Overview

If you are planning to start a business, then let me congratulate you because there can be nothing more exciting than setting up your own startup, but mind it that the road is full of challenges. As a form of entity, the sole proprietorship is one of the easiest ways to start doing so. This type of business is simple to start, gives you full control, and has fewer regulations to worry about. It is easy to start; you will run the business yourself and with less law enforcement pressure. This article is for people who are considering establishing a sole proprietorship in Maharashtra and explains the process step-by-step.

Benefits

• 1) Simplicity: It's the easiest type of business to start.
• 2) Control: You make all the decisions on your own.
• 3) Less Compliance: Compared to other types of businesses, there are not as many law requirements.
• 4) Full Control: You’re in charge of everything.
• 5) Reduced Taxes: Business income is taxed as personal meaning that it may lower your tax burden.
• 6) Less Rules: There are fewer requirements than some other business structures.

Procedure to Register a Sole Proprietorship in Maharashtra

1. 1) Pick a Business Name: First, choose a name for your business. While there’s no formal registration required for a business name in a sole proprietorship, it’s wise to pick a name that isn’t already taken. This helps you avoid any legal issues in the future.
2. 2) Get a PAN card: If you do not have a PAN card, then go and apply for a PAN card. This should be required for all financial transactions and for taxes. Yes, if you already have a PAN of your own then it can be used for the business as well.
3. 3) Open a bank account: Next, open a current bank account in your business’s name. Banks will usually ask for some proof that your business exists, which you can get by registering under the Shop and Establishment Act or obtaining a GST registration.
4. 4) Register under the Shop and Establishment Act: In Maharashtra, all businesses must register under the Shop and Establishment Act. You can do this by applying to your local municipal corporation. You will obtain a certificate as identification of your business after registering.
5. 5) Apply for GST Registration: If you have an annual turnover of ₹20 lakhs (₹10 lakhs in some states) or more than this in a year; then GST has been made mandatory to apply. Registration is online through the GST portal. And if your turnover is less than 20 lakh rupees and, still want to go with the GST, you can voluntarily do that, especially if you deal with other businesses that are GST-registered.
6. 6) Register for Professional Tax: In Maharashtra, you must register for Professional Tax (PT) within 30 days of hiring any staff. Even if you don’t have any employees, as a sole proprietor, you need to register and pay the professional tax.
7. 7) Maintain records and file taxes: A sole proprietorship requires much less paperwork; however, accurate financial records are still vital. You have to annually file an income tax return. This is very similar to a sole proprietorship, where the income of the business is considered as your income and filed using Self PAN.

Documents

• 1) PAN Card: Your PAN (Permanent Account Number) is essential for tax purposes. You can use your personal PAN card for your business.
• 2) Aadhar Card: For identification purposes and to register under the Shop Act, you need an Aadhar card.
• 3) Bank Account Proof: It can be a cancelled cheque or your bank account details. If you are creating a bank account for your business, you will require evidence that it exists.
• 4) Proof of Business Address: You’ll need to submit proof of where your business operates. This could be a lease, an ownership document, or an electricity bill.
• 5) Shop and Establishment Act License: To prove your business is officially registered in Maharashtra, you’ll need this license. You can obtain it from your local municipal corporation.
• 6) GST Registration Certificate (if applicable): If you’re registering for GST, you’ll need to provide this certificate.
• 7) Professional Tax Registration (if applicable): For businesses with employees, you’ll need to show proof of registration for Professional Tax.
• 8) Other Licenses or Permits (if applicable): Depending on the nature of your business, you might need additional licenses, like an FSSAI license for food-related businesses.

Frequently Asked Questions (FAQs)