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 –

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.

How to register a proprietorship firm in India

Sole Proprietorship Registration

Majority of the businesses in India are unregistered with many being operated as a sole proprietorship firm business.  A sole proprietorship is one of the easiest and simplest form of business entity to register and maintain in India. There is no formal sole proprietorship registration and to start a proprietorship only PAN number for the Proprietor, certain licenses and capital is required. In this article, we look at the process for forming a sole proprietorship in India.

Sole Proprietorship Registration

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.

Business involved in providing Services

Businesses involved in providing services are liable to collect and remit service tax. Service tax registration can thus be obtained from the Service Tax Department to show the existence of a proprietorship business. However, once service tax registration is obtained, half-yearly service tax returns must be filed by the Proprietorship.

In addition to service tax registration, other registrations like shop and establishment act license or MSME registration or ESI registration or professional license can be used by the sole proprietorship to establish the existence of a proprietorship business.

With the above easy to obtain and common registration, most sole proprietorship can satisfy RBI rules for opening a bank account in the name of Proprietorship and conduct business as Proprietorship firm.