If you want to start a new online or offline business, sole proprietorship firm is the best option for you. its a very simple business formation for small entrepreneurs who want to test their ideas or start with small capital with low cost of formation.
Key Features of Proprietorship Firm
1.Only 1 Person Required as Single Entrepreneur.
2.Single Owner of the Business.
3.Easy to Start and Easy to Close.
4.Complete Control.
5.Lower Cost of Formation and Compliance.
Disadvantages of Proprietorship Firm
1.Lack of Resources.
2.Unlimited Liability.
3.Lack of Credibility.
4.Can not raise funds easily.
5.Can not add Partners.
As a sole proprietor, main objective of the firm is opening a current bank account on the name of business. so basically most of the banks ask for any legal certification where your legal business name with proprietorship status has been mentioned. so there are lot of the valid certifications work's in case of sole proprietorship firm. So here we divided all the certification in mainly 2 categories as per the RBI Compliance to open a current bank account.
Updated info on 20th June 2017 as per the GST Impact on the Proprietorship Firms.
A) Tax Registration in India (GST Registration)
B) Basic Local or Central Government or other body license
a) Tax Registration (GST Registration) -
So From 1st July 2017 the government of India imposed the GST on all the business. GST is basically a uniform tax which is replace the various taxes like Service Tax | VAT/CST Registration or TIN Number etc.
So Ultimately Now whether you are doing service based business or product based business, you have to required only the GST ( Good and Service Tax) when turnover or sales cross more than 20 lakh rupees in a year or in the north east state 10 lakh rupees in a year. but in some following cases you have to required the GST Registration as sole proprietorship firm in the starting :-
When you want to deal inter state and supply goods and services across the state anywhere in India.
When you are doing trading or retail and your other suppliers are registered under the GST.
When you want to start a online ecommerce business or internet related any type of business.
Documents Required as a GST for the Firm :-
1.Personal Pan Card Copy
2.Aadhar Card Copy
3.Electricity Bill Copy of Business Location or Premise (Don't worry if its on other person name)
4.Personal Bank Statement Copy or Cancel Cheque anyone
5.Passport Size Photograph
b) Basic Local or Central Government or other Body License - (It's not a long term solutions)
These type license are issued by the central government or state government or any other body on the name of sole proprietorship Firm. Most of the banks required anyone minimum 2 Valid Certification out of 4 in this category which are following -
1.Chartered Accountant Certificate -
ICAI (The Institute of Chartered Accountant of India) is a body which is incorporated by the government of India for the chartered accountants. so all the practicing members only of ICAI (i.e is CA) can verify the documents and information of the sole proprietor & issued a CA Certification to open a current bank account on propreitor name.
(Note : Some private banks are not accepted the CA Certification so just confirm with your bank)
2.MSME Registration Online Certificate -
MSME (Micro small and medium enterprise) is a government body which is incorporated for formation of rules & regulations for small business in India so they can issued a registration certificate on the name of proprietorship firm.
(Note : Some private banks are not accepted the MSME Certification so just confirm with your bank)
3.Income Tax Return (Business ITR) -
Every person which are living and earn in India, they have to pay the income tax yearly basis. so if you are earning from your business as freelancer then you can file your ITR on business name as proprietorship firm status.
4.Shop Act License -
Every state or regional city or area have a municipal party to control on the local business which is incorporated by the respective state government. so they can issued also a shop act license on the physical shop name as proprietorship firm status.
So all the proprietorship firm owner's which is just starting the new business within the state,they can go with the anyone above 2 legal valid certification. We highly recommend to you go with the CA Certification and MSME Registration Certificate or CA+ Income Tax Return which is issued by the government & you can run your business anywhere in India.
Documents Required : It's required the basic documents of the sole proprietor or owner of the firm :
Documents Required as a MSME or CA Certification for the Firm :-
1.Personal Pan Card Copy
2.Aadhar Card Copy
3.Electricity Bill Copy of Business Location or Premise (Do'nt worry if its on other person name)
Your details: