A sole proprietorship firm is an entity owned by a single individual, unincorporated in nature, with no distinction between the rights and liabilities of the owner and the firm. It is one of the most popular ways of starting a business in India. If one wishes to get their proprietorship firm registered, there are three ways to do that. In this article, we will focus on how a sole proprietorship firm can apply for MSME registration.
Modes of Registration for Sole proprietorship firm
There are three modes of registration through which a sole proprietorship firm can get itself registered. Following are the modes of registration:
- A license under the Shop and Establishment Act: Registration of a sole proprietorship firm can be done under the Shops and Establishment Act if such a firm falls under the category of shop or commercial establishment as per the Act.
- Udyog Aadhar under MSMED Act: An Udyog Aadhar is a relatively newer registration method under the MSME, and it is a unique identification number given to registered businesses. A sole proprietorship firm can get the Udyog Aadhar via registration in addition to the various benefits offered by the MSME to the registered companies.
- Goods and Services Tax Registration: If the sole proprietorship firm has a turnover exceeding Rs 20 lakhs, they can go for GST registration. Businesses with less turnover can skip this registration completely.
Composite Criteria of Companies Under MSME
Following are the composition criteria for micro, small and medium enterprises :
|Classification||Micro industries||Small scale industries||Medium-scale industries|
|Investment in Plant and Machinery or Equipment||Amount not exceeding one crore rupees||Amount not exceeding ten crore rupees||Amount not exceeding fifty crore rupees|
|Annual turnover||Amount not exceeding five crore rupees||Amount not exceeding fifty crore rupees||Amount not exceeding two hundred and fifty crore rupees|
Advantages of an MSME Registration
Following are the benefits that can be availed by a sole proprietorship firm upon an MSME registration:
- Businesses registered under the MSME are provided loans at a reasonable rate of interest without any hassle.
- Companies are allowed minimum alternate tax for fifteen years.
- Such companies are permitted to sign up for government project tenders.
- Various credit schemes offered by MSME can be availed by businesses registered under MSME.
- There is a One Time Settlement fee system under the MSME scheme.
- The setup cost for companies is very low and has been reduced over the years.
- Companies registered under MSME can easily avail government licenses.
Documents Required by a Sole proprietorship firm for MSME Registration
Following are the documents required by a sole proprietorship firm for MSME registration:
- Copy of Aadhar card of the owner
- Copy of PAN card
- Details of the bank account of the owner
- Proof of registered office
Following is the procedure by which a sole proprietorship firm can get the registration under MSME:
Step 1: The registration is done via the online portal created by the Government of India for registration, i.e., https://udyamregistration.gov.in
Step 2: A form of registration is available in the portal as mentioned above, wherein the applicant can fill in the required details.
Step 3: Upon completion of the process of registration, a permanent registration number will be provided to the applicant.
Step 4: The applicant can track their registration details using that unique registration number.
Step 5: After successful registration of a firm, an e- certificate will be issued online. Such a certificate has a unique QR code that encompasses the details of the enterprise.
Points to be kept in mind while registering a sole proprietorship firm under MSME
Following are some of the key points which should be kept in mind while registering a sole proprietorship firm under MSME :
- The registration process under MSME is entirely free of costs, and any fees or costs are not involved in such registration.
- Once a proprietorship firm is registered, no renewal of registration is required.
- An enterprise shall not file more than one Udyam or MSME registration. However, any activity related to the manufacturing or service can be specified.
- The applicant shall provide an Aadhar number for an Udyam Registration.
- Such aadhar number shall be :
- Of proprietor in case of a proprietorship firm
- Of the managing partner in case of a partnership firm
- Of Karta in the case of a Hindu Undivided Family.
- An MSME Registration is fully online and is based on self-declaration.
- The registration process does not require the upload of documents or proof of any kind.
- Any detail on investments and turnover of such a company linked with PAN and GST will automatically be accessed from the Government databases.
- Any intentional misrepresentation or attempt to hide self-declaration facts will attract a penalty under Section 27 of the MSMED Act.
- If an enterprise is registered as a Udyam with PAN card details, all the information of previous financial years shall be mentioned on a self-declaration basis, where the company did not have PAN.
- The applicant shall provide GSTIN and PAN details in addition to the Aadhar card details in case of a company or limited liability partnership or society or trust or a cooperative society.
- The online portal for MSME registration is fully integrated with GST and Income tax systems.
- As per the latest notification, companies with EM-II or UAM registration shall re-register themselves under MSME.
- As per the notification dated 5th March 2021 by the Ministry of MSME, PAN and GST will be required for Udyam registration.
When a company is registered under the MSME Act, it can enjoy a variety of benefits, including cheaper bank loans, tax incentives, priorities during the bidding process, and access to various government programs and incentives. If a sole proprietorship firm wants more benefits and profits in the future, then it should get the MSME registration done as soon as possible.
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