As an entrepreneur, the first thing that you should do is register a proprietorship company. Even though your initial focus is to shape your business idea and get together a team that believes in your vision, closing deals, pitching to prospects, etc. they come secondary as these activities take up all your time.
It is a rule of thumb that you should never use your private bank account to make transactions related to your business.
Additionally, if you look for investments and funding, investors never invest in a company that is not registered. If you need a helping hand to register a proprietorship company in India, this article will guide you. But before we divulge that information, let us cover the basic requirements to register a proprietorship.
Documents required for proprietorship registration in India
To register as a proprietorship, the documents listed below are required.
1. Aadhar Card
Aadhar number is mandatory and a necessity to apply for any registration in India. In fact, you can also file Income Tax Returns only if you have linked your PAN card with Aadhar number. You can apply for an Aadhar card at the nearest E-Mitra or Aadhar Seva Kendra and receive it at your registered address in 15 to 20 days.
2. PAN Card
PAN card is another mandatory identification documentation. To apply for a PAN card, all you need a scanned photograph, identification proof, and proof of address. This form can be submitted online by verifying through Aadhar e-KYC. If the NSDL finds all the details to be true, it allots your PAN number within 7 to 8 days, which is then received at your registered address.
3. Bank Account
Now that your Aadhar number and PAN are accessible, the next step is to create a bank account for your proprietorship. Apart from these two identifications, you need to show proof of address. Remember that you should open a current account for your business and submit a GST registration document (discussed below) to the bank officials as well.
4. Registered office proof
Proof of your registered office is quite mandatory. If you have a rented property, then you can showcase a rent agreement and NOC from the landlord. And if it is a self-owned property, then you can submit an electricity bill or any other address proof.
Now that the basic documentation has been covered let’s look at the ways to register a proprietorship company in India.
3 ways on how to register a proprietorship company in India?
1. Registration under Shop and Establishment Act
You can register the existence of your proprietorship under the Shop and Establishment Act if you have a shop as a place of business. A shop in this context can be
- A place where goods are sold – retail or wholesale
- A place where services are provided to customers
- A place that comprises an office, store-room, go down, warehouse, etc. in the same premise or otherwise used to connect to trade or business.
It is important to remember that this does not include factories, commercial establishments, residential hotels, restaurants, theater, and other public entertainment places.
You can register your proprietorship under this act by applying to the local Municipal Corporation, along with the prescribed fees and information. This includes your name as the employer or the manager, postal address, name of your establishment, etc. Your application is then verified to the correctness of the details. Once done, you will be issued a certificate of registration that will be valid for five years and can be renewed at a later date.
This certificate should always be prominently displayed at your establishment.
2. Registration through Udyog Aadhaar under Ministry of MSME
The Udyog Aadhar is essentially a unique identification number provided by the MSME to you as a business owner. An added advantage of being eligible to avail of the MSME benefits is that it is also considered a Sole Proprietorship Registration.
The introduction of Udyog Aadhar has replaced the previous EM-I and EM-II forms for registration. When a proprietorship registers for Udyog Aadhar, it also receives additional benefits of various other schemes introduced by the Ministry of MSME.
To apply for registration through Udyog Aadhar, you need to get the required form attested by a professional. All you have to do is visit the official Udyog Aadhar registration portal and follow these steps:
- Enter your individual Aadhar number, or in case of a company, the authorized signatory who applies on behalf of the company.
- Then you will receive an OTP on the phone number or email linked with the Aadhar number.
- Now enter the OTP for verification and fill out the form’s details like the bank details, the number of people employed, date of commencement, etc.
- Once done, click submit.
- You will again receive an OPT for confirmation of the final submission.
After the submission, you will get a confirmation of the same and a Udyog Aadhar number on a certificate online. You can also take a print and keep a hardcopy of the same.
3. Proprietorship registration through GST
GST is another method to register a proprietorship company in India. If you are dealing with any kind of exchange of goods and services, you must apply for a GST registration.
Once registered, the only drawback is that you will need to fulfill all the compliances and collect the tax from customers, thereby filing the GST Returns. If your turnover is less than Rs. 20 Lakhs, then you do not need to register or collect GST. But if you still choose to register through GST, then you need to fulfill all the compliances.
- To apply for a GST registration, follow these steps:
- Visit the official GST website to fill the online form.
- Submit scanned copies of your documentation as required.
- Furnish the necessary information like the name and HSN/SAC Code of the goods or services you sell.
- Sign the form with your digital signature or e-verify your registration form through an Aadhar card.
- Once done, submit your GST form.
Wrapping it up
With this, we have touched upon all the mandatory requirements and the process to register a proprietorship company in India. However, once you obtain the requirements and mandatory documents, the registration process runs smoothly, thereby providing you the license needed for your business’s legal functioning.
What processes have you gone through to register a proprietorship company in India? Let us know in the comments below.