Amid the rapid growth of the digital economy, competition among Micro, Small, and Medium Enterprises (MSMEs) has become increasingly intense. Many business owners focus on marketing strategies and product development, yet often overlook a fundamental aspect of running a business in Indonesia: business legality.
Having official permits is not merely about fulfilling administrative obligations to the government. More than that, legal status serves as a “passport” that enables a business to grow further, reach broader markets, and earn the trust of various stakeholders.
So, what are the real benefits of business legality for MSMEs? And when is the right time to take care of it? Read the full explanation in this article.
What Is Business Legality?
Simply put, business legality refers to the standardization and official authorization of a business entity by the relevant government authorities. It serves as legal certainty that the business you operate is legitimate, officially recognized by the state, and conducted in compliance with applicable regulations.
In Indonesia, since the implementation of the risk-based Online Single Submission (OSS) system, the primary legal requirement that every business owner must obtain is a Business Identification Number (NIB). The NIB serves as a single identity for business entities, much like a national ID card for citizens.
Depending on the type and scale of the business, legal compliance may also include other specific certifications, such as Halal Certification, BPOM registration, Distribution Permits, and the Environmental Management and Monitoring Commitment Statement (SPPL).
Benefits of Having Business Legality for MSMEs
Deciding to take care of business legality is often seen as an administrative burden by some MSME owners due to the perceived complexity of the procedures. In fact, with today’s digital systems, the process is much simpler and offers protection as well as growth opportunities that illegal businesses cannot obtain.
Business legality is a long-term investment that strengthens your business’s bargaining position in the eyes of both customers and investors. Here are some key benefits of having legal business status that you should understand:
Provides Strong Legal Protection
Manfaat paling mendasar dari legalitas adalah adanya payung hukum. Dengan terdaftarnya usaha secara resmi, aset pribadi bisa memiliki batasan yang jelas dengan aset perusahaan (terutama pada badan hukum seperti PT).
Additionally, if a dispute arises in the future or someone attempts to misuse your business name, official legal status serves as authentic evidence to protect your business rights in the eyes of the law.
Facilitates Access to Capital and Financing
Nearly all financial institutions, both banks and non-banks, require legal documents such as the NIB as a primary condition for business loan applications. If an MSME wants to scale up and needs a significant capital injection for expansion, having complete legal compliance is the key to unlocking it.
Without official documents, banks will consider the business high-risk, making it difficult for you to secure financial support.
3. Enhances Credibility and Consumer Trust
In today’s information-driven era, consumers are becoming increasingly discerning. They tend to choose products or services from businesses with official permits, as these are perceived to be more responsible and reliable in quality.
Business legality helps build a professional image. By displaying your business license number or Halal certification on product packaging, you indirectly provide consumers with a sense of security, which ultimately enhances customer loyalty.
4. Opportunities to Participate in Government Tenders and Projects
The Indonesian government has a policy to prioritize MSME products in the procurement of goods and services for government agencies through the e-catalog system. However, the absolute requirement to enter this ecosystem is having complete business legality. With official permits, the opportunity to secure large project contracts from government agencies or nationally scaled private companies becomes much more accessible.
5. Simplifies Export Processes and Market Expansion
If you dream of taking your MSME products to international markets, legality is a non-negotiable requirement. Export processes require various legal documents certifying that the products are safe and meet international standards. Without proper legal status, products can be held at customs, making international distribution difficult.
When Should MSMEs Obtain Business Legality?
Ideally, business legality should be arranged before or at the start of operations. However, there are several critical situations indicating that you should not delay any longer:
- When expanding product marketing: If you have started selling extensively on marketplaces or social media, legal compliance is necessary to protect your brand.
- When hiring employees: If you start recruiting permanent staff, business legality is required for managing BPJS Employment and payroll administration.
When applying for product certification: You cannot obtain Halal or BPOM certification without first having an NIB.- When revenue becomes stable: To avoid future tax issues, business legality helps you manage tax obligations more systematically and transparently.
In short, don’t wait for your business to face problems or inspections before obtaining permits. Business legality should be seen as an initial step toward professionalism, not just a formality once the business has grown.
Enhance MSME Professionalism with Labamu
After securing business legality, the next step to help your MSME level up is to digitalize financial management. Managing daily operations often poses a challenge for busy business owners.
Now, the Labamu cashier app is here, specifically designed to help MSME owners manage their businesses more intelligently. One standout feature you should try is the Operating Account, which allows you to:
- Separate personal and business finances: Avoid cash confusion by using an operational account fully integrated within the app.
- Transparent cash flow management: Monitor every rupiah coming in and going out in real time.
- Simplified transactions: Make payments to suppliers and receive payments from customers easily within a single secure platform.
With official legality and the technological support from Labamu, your MSME doesn’t just operate—it’s ready to soar and compete in the global market. Ready to take your business to a more professional level?
Let’s get started with Labamu!
