Know about Proprietorship Firm in India

A proprietorship firm means the firm is no different than its proprietor, i.e, the owner. It is not a company so to say and it is not necessary for a proprietorship firm to be registered under Companies Act or Establishment Act.

As the sole proprietor of the firm, the first thing that has to be done is opening a current bank account in the firm’s name. The firm can be a service provider or a product provider and on the basis of their category they need the following documents to run their firm:

Service Based Business

These firms provide chargeable services to its customers either offline or online.

• Service Tax Certification:

When a person commences a new business, it is obligatory for him/her to obtain service tax registration within 30 days of commencement, if the business will have taxable service in excess of Rs.9 lakhs. Moreover, some banks deny opening a current bank account without Service Tax certification.

• Chartered Accountant Certification regarding nature of business. (Required by some private banks)

Product/Manufacturing/Sales Business

These firms sell VAT applicable products to its customers via its online or offline portal.

• Shop Act License ( In Maharashtra or Gujarat it is called Gumasta and in West Bengal, it is called Trade License)
• VAT/Sales TAX/TIN Registration.

Common Documents required in both above cases to register as a Proprietorship Firm:-

• ID and Address Proof in the form of Pan Card/Passport/Voter ID/Aadhar Card/Driving License Copy of the Proprietor.
• Either of the one Business Place Address proof:-

1. If Property on Rented: Need Rent Agreement and No Objection Certificate from Landlord.
2. If Property is owned: Need Electricity Bills or any other Address Proof.
3. For Value Added Tax: – Security Amount as Fixed Deposit or minimum two surety of dealers who are already registered in that state VAT Registration.