There is no formal procedure in India to register a sole proprietorship, as a sole proprietorship is considered to be an extension of the Proprietor. Therefore, the existence of a sole proprietorship business can be established only through opening a bank account in the name of the proprietorship firm or obtaining licenses required for conducting the business. To open a bank account for a sole proprietorship, RBI’s KYC norms mandate that any two of the following document must be submitted to the Bank:
-Certificate/license issued by the Municipal authorities under Shop & Establishment Act,
-Sales and income tax returns
-Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities
-License issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, -Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities,
-Registration/licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority/ Department, etc.
-Banks may also accept IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of the bank account etc.
-The complete Income Tax return (not just the acknowledgement) in the name of the sole proprietor where the firm’s income is reflected, duly authenticated/ acknowledged by the Income Tax Authorities.
-Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.
Since, any two of the above documents are required to open a bank account in the name of the Proprietorship, Proprietors typically first obtain any of the above license / registration / certificate first to establish the existence of the proprietorship firm.
Sole Proprietorship Registration through License
As explained above, the existence of a sole proprietorship is established through licenses or registrations or certificates in the name of the Proprietor. Based on the type of business, the following are some of the easy registrations to obtain for establishing a sole proprietorship in India.
Proprietor PAN Card
Proprietorship businesses are considered to be one and the same as the Proprietor. The PAN card of the proprietor will be used for opening bank account, obtaining licenses / registrations / certificates in the name of the sole proprietorship and filing income tax return for the sole proprietorship. Hence, obtaining PAN card for the Proprietor is the first step in establishing a sole proprietorship.