MSME (Micro, Small, and Medium Enterprise) actors usually start their businesses with simple strategies, such as creating attractive designs, marketing according to trends, and selling products from home or online. However, there is one important aspect that must not be overlooked: business legality.
Business legality for MSMEs serves as a form of protection. By having official permits (such as a Business Identification Number/NIB and business licenses), business owners are legally recognized and therefore entitled to business certainty, brand protection, as well as access to financing and government programs. So, what does MSME legality actually involve? Find out in this article.
The Importance of MSME Business Legality
Business legality is official recognition that the business you run is lawful in the eyes of the law. With legal status, your MSME gains clear legal protection, helping to minimize future risks such as business disputes or enforcement actions by authorities.
Beyond legal aspects, business legality is closely related to trust. Consumers tend to feel more confident purchasing products or using services from businesses that have official permits. This is especially important for MSMEs aiming to expand their market, collaborate with large brands, or enter digital platforms and marketplaces.
From an internal perspective, legality helps you manage your business more systematically. Tax records, brand ownership, and business structure become clearer. As a result, your business is not only sustainable in the short term but can also be properly transferred or inherited in the future.
What Business Permits Do MSMEs Need?
Each MSME has different legal requirements depending on the type of product, business sector, scale of operations, and marketing channels. Below are several types of permits that MSMEs should pay attention to:
1. Trading Business License (SIUP)
SIUP is a license granted to business actors to conduct trading activities, whether goods or services. For MSMEs operating in the trading sector, SIUP serves as proof that the business is legal and allowed to carry out commercial activities officially.
Currently, many licensing systems have been integrated through OSS (Online Single Submission). Although many functions are now represented by the issuance of the NIB, SIUP is still often required for participating in tenders, official exhibitions, or collaborations with certain institutions.
2. Company Registration Certificate (TDP)
TDP is proof that a company or business has been officially registered in government records. Through TDP, your business identity—such as business name, address, and type of activity—is clearly documented. Under the latest regulatory scheme, TDP has largely been integrated into OSS, making the company registration process easier.
3. Taxpayer Identification Number (NPWP)
NPWP is a taxpayer identification number that must be owned by business actors. Many MSMEs still feel hesitant about obtaining an NPWP due to concerns about heavy tax obligations. In fact, the tax system for MSMEs uses a special scheme that is relatively lighter.
In addition, NPWP is often required for processing other permits, applying for financing, or collaborating with certain institutions. Having an NPWP indicates that your business is managed responsibly and transparently.
4. Business Identification Number (NIB)
Currently, the NIB is the most important and fundamental form of legality for MSMEs. NIB is an official business identity issued through OSS. By having an NIB, MSMEs are not only administratively legal but also gain real access to various facilities that were previously unavailable.
For example, many MSME actors who have obtained an NIB are able to open business bank accounts, apply for People’s Business Credit (KUR), and register their products on marketplaces and government procurement programs. In several regions, MSMEs with an NIB are also prioritized for training programs, capital assistance, and free halal certification.
As a result, legality through NIB is not merely a formality—it becomes a gateway for MSMEs to scale up, expand their market, and obtain stronger legal protection.
Managing an NIB is also relatively easy because it can be done online. However, it is crucial to fill in the data correctly, especially when selecting the KBLI (Indonesian Standard Industrial Classification). Errors in KBLI selection can affect additional licensing requirements and future business collaborations.
5. Trademark Rights
Trademark rights provide legal protection for your brand name, logo, or business identity. As your business becomes more well-known, the risk of imitation increases. Without trademark protection, other parties may use the same or similar names, making it difficult for you to pursue legal action.
6. Halal Certification
Halal certification is essential for MSMEs producing food, beverages, cosmetics, and other consumer-related products. As Indonesia has a Muslim-majority population, halal status is not only a religious requirement but also a key factor in consumer trust.
7. BPOM License
A license from BPOM is required for certain products, such as processed foods, beverages, traditional medicines, and cosmetics. This license indicates that the product has undergone supervision and meets established safety standards.
8. Home Industry Food Permit (PIRT)
PIRT is a permit specifically intended for home-scale food businesses. This permit indicates that the food products produced meet basic safety requirements. The process of obtaining a PIRT is relatively simpler compared to other permits, making it suitable for MSMEs that are just starting a food business.
MSME Business Legality Structure
The structure of MSME legality refers to the stages of obtaining permits, from the most basic to more specific ones. The first stage is obtaining business identity legality, namely the NIB. Having an NIB clarifies your business status and serves as an entry point into the national licensing system.
The second stage involves administrative and tax legality, namely NPWP. As the business grows, having an NPWP helps manage formal transactions, partnerships, and financing applications.
The third stage is brand protection legality, namely trademark rights. This becomes important when your business is already gaining recognition, has loyal customers, and shows stable growth potential.
The fourth stage is product legality, which depends on the business category. Home-based food products can use PIRT and halal certification, while cosmetics and health-related products require BPOM licenses.
The legality structure is also related to the form of the business entity. Some MSMEs operate as sole proprietorships, while others grow into CVs or PTs. At this level, legal requirements become more complex, including ownership structure, deeds of establishment, and financial reporting compliance. These structural differences are important because they determine the level of legal protection, owner liability, and business development opportunities.
The Importance of Legality in Obtaining Financing
One of the biggest challenges for MSMEs in developing their business is limited capital. In this case, applying for financing can be an effective solution. When you have legal documents such as an NIB and NPWP, the financing application process becomes much easier. These documents help financing institutions verify your business, assess your seriousness as a business owner, and map risk profiles more accurately.
If you are interested in applying for MSME financing but are still unsure about the process, there is no need to worry. BFI Finance offers financing services secured by Motorcycle BPKB, Car BPKB, or House/Shophouse Certificates.
All financing services at BFI Finance are licensed and supervised by the Financial Services Authority (OJK), ensuring that every transaction is accountable. With proper business legality and the right financing support, your MSME can grow faster because #SelaluAdaJalan with BFI Finance.
