The Official Registration of Business In India

In the global market, India has been the hotspot for business activities since ancient times and ever since the independence of India, the business culture in India has seen various changes. Over time, various new kinds of business entities have emerged. Starting from sole proprietary to One Person Company the form of conducting business has changed a lot. Among all this sole proprietary and partnership remain dominant forms of business in India. Though registration of both the forms of business is entirely optional, it’s always better to get them registered to avoid future conflicts and complications.

Registration of a Sole Proprietary: A sole proprietorship is the most common and simple form of business entity where all the liability falls on one person.

There are three ways of registering a sole proprietorship:

  1. Registration under the Shop and Establishment Act
  • An establishment includes commercial establishments, residential hotels, eating houses, etc. whereas a shop means any premise where goods and services are sold which includes office, storeroom, godown, or a warehouse.
  • Every establishment or a shop falling under the purview of this act needs to be registered within 30 days of commencement. For this purpose, the owner needs to submit an application along with the prescribed fee to the local municipal corporation body.
  • The application should contain the name of the employer, name, and postal address of the establishment, and any other information which is specified.
  • After scrutinizing the application, if the municipality is satisfied they issue a registration certificate of the establishment or shop which is valid for 5 years. 

2. Registration under the Ministry of MSME (Micro Small and Medium Enterprise)

  • An enterprise registered under MSME can reap various benefits offered by the ministry such as collateral-free loans, waiver of stamp duty and registration duty, excise exemption schemes, etc.
  • The registration can be provisional (valid for 5 years) or permanent. Generally, entities obtain the Provisional Registration Certificate during their pre-establishment period as it helps them in easy access to loans and purchase of assets.
  • Once the entity commences operation they can apply for permanent registration. The registration can be done online as well as offline. The proprietor of the business needs to fill a single form that requires personal aadhar number, PAN of proprietor, industry name, industry address, bank account details, and some other information.
  • The proprietor can submit self-attested documents. Registration under MSME does not carry any registration fees. Once the information is filled and uploaded the proprietor is provided with a registration number by the MSME ministry. 

3. Registration under Goods and Service Tax Act

  • GST Act replaced the old VAT and Service Tax registration. If the aggregate annual turnover of the business is over 20 lakhs in a financial year then it is mandatory to be registered under GST.
  • Apart from this if a business is engaged in the supply of goods through e-commerce channel, inter-state supply of goods, or falls under any specified criteria under GST act then it’s mandatory to be registered under GST.
  • Application for the GST registration or GST identification number can be made through an online portal. Documents that are required by the government are PAN and ID proof of the proprietor, bank statement, a declaration by the proprietor stating his compliance with the provision of the laws, NOC of the owner, and a rent agreement (in case the premise is rented). All these documents need to be scanned and submitted on the online portal.
  • The proprietor also needs to submit the names of HSN/SAC code. Finally, the proprietor either needs to digitally sign the registration form or can e-verify through aadhar card. After submission of the form the proprietor gets her GST Identification Number within a month.

The registration of sole proprietor is not mandatory; it is up to the proprietor whether or not he intends to be registered. However, banks insist on getting the firm registered under any government provision if the proprietor wants to open a bank account in the name of the business. Registration helps the proprietor to prove the legal existence of the business. 

Registration of Partnership Firm

Partnership is another common form of business conducted in India. Under partnership two or more people agree to share profits of the business which is carried by all or any one of them acting for all. In India Partnership Act 1932 governing statute for partnership entities states that the registration of partnership firms is not mandatory. Though to avail certain benefits of legal provision, registration of the firm is necessary. 

  1. Registration under Partnership Act 1932
  • Partnership Deed - In every partnership firm partnership deeds are very important. A partnership deed contains all the conditions and agreements of a partnership firm. It acts as a guiding source and acts a piece of evidence in case of any dispute between partners. Generally, a deed contains information pertaining to the name of the firm, nature of the business, address of the business, nature of the business, capital contribution by partners, profit sharing ratio, interest on capital and drawings, provision for admission/retirement of a partner, dissolution of the firm, etc. 
  • Application to the Registrar of the State - An application along with the registration fee and copy of the partnership deed needs to be sent to the registrar of the firm which is present in the area where the business is located. The application must contain information regarding the name and the nature of the business, address of the business, name, and address of partners, date of joining of partners, and duration of the business. The application must be signed by all the partners of the firm. 
  • Verification – After verification of the documents the registrar makes the entry of the firm. The on which the registrar records and files the statement by the partners is regarded as the date of registration of the firm 
  • Application of PAN Card - After registration of the firm with the registrar, the firm then needs to apply for the PAN card with the Income Tax Department. 
  • Opening of a Bank Account - Upon receiving the PAN card, a firm can apply for a bank account under the firm's name to carry out activities via the current account. 

2. GST Registration of the Partnership Firm

The procedure for applying for GST Identification Number is the same as that of a sole proprietorship. However, the list of documents differs. Documents required are Photographs of all the partners, PAN card and aadhar card of all the partners, PAN of the partnership firm, partnership deed, proof of principal place of business, and letter of authority in favor of any partner. 

Even though the registration of any of these firms is not mandated by law, but the indirect benefits which are provided to the registered firms encourage firms to get registered.

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