OSS system, ensure the scan quality is good, and the file sizes meet the required specifications.

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How to Register for an MSME Business License

There are two ways to apply for a business license for MSMEs: offline and online. Here’s how you can do it.

Steps to Register for a Business License Offline

To apply for a business license offline, you can visit the nearest trade department office. Here’s what to do:

1. Get the Registration Form
   Visit the trade department office in your business area and take the registration form for the Trading Business License (SIUP). Make sure you bring all the required documents.
2. Fill Out the Registration Form
   Complete the form with accurate information, such as business name, business sector, and business owner data. The form must be signed by the business owner or the company representative, and stamped with a legal stamp.
3. Pay the Registration Fee
   The registration fee may vary depending on the regulations in your area. Be sure to ask and pay the fee according to the applicable rules.
4. Collect Your SIUP
   Once the form and documents are submitted, the SIUP issuance process usually takes up to 2 weeks. You will be contacted by the trade department when the SIUP is ready for pickup.

Besides the business owner, others can also handle the business license registration by showing a power of attorney with a legal stamp.

Steps to Register for a Business License Online

The process of registering an MSME business license is done through the OSS website, which can be accessed online. The first step is:

1. Create an OSS Account
   • Visit the official oss.go.id website.
   • Click the “Registration” button at the top right.
   • Choose the “UMK” business type.
   • Enter your NIK and personal details as per your ID.
   • Verify your email and phone number.
   • Create a strong password (at least 8 characters).
2. Fill Out Profile Data
   • Log in to the OSS system with your newly created account.
   • Select the “Company Profile” menu.
   • Complete the basic information, such as business owner details, business address, and contact information.
   • Upload supporting documents like a scanned ID, photo, and domicile letter.
3. Submit a Business Identification Number (NIB) Application
   • Select the “Permit Application” menu and choose “New NIB Application.”
   • Fill out the form with complete information about your business, business sector, capital, and employee count.
   • Review the data entered.
   • Click “Submit” to submit your application.
4. Verification and Issuance of Business License
   After submitting your application, the next step is data verification by the OSS. The verification process usually takes between 1 and 3 working days. Therefore, be sure to regularly check your email.

Once your data is verified, you will receive a Business Identification Number (NIB) that can be downloaded from the OSS system. Don’t forget to save the digital document and print a hard copy of the NIB for your business records.

Use Jack for your business needs

Thanks to OSS, registering an MSME business license is no longer as complicated as it used to be. Remember, having a business license is not just a formality.

It’s a sign of your commitment to professionalism and legal compliance in business. So, what are you waiting for? Get your business license now and look forward to a bright future for your business.