• How can I open a proprietorship firm?

Hi, I am a dance teacher and choreographer, and currently teach dance to students at my home in Gurgaon. I am planning to shift to a basement where I can legally run a dance studio. I want to register/open a sole proprietorship firm. What do I need to do to open a bank account? What all do I need? Apparently I will need some registration (like SSI)/tax document as proof now to open a current account. How can I get that? The studio is currently fully self-funded and I don't yet have any external funding. 

Also, can I get the rental lease made on the studio's name? or will I have to get it made on my name only?
Asked 1 year ago in Business Law from Gurgaon, Haryana

Dear Client,

Bank account will open on the basis of proprietory deed - registration/ license document

PAN, address proof of proprietor and I`d proof.

Lease deed will be in the name of Proprietor,

Yogendra Singh Rajawat
Advocate, Jaipur
13207 Answers
17 Consultations

4.6 on 5.0

sole proprietorship does not need any registration

it is essentially the individual who has given a name to his business

you can obtain PAN on the name of sole proprietorship

the lease deed will always have the lessee written as - Mr. ____________, sole proprietor of _____________

sole proprietorship cannot be the lessee because it is not a legal entity

the sole proprietorship gets its colour and force through the individual behind it

so in any document it will be the name of the individual first followed by the name of sole proprietory and not vice versa

Yusuf Rampurawala
Advocate, Mumbai
4457 Answers
25 Consultations

5.0 on 5.0

1. There is no separate procedure for opening a proprietorship business. Only the complaisance like trade license, fire license, police license etc si required which is same for company or firm to open such school.

2. You need GST registration as well.

3. Yes you as proprietor of the dance school can execute the lease in the name of school as well. There is no need for separate name,

Devajyoti Barman
Advocate, Kolkata
17808 Answers
252 Consultations

5.0 on 5.0

there is no formal procedure to register sole proprietorship as sole proprietor is considered extension of proprietor

2) existence of sole proprietorship can be established by opening bank account in name of firm or obtaining licences required for running business

3) RBI KYC norms mandate that to open bank account in name of sole proprietorship any two of following documents may be submitted

a) certificate issued by muncipal corporation under shops and establishment act

b) sales and income tax returns

c) registration certificate issued by service tax/ profession tax authorities

d) CST/VAT certificate

e) Registration/licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority/ Department, etc.

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

Ajay Sethi
Advocate, Mumbai
66944 Answers
4041 Consultations

5.0 on 5.0

Hello,

You do not need any formal registration for opening a sole proprietorship. The status of sole proprietorship is essentially granted by way of other registrations such as shops and establishments, service tax(now GST) etc. for opening a current bank account, the bank can provide you with the documentation requirements(as these can slightly vary from bank to bank). These would generally include your PAN card, address proof, address proof of your business premises. The lease deed can be done in the name of the proprietorship firm through the sole Proprietor, i.e. you. You will need to finalise a name for the sole proprietorship, try to choose a name which is not similar to any big dance academies or other establishments, as they can tomorrow allege Intellectual property infringement (basically that you have copied their name in order to attract business).

Hope this helps.

Best regards,

Nityashjit Kaur

Nityashjit Kaur
Advocate, Delhi
10 Answers

Not rated

This is my response to you:

1. Proprietorship with less than Rs. 3 lakhs of income is not required to pay any income tax, as proprietorship's are taxed as the individual owing the business;

2. After starting up a Proprietorship, it is relatively harder to open a bank account or obtain a payment gateway in the name of the business - since more registrations like GST Registration may be required, therefore engage services of a CA to do the same;

3. Another benefit is that the Proprietor and the proprietorship are one and the same for all legal purposes. Hence, there is no formality for winding up or closing a proprietorship;

4. To prove access to the registered office, a recent copy of the electricity bill or property tax receipt or water bill must be submitted;

5. Yes you can make a rental agreement for the studio's name;

6. Other documents will also be needed, therefore engage a local lawyer who can help you with the formalities and complete the legal processes involved in it.

Gowaal Padavi
Advocate, Mumbai
1826 Answers
2 Consultations

5.0 on 5.0

Hi, a proprietorship firm has to be registered ..I can assist you with the same .. You can visit my office in GURGAON

Hemant Chaudhary
Advocate, Gurgaon
4258 Answers
31 Consultations

4.9 on 5.0

There is no formal procedure in India to register a sole proprietorship, as a sole proprietorship is considered to be an extension of the Proprietor. Therefore, the existence of a sole proprietorship business can be established only through opening a bank account in the name of the proprietorship firm or obtaining licenses required for conducting the business. To open a bank account for a sole proprietorship, RBI’s KYC norms mandate that any two of the following document must be submitted to the Bank:

Certificate/license 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

License 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,

Registration/licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority/ Department, etc.

Banks may also accept IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of the bank account etc.

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.

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

Since, any two of the above documents are required to open a bank account in the name of the Proprietorship, Proprietors typically first obtain any of the above license / registration / certificate first to establish the existence of the proprietorship firm.

Sole Proprietorship Registration through License

As explained above, the existence of a sole proprietorship is established through licenses or registrations or certificates in the name of the Proprietor. Based on the type of business, the following are some of the easy registrations to obtain for establishing a sole proprietorship in India.

Proprietor PAN Card

Proprietorship businesses are considered to be one and the same as the Proprietor. The PAN card of the proprietor will be used for opening bank account, obtaining licenses / registrations / certificates in the name of the sole proprietorship and filing income tax return for the sole proprietorship. Hence, obtaining PAN card for the Proprietor is the first step in establishing a sole proprietorship.

Business involved in Manufacturing or Trading

Value Added Tax or VAT tax is applicable for goods and products sold in India. Any person involved in manufacturing or trading must obtain VAT Registration for conducting business irrespective of the type of business entity. Therefore, to start a sole proprietorship business, business involved in sale of goods and products may obtain VAT or TIN Registration using the Proprietor’s PAN Card from the respective state government. However, once VAT registration is obtained, monthly or quarterly or half-yearly or annual VAT tax returns must be filed by the Proprietorship.

Shop & Establishment Act License is required for businesses that operate a store or factory or formal place of business. Shop & Establishment Act license is often provided by the Department of Labor in the State and is required to operate a business in most states. Therefore, shop and establishment license can be obtained to show proof of existence of Proprietorship business.

MSME Registration is a registration provided to Micro, Small and Medium sized enterprises under the MSMED Act to promote small scale businesses in India. MSME registration can be often obtained easily in many states and can be also used to prove the existence of a proprietorship business.

Sir you can obtain a Shop establishment certificate easily in the name of the FIRm and then can apply for the bank account. Further yes you can enter into the rental lease on name of the studio.

Shubham Jhajharia
Advocate, Ahmedabad
19332 Answers
75 Consultations

5.0 on 5.0

A proprietorship firm can be opened by a simple procedure. You need to have an address proof the address at which the firm would be registered. Your firms letter head. A name of he firm. PAN CARD and other tax documents are necessary.lease would be in the name of the firm. The bank would open a current account in the name of your firm.

Regards

Rahul Mishra
Advocate, Lucknow
4322 Answers
11 Consultations

5.0 on 5.0

Dear Client,

You need to register your firm get GST No. We will get it registered for you. For more information, contact to me

Jaswant Singh
Advocate, Gurugram
573 Answers
2 Consultations

4.8 on 5.0

Since this is a proprietorship firm the agreement can be entered into your name also mentioning as proprietor of so and so studio.

The other formal requirements like municipal licenses, taxes and permission from other authorities are certain other issues to be taken care locally.

T Kalaiselvan
Advocate, Vellore
56705 Answers
701 Consultations

5.0 on 5.0

1.You do not need to register your studio as a sole propreitorship.

2. You'll have to take a licence under the shops and Establishment Act.

3. NOC from municipal corporation of your area.

4. You can get the rental agreement in the name of the studio or in your name in the capacity of sole proprietor of your studio.

Siddharth Jain
Advocate, New Delhi
4773 Answers
52 Consultations

5.0 on 5.0

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