Umesh (Director) 29 November 2014

Is registration required for propirioty firm.

1)I want to start a manufacturing and trading firm in apparel.But presently i want to keep it as a properiotary firm and not a pvt.Ltd.Firm.Is this fine.

2)Also as this is first time buisness , is it necessary for me to register this properiotary buisness.Can i legally manufacture and do trading of mine manufactured and others manufactured apparel under my company name by experimenting the market for one year and then registering the firm.

Pls. advise.Thanks in advance.

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Advocate dishi (AM LEGAL) 29 November 2014

No.There is no formal registration is required for a sole proprietorship. You simply have to open a bank account with the name & style you want to work. But if you are liable for state VAT or service tax registration, then you have to obtain VAT and/or service tax registration. Further, for sole proprietorship, no separate income taxPAN is required. The PAN of the proprietor will be the PAN of the firm and proprietor will have to file income tax return in his personal name.

Now after announcement of KYC norms by RBI, it is mandatory to have at least two registration in the name of sole proprietorship firm. So now you have to submit two documentary proof for the name of sole proprietorship firm. Normally owner can get registration under shop & establishment act and under service tax or VAT.

https://www.charteredonline.in/2011/11/how-to-register-your-proprietorship.html

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Advocate dishi (AM LEGAL) 29 November 2014

Here's a list of most common licenses in India that your business might require:

Service Tax Registration
PAN Card
TAN (Tax Collection & Deduction Account Number)
VAT/ CST Registration
Shops & Establishment License
Central Excise License
Importer Exporter Code
Professional Tax
Employee Provident Fund Registration
ESI (Employee State Insurance) Registration

Advocate dishi (AM LEGAL) 29 November 2014

Know Your Customer (KYC) guidelines - accounts of proprietary concerns

RBI/2011-12/579
DNBS(PD).CC. No 275/03.10.42/2011-12

May 29, 2012

All Non Banking Financial Companies /
Residuary Non Banking Companies

Dear Sir,

Know Your Customer (KYC) guidelines - accounts of proprietary concerns

A reference is invited to para 1 and Annex vi of the Master Circular DNBS (PD) CC No.231/03.10.42/2011-12 dated July 1, 2011on Master Circular – 'Know Your Customer' (KYC) Guidelines – Anti Money Laundering Standards (AML) - 'Prevention of Money Laundering Act, 2002. NBFCs have been advised that internal guidelines for customer identification procedure of legal entities may be framed by them based on their experience of dealing with such entities, normal lenders prudence and the legal requirements as per established practices. If the NBFCs/RNBCs decide to accept such accounts in terms of the Customer Acceptance Policy, the NBFC should take reasonable measures to identify the beneficial owner(s) and verify his / her / their identity in a manner so that it is satisfied that it knows who the beneficial owner(s) is / are.

2. For sake of clarity, in case of accounts of proprietorship concerns, it has been decided to lay down criteria for the customer identification procedure for account opening by proprietary concerns. Accordingly, apart from following the extant guidelines on customer identification procedure as applicable to the proprietor, NBFCs/RNBCs should call for and verify the following documents before opening of accounts in the name of a proprietary concern :

i) Proof of the name, address and activity of the concern, like registration certificate (in the case of a registered concern), certificate/licence issued by the Municipal authorities under Shop & Establishment Act, sales and income tax returns, CST / VAT certificate, certificate / registration document issued by Sales Tax / Service Tax / Professional Tax authorities, Licence 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, etc.

ii) Any registration / licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority / Department. NBFCs/RNBCs may also accept IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of account.

iii) 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.

iv) Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.

v) Any two of the above documents would suffice. These documents should be in the name of the proprietary concern.

Yours faithfully,

(Dr Tuli Roy)
Deputy General Manager

T. Kalaiselvan, Advocate (Advocate) 03 December 2014

You may follow the advise rendered by Mr. Dishi Srivastava which seems to be more appropriate, in case of further doubts, you may contact a local consultant for more proper guidelines in this regard.

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