What business permits must MSME entrepreneurs prepare before starting their ventures? For small and medium-sized business owners, there are several essential legal documents to secure—ranging from the Business Identification Number (NIB), Taxpayer Identification Number (NPWP), Business Certificate (SKU), Home Industry Permit (PIRT), Company Registration Certificate (TDP), and more. Discover the complete explanation in this iReap POS article.
Business Licensing According to PermenkopUKM 2/2019
To support the growth of Micro and Small Enterprises (MSEs) in Indonesia, the Ministry of Cooperatives and SMEs (Kemenkop UKM) has issued new regulations to simplify the business licensing process for MSME owners.
Under the Ministerial Regulation No. 2 of 2019 concerning Electronically Integrated Business Licensing for Micro and Small Enterprises—commonly known as PermenkopUKM 2/2019—business permits can now be managed entirely online.
This regulation aims to streamline the licensing procedures, enabling entrepreneurs to obtain legal documents faster and start their businesses promptly.
So, what types of business licenses must MSMEs obtain to operate legally under Indonesian law?
Mandatory Business Documents for MSME Entrepreneurs
1. Micro and Small Business License (IUMK)
The Micro and Small Business License (IUMK) is an essential document that signifies your business is legally recognized.
Obtaining the IUMK is relatively simple. You’ll need to prepare several documents, including a neighborhood introduction letter (RT and Lurah), photocopies of your ID card, NPWP, and a business domicile certificate. Submit these to the local Trade Office or the relevant regional authority.
2. Trade Business License (SIUP)
The Trade Business License (SIUP) serves as legal proof that a business meets all the requirements and regulations necessary to conduct commercial activities.
This document contains key details about the business owner, the type of trade, business address, and other relevant commercial regulations.
Holders of a SIUP are required to report business activities periodically and pay taxes. On the upside, possessing a SIUP offers numerous advantages, such as the ability to open a corporate bank account, participate in tenders, or establish partnerships with government agencies and business partners.
3. Business Identification Number (NIB)
The NIB, or Business Identification Number, is an official business identity issued by the Investment Coordinating Board (BKPM). Holding an NIB provides stronger legitimacy, especially for MSMEs engaged in cross-border trade or international cooperation.
Introduced under PermenkopUKM 2/2019, the NIB aims to simplify and accelerate the business licensing process in Indonesia.
Every entrepreneur must possess an NIB to operate legally, reduce bureaucratic barriers, and facilitate smoother business operations. It contains details about the business owner, business type, location, and other relevant data.
Creating an NIB is straightforward. You can follow the steps in this guide: How to Create a Free NIB Online for MSMEs.
4. Taxpayer Identification Number (NPWP)
The NPWP is a crucial tax document, representing not only a legal obligation but also a practical necessity for business operations and growth.
Having an NPWP builds trust with clients and partners by demonstrating tax compliance, while enabling the government to monitor and ensure proper taxation.
5. Company Establishment Deed
The Company Establishment Deed is the foundational legal document that formalizes the creation of a business. It includes details about the owners, business objectives, and company structure.
This deed provides solid legal standing and protects the rights of business owners in case of disputes or conflicts in the future.
6. Business Certificate (SKU)
The Business Certificate (SKU) outlines key information such as the type of business, address, owner or manager, and other operational details. It validates your business activities and strengthens your legitimacy in the eyes of relevant stakeholders.
7. Company Registration Certificate (TDP)
The TDP is a regional registration certificate issued by the local government, confirming that a company is officially registered in its jurisdiction. It ensures your business is recognized both nationally and locally.
Mandatory Legal Documents Before Starting an MSME
Among all the required licenses, which one should be obtained first?
According to PermenkopUKM 2/2019, registering for an NIB through the OSS Risk-Based System (Online Single Submission) is the initial step. Once you have the NIB, you can immediately begin your business operations—ideal for startups and new entrepreneurs.
As your business grows, you can later obtain other documents such as the IUMK, SIUP, Company Deed, SKU, and TDP as needed. The key principle is that the NIB allows anyone to start a business legally and in compliance with Indonesian law.
Before determining whether your enterprise qualifies as an MSME, check the latest regulations here: Latest MSME Criteria under Government Regulation No. 7 of 2021.
About
