Registrations That Start as You Hire: From Your First Employee to 20 and Beyond

A business with no employees needs only a few registrations. Each hire adds more. Some start with the very first employee; others are triggered when headcount crosses a threshold. Registering on time is much easier than paying back contributions, interest and penalties later. This guide walks through what starts when.

From the First Employee

Shops and Establishments

Many states require a Shops and Establishments registration as soon as a shop or office has employees, and some require it even without employees. The law also sets rules for working hours, holidays, leave and the registers you keep.

Professional Tax

In states that levy Professional Tax, an employer has to register, deduct Professional Tax from salaries and pay it to the state. This usually starts from the first salaried employee.

TDS on salaries

Once an employee's salary is above the taxable limit, the employer has to deduct TDS, deposit it, file quarterly TDS returns and issue Form 16. That needs a TAN, so get one before the first payroll.

Employment terms

Appointment letters, salary structures and basic HR policies aren't registrations, but they're the foundation for everything else, and they're much easier to put in place from the start.

At 10 Employees

ESIC

Employees' State Insurance generally applies once a business has 10 or more employees in an area where the scheme is in force. It covers employees earning up to the wage ceiling, which is currently ₹21,000 a month. The employer registers, and both employer and employee contribute each month.

Other laws that commonly start around 10

• Workplace harassment: an employer with 10 or more employees has to set up an Internal Committee under the POSH law.
• Gratuity: the Payment of Gratuity Act generally applies to shops and establishments with 10 or more employees.
• Shops and Establishments: in some states, the type of registration or the obligations change once you cross a headcount threshold.

At 20 Employees

EPF

Provident Fund generally applies once a business has 20 or more employees. The employer registers with EPFO, and both employer and employee contribute each month. Contributions are mandatory for employees earning up to the wage ceiling, and can be extended to others. Businesses with fewer employees can also register voluntarily.

As You Grow Further

• Larger establishments take on more obligations under labour laws, such as standing orders and welfare facilities, depending on the industry and state.
• Factories have their own thresholds under factory and labour laws.
• India's four labour codes consolidate many of these laws, and the rules under them are being rolled out, so some thresholds and terms may change. Check the current position when you cross each stage.

Contractors and Staffing

Workers engaged through contractors or staffing agencies can still count for some laws, and the principal employer may be responsible if the contractor doesn't comply. Check that your contractors are registered and paying contributions.

Staying Ahead

• Track headcount every month, including part-time and contract staff where they count.
• Register as soon as you cross a threshold; most laws require registration within a short period.
• Set up payroll so that PF, ESI, Professional Tax and TDS deductions happen automatically.
• Keep the registers each law requires from day one.

A Checklist by Stage

1. Before the first hire: TAN, Shops and Establishments, and Professional Tax where it applies.
2. At 10 employees: ESIC, an Internal Committee, and gratuity coverage.
3. At 20 employees: EPF.
4. Every month: deduct and deposit TDS, Professional Tax, PF and ESI on time.

Getting Help

Think Filing sets up the registrations that come with hiring, and runs payroll compliance so nothing is missed as the team grows.

Sources

• Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
• Employees' State Insurance Act, 1948.
• Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
• Payment of Gratuity Act, 1972.
• State Shops and Establishments and Professional Tax laws.