A typical supply chain consists of a variety of parties that collaborate to provide goods and services to the customer. In general, a supply chain will involve a manufacturer, a wholesaler, and finally a retailer.

These three parties not only differ in the role that they have in the supply chain but also in the tax requirements like GST registration

Therefore, when a product or service is sold to a customer, it has a certain tax imposed on it, beginning from the manufacturer and ending with the retailer. 

Who is a Manufacturer? 

A manufacturer represents a company or an individual who is responsible for making a product. That is, manufacturers convert raw materials into usable products.

Larger manufacturers invest in machines and other technology to create larger volumes of products. However, a significant number of Micro, Small or Medium Enterprises (MSMEs) create their products using manual labour. 

MSMEs that are in this situation can take help from MSME loans to attain better equipment and grow their business. In addition to this, the loan can also be utilised to obtain more space to carry out manufacturing.

By doing so, businesses will be capable of keeping up with the increasing demands. 

Manufacturers are usually classified into three types depending on how they produce their goods. These three types are: 

  1. Make-to-Stock: Some manufacturers choose to manufacture a certain number of goods. This number depends on previous sales and more. Therefore, it requires a company to predict the demand from wholesalers and retailers beforehand. 
  1. Make-to-Order: This manufacturing process is carried out when a manufacturer receives orders from a wholesaler or distributor. The manufacturer will look to make the exact number of goods as mentioned in the order. 
  1. Make-to-Assemble: This process involves a mixture of the above manufacturing processes. According to this process, the manufacturer will make all the components of the product. Once the order is made, the manufacturer will assemble the goods and deliver them. 
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In this way, the goods are sold from the manufacturer and to the next party in the supply chain. 

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Who is a Wholesaler? 

A wholesale business involves buying a large number of products from the manufacturer and then selling it to a retailer. For wholesalers, the quantity is more important than quality as the goods will be sold in bulk to a retail business.

The role of the wholesaler, in this case, would be to get goods from the manufacturer and apply a particular price on the goods to sell them to retailers.

Wholesalers will also be required to apply GST on the goods they sell, just like the manufacturers.  

A wholesale business that is looking to obtain a business loan can accomplish the following: 

Overcome delivery challenges

As a wholesale business, several problems crop up when it comes to receiving goods from manufacturers and delivering goods to retailers.

Businesses will require good transportation like automobiles and packing equipment which can be obtained by receiving a business loan.

In addition to this, businesses can use the funds to introduce technology that will track shipments. Thus, it helps to reduce the risk of delivering goods. 

Increase storage

Since large volumes of goods are ordered, they will also require space to store all these goods. For this reason, the funds from the loan can be used to attain more storage space in case the wholesaler wants to sell more goods. 

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What is a Retail Business? 

A retailer is the last business in a supply chain. Customers will finally receive the product they want from a retail business. This kind of business buys different types of goods from a variety of wholesalers.

The retailers differ from wholesalers as they buy a smaller number of goods. This business will also be required to market its goods to the customer. 

Retail stores can either be online or offline. At present, almost all retail businesses look to have an online presence as well. Therefore, a retailer can utilise the funds from a business loan to improve the following: 

Online presence

Businesses that are looking to open online retail stores will require a loan to provide their customers with quality goods and services. This is because there are several requirements like creating a website, delivery requirements, and more.

A business will require extra funds to enter into the online market and receive significant profits in the future. 

Expand stores

The physical stores can also expand by using a business loan. By carrying out the expansion, a business will be able to keep up with increasing demands for certain goods.

In addition to this, the business will also be able to provide a variety in the goods they offer. 

GST Registration For Manufacturers, Wholesalers, and Retailers

The introduction of the Goods and Services Tax or GST Act. This act impacted all manufacturers, wholesalers, and retailers depending on the turnover that they bring in.

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Businesses across India, including businesses having MSME registration, are required to register for GST if their annual turnover is more than Rs. 40 lakhs. 

However, businesses that are present in North-East India and the hill stations receive a GST exemption limit of Rs. 20 lakhs.

Therefore, the GST applies to any business irrespective of whether the business is a manufacturer, wholesaler, or retailer. To learn more about GST registration, view this step-by-step guide.

The Government of India has also made GST registration beneficial for MSMEs looking for an MSME loan. This is because the MSMEs that are GST registered will receive a 2% interest subsidy.

Therefore, the manufacturers, wholesalers, and retailers who also have MSME registration will have relief on fresh and incremental loans. 

Be it manufacturers, wholesalers, or retailers; business loans can contribute greatly to a business’s growth.

For a manufacturer, a loan could be used to increase production or increase the quality of the goods by buying better materials and more. For wholesalers and retailers, an MSME loan can help to expand their business significantly. 

To obtain a business loan quickly and easily, consider visiting the Ziploan website. Businesses can find out if they are eligible for a business loan and even apply online.

Ziploan offers loans to all kinds of businesses, especially MSMEs, to assist them in their efforts to expand their business.

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