Ways to setup Sole Proprietorship in India

Sole Proprietorship Registration is a simple form of business entity with minimum regulatory compliances. It is owned by the single owner whose liability will be unlimited. Under this, owner is called as Sole Proprietor. To start with sole proprietorship, one has to acquire license according to the business type such as registration under GST, Shops and Establishment Act, MSME registration and food license in case of food business. However there are threshold limits which exempts from compulsory registration.

Features of Sole Proprietorship Registration

Ø  Full control over the business

Ø  Unlimited Liability

Ø  Decision making power

Ø  No Perpetual Succession

Ø  It is not a separate legal entity

Ø  Lesser regulatory compliances

Advantages of Sole Proprietorship Registration

Ø Easy formation

Ø Taxation Benefits

Ø Decision making power

Ø Less legal compliances

Ø Lower formation cost

Disadvantages of Sole Proprietorship Registration  

Ø  Limited Ideas

Ø  Unlimited Liability

Ø  Lack of Credibility

Ø  Inability to raise funds

Ø  Further addition of partners cannot be done

Documents required for setting up Sole Proprietorship Registration

There is no prescribed process of Sole ProprietorshipRegistration. It can be done as per the type of the business activity. 

In case of registration under Shops & Establishment Act

Ø  Copy of PAN of Proprietor

Ø  Copy of Identity Proof (Aadhar/ Passport/ Voter ID)

Ø  Bank Statement

Ø  Copy of Address Proof

Ø  Passport Size Photograph 

In case of Tax Registration(GST Registration)

One has to obtain GST registration, in case turnover exceeds Rs.20 lakhs and Rs.10 lakhs in case of north east region. However in some cases GST registration is required to be obtained. 

Following below mentioned documents are required for GST registration:

Ø  Copy of PAN

Ø  Copy of Aadhar Card

Ø  Proof of business location

Ø  Copy of bank statement

Ø  Passport size photograph

In case of Bank Account Opening

Bank account can be opened on the name of the Company, if proprietor has obtained any of the license. As banks ask for legal certification from the proprietor. 

Following below mentioned documents are required for bank account opening as per RBI for KYC such as:

1.       License issued under Shops & Establishment Act;

2.      GST registration certificate

3.      Certificate of Practice issued by authorities such as following:

Ø  Institute of Chartered Accountants of India,

Ø  Institute of Cost Accountants of India,

Ø  Institute of Company Secretaries of India,

Ø  Indian Medical Council, Food and Drug Control Authorities.

4.      License issued by Central or State Government to the proprietors.

5.      IEC (Import Export Code) issued to the proprietor by the DGFT.

6.      Income Tax Return (ITR)

7.      Utility bills on the name of the proprietor.

Usually sole proprietor finds it difficult to manage all the business activities solely and they decide to convert it into another form of business entity. 

Sole proprietorship is best for small entrepreneurs as it involves low formation cost. Our team of experts will help you in Sole Proprietorship Registration process. They will verify the documents and start the necessary process. 

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Private Limited Company Registration In India

In India, company registration is mandatory with the Ministry of Corporate Affairs. Before setting up company in India there are various factors which must be considered by the entrepreneur. 

Advantages of Private Limited Company Registration in India

Here are the following benefits of Private Limited Company Registration:

• Limited Liability
• Shares can be transferred
• Separate Legal Entity
• Perpetual Succession

Basic Requirements of Private Limited Company in India

• Here are the following requirements of Private Limited Company Registration in India: 
•  Minimum two people are required to form a Private Limited Company in India.
• There must be at least two directors and two shareholders at the time of incorporation of private limited Company.
• Maximum fifteen directors can be appointed in a private limited company and maximum 200 shareholders.
• There is no such requirement of minimum share capital to setup a Private Limited Company in India.

Director eligibility in a Private Limited Company in India

• A person must have completed 18 years.
• Only a natural person can become director in a Private Limited Company in India.
• A foreign national can become director in a Company.

Private Limited Company Registration Validity
 

Once a Private Limited Company registration is done, it shall be valid for the lifetime, however Company must have fulfilled the legal compliances such as filing of annual return and other mandatory forms.

Foreign National Appointment in Directors

Yes, a foreign national can be appointed as a director in a Private Limited Company if he has obtained Director Identification Number but at least one director must be an Indian resident.

Documents for Private Limited Company Registration in India

For Private Limited Company registration in India, below mentioned documents are required:

At the time of Name Reservation (RUN):

·         Proposed Company Name

·         Object of the Company

At the time of Company Incorporation Form (SPICE):

·         DSC for all the proposed directors;

·         DIN of all the proposed directors (If there are more than 3 directors)

·         Details of capital structure of the Company

·         Details of subscribers of the company

If Individual

1.      Personal details of directors;

2.      PAN

3.      ID Proof

4.      Address Proof

5.      No of shares prescribed

If Company

1.      CIN of the Company

2.      PAN of Company

3.      No of shares subscribed

4.      Email id of the Company

5.      Phone No of the Company

6.      Registered Office Details

7.      Details of interest in other entities

·         Details of directors in a Company

1.      Personal details of directors;

2.      PAN

3.      ID Proof

4.      Address Proof

5.      Interest in other entities and amount of shareholding (DIR 2)

·         Registered Office Details

1.      Ownership proof in case of owned office;

2.      Rent agreement if office is on rent;

3.      If office is owned by director then NOC from director.

4.      Registered office address proof (Not older than two months)

·         Affidavit by the subscribers in form INC-9.

·         Declaration by professional in form INC-10.

After filing of incorporation form with required documents, Registrar of Companies verify the application and issue Certificate of Incorporation.

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Legal Requisites For Setting Import Export Business

Foreign trade istrade between the different countries of the world.It has three kinds: imports, exports and entrepot.

• Inflow of goods in a country is called import trade
• Outflow of goods from a country is called export trade
• Goods are imported for the purpose of being re-exported with or without some processing or repackaging operations which is called entrepot trade.

Foreign Trade is extremely necessary for optimum usage of abundantly available resources and to satisfy the requirement of the country. Foreign Trade also brings in quality products into the country and by exporting the superior good, the capital and money comes in. Foreign trade not only generates the employment but also raises the living standards.
 In a nutshell, foreign trade is essential to have economic development of the country.
With an aim to make India a significant partner in global trade by 2020, the Foreign Trade Policy 2015-20 provides a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country.

What is the Import Export Code (IEC)?

IEC is Export Import Code required for the business of export or import of goods and services in India. It is a 10-digit identification number issued by the DGFT (Director General of Foreign Trade), an attached office of the Ministry of Commerce and Industry, headed by Director General of Foreign Trade. DGFT is responsible for implementing the Foreign Trade Policywith an aim to promote India’s exports and enhance the treasury.

• Commonly known as Export license in India, IEC is fairly easy to obtain. It is a completely online process and requires only basic documents and minimal fee.
• After application has been duly submitted, obtaining the license takes not more than 15-20 days.
• No hard copy shall be supplied to the applicant, instead a soft copy will be sent.
• PAN is essential for the application of IEC registration.
• IEC has lifetime validity and requires no renewal.
• After obtaining IEC, no further compliances, return filing or maintenance fee are required.
• In future if modifications are sought, they can be applied for through the same portal with the prescribed fee and additional documents.
• IEC will be granted only for the product category as applied for. Though, one can seek IEC for additional categories with an additional fee for each category.

 What is the Requirement for Filing an IEC?

1. One time Client browser settings, mentioned on the official site.
2. A valid PAN card available with the applicant or the applying entity
3. Valid Mobile Number and Email ID for the token code to be sent on both
4. Scanned copy of the documents to be uploaded in the required format of either gif/pdf
5. A suitable mode to make online payment of the fee

 What are The Steps of Filing The Application?

1. The prescribed format of application, ANF 2A form, is available on the website of DGFT. the required details may be filled according to the structure of the entity: Proprietorship, Partnership firm, Limited Liability Partnership, Private/ Public/Govt. Undertaking, Section 8 company, Registered Society/Trust, HUF,
   http://dgft.gov.in/exim/2000/iec_anf/ieconlnapplform.htm
2. Respective Regional Officer of DGFT has to be selected referring to the LIST OF REGIONAL AUTHORITIES AND THEIR JURISDICTION provided on the official site. The DGFT Regional Officer must chosen carefully and appropriately.
3. A prescribed fee has to be paid online through various options of the modes provided.
4. The required documents must be attached, which can only be in either GIF or PDF formats as mentioned. The documents must be attached carefully as any discrepancy may cause rejection of the application.
5. After reviewing the application for correctness, take a print, sign and submit its scanned copy on the site.
6. The status of IEC registration application may be tracked on the official site.
7. A computer generated certificate shall be provided to the applicant with all the details. The authenticity of the certificate may be verified by clicking on the link “View your IEC” on the DGFT’s website

 What Documents are Required for Registration?
In case of fresh e-IEC:

1. Digital Photograph of the Signatory Applicant (Proprietor, Managing Partner, Director of the Company, Karta or the Chief Executive of Registered Society, as the case may be)
2. Copy of PAN card
3. Bank Certificate (in ANF2(I) FORMAT on the official letter head of the Bank) or cancelled cheque bearing the applicant entities name

In case of any modification of IEC, additional documents are required like:

1. Digital Photograph of the Proprietor, Managing Partner, Designated Partner/Director of the Company, Secretary or Chief Executive of the Registered Society, Karta.
2. PAN card of the applicant entity
3. Passport (first & last page)/Voter’s I-Card/ Driving License/UID (Aadhar card), any of these, for the applying entity/ applicant
4. Sale deed in case business premise for a self-owned property; or Rental/Lease Agreement for a rented/ leased office; or latest electricity/ telephone bill
5. Certificate of incorporation as issued by the RoC, Partnership Deed, Registration Certificate of the Society, Copy of the Trust Deed as the case may be

 What is Registration CUM Membership Certificate (RCMC)?
It is issued by Export Promotion Councils/Commodity board/Development authority or other competent authority as prescribed in Foreign Trade Policy or HBP Vol1, for 5 years.
avail any benefits or concession under the current FTP, a firm has to apply for an authorization to import/export and has to furnish valid a Registration Cum Membership Certificate.
The current procedure for furnishing RCMC information is manual. IEC holder has to submit the RCMC certificate in physical form to concerned Regional authority.
Requisites for the RCM are:-

1. Necessary setup for the creation of RCMC data file.
2. Class III Digital Certificate for signing the file created above
3. A self-attested copy of the IEC issued by the licensing authority (DGFT) concerned.

A self-attested copy of the Permanent Account Number (PAN)

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