A sole proprietorship rank amongst the best business models due to the ease of establishment and unlimited liabilities. Precisely, anyone who intends to open such a business needs not to raise any formal certification from any authority. Sole Proprietorship business could be started with a minimum investment, unlike other business models. Neither the sole proprietorship fit in the legal framework, nor is it considered as a legal entity. In this blog, we will look at the Documents required for sole proprietorship registration in detail.
Sole proprietorship discourages any compliances w.r.t the establishment procedure. The notion of double taxation does not apply to sole proprietorship business models, meaning the sole proprietor doesn’t have to pay a separate tax on its income. If you are looking for a business model that encourages profitability and ownership, then sole proprietorship could be your best bet.
Read our article:Procedure for Sole Proprietorship Registration: A Step by Step Guide
Documents required for Sole Proprietorship Registration
Aadhar number is an absolute necessity for starting any business form in India. Authority would not be able to approve the registration request in the absence of an Aadhar number. If you haven’t obtained it yet, visit the nearest Aadhar Seva Kendra to enrol yourself by completing a simple identification process. The same can be done via the online portal as well. All you need to visit E-Mitra, get access to an application form, and fill up the requested details. You will receive the hard copy of the Aadhar card in two to three weeks.
It’s a well-known fact that the ITR filing is completed via PAN number. So, if you haven’t availed it, then head over to the NSDL website and fill a PAN application after selecting relevant options from the drop-down menu. The application would cost you around 110 bucks, precisely. While filling up the online application, you need to upload the recent photograph, scanned copy of the address, and identity proof. After completing this requirement, the applicant needs to take advantage of Aadhar e-KYC to verify the completed application for the submission purpose.
As soon as the authority came across the submitted application, it would conduct verification for the same on the predetermined grounds. Once the authority validates the application, the PAN number will be awarded to the applicant within a week or so. The hard copy of the same will also be forward to the applicant’s registered address in two to three weeks.
After obtaining PAN and Aadhar number, you can approach any legitimate bank to open an account. However, to serve this purpose, you would need to provide some additional documents such as Voter ID and utility bill along with PAN and Aadhar number. In case if you wish to open a current account with the bank, you have to submit a GST registration document.
Proof Regarding the Establishment
- NOC or Lease agreement in case of a rented property.
- Utility bills if the property owner is the applicant itself.
Apart from the above documents, the applicant can avail some additional registration to strengthen the business’s core.
Registering as SME
Although MSME registration offers a plethora of long-term benefits to the business set-up, it has yet not been made compulsory by the government. After registering to SME under MSME Act, the business entity can avail numerous benefits such as:
- Fiscal aid from reputed banks at the nominal interest rate.
- Valuable government tenders.
- Tax exemption.
Shop and Establishment Act License
Shop and Establishment Act License set a framework for ethical working for the business entities under the unorganized sector. With no manpower at the disposal, the sole proprietors need not avail this license. However, they are authorized to voluntarily opt for it if they want to abide by the local laws and gain taxation benefits. Shop and Establishment Act License transform a business into a legal entity. The municipal corporation of the respective states generally issues this license based on the number of employees and business nature.
You can apply for GST registration if your yearly turnover exceeds the threshold limit as per GST act I:e Rs 40 lakhs. Keep in mind that for e-commerce operators, GST registration is compulsory. The applicant needs to provide the following documentation for the availment of GSTIN.
- PAN and Aadhar of the applicant.
- Recent photographs of the applicant.
- Business premises proof (Electricity bill/ rent agreement)
- Banking details such as IFSC code, account number, and address.
After arranging the above document, applicants must visit the GST portal and fill an application form. The authority might take around 3-4 days to process the request.
Important Points to Remember
- To set up a sole proprietorship business all you need an Aadhaar and PAN number.
- You can also voluntarily choose other certifications like Shop Act and MSME to avail of numerous benefits.
- A sole proprietor doesn’t need to have a current account for the business transaction.
A sole proprietorship is one of the legitimate business models that numerous benefits as compared to counterparts. But it is nothing to close to rivals when it comes to sustainability and stability in the state of the crisis. The millions of sole proprietors have been reportedly crushed under the immense economic pressure created by the recent coronavirus outbreak.
Of course, the ongoing crisis has dented the credibility of this business model but that doesn’t mean that you should not opt for it. As soon as the economy gets back to its normal state, the businesses will start to flourish again. That’s all about the Documents required for sole proprietorship registration, don’t forget to share your concern with CorpBiz team by dropping the comment in the comment section.