In India when any person or entrepreneurs start the business then they just read about the legal entity and select the Sole Proprietorship Firm for the best structure. But they are confused about Does Sole Proprietorship Firm needs to be registered in India ?
Sole Proprietorship Firm Registration is not required then why people and banks are asking about the legal certification. So we at MyOnlineCA facing these type of the queries on the daily basis from the Indian entrepreneurs.
Let’s start understanding about the Sole Proprietorship Firm Structure. Basically, its required only the one person to start a firm but the problem is the business is required a current bank account on the Firm name because with the personal saving bank account you can’t deal in the business.
So Ultimate Objective is opening a current bank account with our business name so we can raise the invoice to our customers on the firm name and credit the amount in our bank’s firm account or in cash.
Now if you go to bank for the opening a current bank account in the firm name or company name then banks representative ask for the minimum one or two legal certification –
So you have to require at least one legal certification where your firm name is mentioned, Now question arise is which type of the legal certification ?
Legal Certification for the Firm Registration in India ?
Mostly there is the 2 type of the Registration which is required for the Sole Proprietorship Firm in the starting ?
- Tax Registration Certificate
- Shop Act License or Gumasta License
a) Tax Registration Certificate
Tax Registration are the 2 Types –
a) Service Tax Registration – if your business is regarding the service based then you can apply for the service tax registration certificate in India. A lot of the People are not applying for this certificate because they are afraid from charge the service tax that they do’nt know that they have a small service provider exemption limit of the 10 lac rupees.
Must Read : Service Tax Registration in India
b) VAT/CST Registration – if your business is dealing in the trading of the products which are VAT eligible products then you have to apply for the VAT/CST Registration. VAT/CST Registration is state wise so in each state they have different rules and regulations.
b) Shop act License or Gumasta License
Shop act license is required by the small shopkeeper when they are not dealing in the VAT products or not provide the service, in that case, most of the small merchants are apply for the shop act license from the respective state municipal party. Gumasta License is also the same as Shop act license but its terms used in the Maharashtra or Gujarat state. In the west Bengal state, it’s used as Trade License.
Must Read : How to apply for the Gumasta License
So Now hope you all the doubts are cleared regarding the does Sole Proprietorship Firm has required the Registration or not in India. For the Register a Firm Online Just Connect with the MyOnlineCA.