How to set up your Sole proprietorship Firm in India

Kindly guide on how to go about starting a company as sole proprietorship in Bangalore? What kind of registrations etc are required? What other formalities are required?

Its always best to first decide on the businesses entity that you want for doing business. Every business has different needs and goals, and so does the type of registration that you want to choose for your business. I recommend you to check these Option for registration before proceeding further.

If you want to do business as Sole proprietorship then it doesn’t need any registration with Government but there are some business licences you need to take when setting up Sole proprietor firm/company.

And these business licences depend on the type of business that you want to do. For example it can be a product based or a service based business. These licenses will also help in getting a bank account in the name of your business entity.

Business licenses in India

PAN Card

As a Sole Proprietor firm you will be filing returns in your name so a PAN card is mandatory. you can apply for the same online for  94 which you will get in 7 days. Apply here – https://www.tin-nsdl.com/

TAN [Tax Collection & Deduction Account Number ]

If you are collecting tax either from the customers or your exployees then a TAN is Must and complete procudure to apply TAN is explain in simple terms here – http://www.startupfreak.com/how-to-get-tan-number-in-india/

Service Tax Registration

In any year if your firms total turnover crosses 9 lacs then you will have to pay service tax which is 10% and you can register and pay for the same online. More info - http://www.servicetax.gov.in/st-proc-home.htm and Service Tax registration form here - http://www.servicetax.gov.in/forms/st1.pdf

VAT/ CST Registration

VAT is a State based tax and CST is Central based tax. If you are buying or selling taxable goods within a state, then VAT registration should be obtained. And if you are buying or selling taxable good across different states then you have to obtain CST registration. VAT rules varies according to the sates in which you are doing business. You can register for VAT online. More info – http://ctax.kar.nic.in/what_vat/About%20vat%20nnew.pdf  For karnataka VAT registration can be applied here http://164.100.80.121/cto/Registration.aspx .  VAT registration fees in Karnataka  500

Shops & Establishment License

Under the Karnataka Shops and Commercial Establishments Act,- (1961), within thirty days of the establishment of the new company, the business owner should send a statement to the inspector of the area concerned, and this statement should contain the name of the owner/manager, Postal address, name of the shop/establishment and any other prescribed details.  once the fees and the statement is accepted by the inspector, the Registration Certificate will be given immediately. Shops & Establishment License fees depends on the number of employees that you have, starts from  125 to  12500 for 100 employees

Importer Exporter Code

This is a 10 digit number like PAN number and is issued by Director General of Foreign Trade [DGFT] , Ministry of Commerce, Government of India to Indian Companies and Individuals who want to carry International Trade. More details here – http://dgft.gov.in/ Apply for it online here http://dgftcom.nic.in/ieconline.htm. Importer Exporter Code Fees  250( Approx)

Professional Tax

If you have employees then you have to collect professional tax from them and pay it to government. Some states do not have this tax imposed and some states collect fixed amount say  2500 Annually.  Please check with you respective states and do the needful.

Employee Provident Fund Registration

If you have less than 20 employees then its not mandatory but you can voluntarily take this for the better employee benefits and employee retention. Its mandatory for more than 20 employees firm and other 180 business classes specified under the law. It can be used as a valid company expense and deducted from the total tax. The registartion is done at no Cost at The Employees Provident Fund Organization (EPFO) which is a statutory organization under the Ministry of Labor and Employment. Once the employer is registered with the EPFO, it will register his employees with the office and open Provident Fund accounts in the name of each employee. More information is available at www.epfindia.gov.in. and registration here - http://www.epfindia.gov.in/registration.htm

ESI (Employee State Insurance) Registration

This is used for health insurance purposes for your employees and is  mandatory for employing 10 people in factory and 20 people in other establishments like shops, hotel etc. The Employees’ State Insurance (ESI) Act (1948) provides for a fund administered by the ESI corporation in which contributions is made both by the employer and the employee at the rates prescribed by the National Government. This is done at no cost at the regional offices in the states. More info here - http://www.esic.nic.in.