A sole proprietorship registration is the simplest form of business registration for business operation. It is not a legal entity but simply refers to a person who owns the business and is personally responsible for its debts. A sole proprietorship can operate under the name of its owner or it can do business under any name which he likes.
A sole proprietor need only register his or her name and secure local licenses, and the sole proprietor is ready for business. A distinct disadvantage, however, is that the owner of a sole proprietorship remains personally liable for all the business’s debts. So, if a sole proprietor business runs into financial trouble, creditors can bring lawsuits against the business owner.
To initiate a Sole proprietorship firm it is necessary to follow the step by step procedure.
Step by Step Procedure to start a Sole Proprietorship Registration Firm.
For initiating a Sole proprietorship firm in India all you need is a Current Account in the name of Sole proprietorship. There is no formal procedure in India to register a sole proprietorship, as a sole proprietorship is considered to be an extension of the Proprietor. Therefore, the existence of a sole proprietorship business can be established only through opening a bank account in the name of the proprietorship firm or obtaining licenses required for conducting the business. To open a bank account for a sole proprietorship, RBI’s KYC norms mandate that any two of the following document must be submitted to the Bank.
- Certificate/license issued by the Municipal authorities under Shop & Establishment Act,
- Sales and income tax returns
- CST/VAT certificate
- Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities
- A license issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities,
- Registration/licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority/ Department, etc.
- Banks may also accept IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of the bank account etc.
- The complete Income Tax return (not just the acknowledgment) in the name of the sole proprietor where the firm’s income is reflected, duly authenticated/ acknowledged by the Income Tax Authorities.
- Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.
Documents required for Sole proprietorship registration
Sole proprietorship registration requires minimal documents such as mentioned below:
- Aadhar Card or any identity proof
- Self PAN card
- Business account (Current account)
- Address Proof (Rent Agreement, Electricity Bill)
Here in this article, we have understood the process to start a Sole proprietorship in India, which are useful to grow your business. If you’re wondering for Sole proprietorship company incorporation then you should visit Online Sole proprietorship registration portal.
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