Can a Sole Proprietorship Firm Apply for an MSME Registration?

Last Updated at: Feb 02, 2021
0
6003
Can a Sole Proprietorship Firm Apply for an MSME Registration?
Finance Minister Nirmala Sitharaman will present the Union Budget 2021 on February 1, 2021. The MSME sector is expected to get a major boost from this Budget. Experts feel that the Centre should simply GST and reduce its rate from 18 %to 5 % on professional services to boost MSMEs.
  1. Modes of sole proprietorship registration

  2. MSME investment limit

  3. MSME registration process

  4. Documents required for MSME registration

  5. Benefits of MSME Registration

  6. FAQs

When it comes to registration of businesses in India, then there are different provisions. One of the popular forms of business entities in India is the Sole Proprietorship Firm. In India, if you want to go ahead with sole proprietorship firm registration, then there are three ways to do the same.

Modes of Sole Proprietorship Firm Registration

  1. The shop and establishments Act- It is needed when the local law is existing in the location of Sole Proprietorship.
  2. Udyog Aadhaar under MSMED Act– This is for micro and small industries
  3. GST Registration– If the business has ROI more than a certain limit, then they need to go for GST registration. The limit is Rs. 40 lakhs for the ones who supply goods and Rs. 20 lakhs for those who provide services.

Full Form of MSME is Micro, Small and Medium Enterprises. These industries are the backbone of developing economies like India.  MSME contributes to 45% of the Total Industrial Employment; it takes a 50% share of the total export from India and 95% of all the industrial units. When the MSMEs grow, the economy of the country will also grow.

There are two categories of MSME:

  1. Manufacturing enterprises
  2. Service enterprise

 Here is a tabular representation of investment that is required 

Type of Enterprise Maximum Investment Limit Annual Turn Over Limit(Rs)
Micro-Enterprise Up to Rs.1 crore Up to  Rs. 5 crores
Small Enterprise Up to Rs.10 crores Up to Rs. 50 crores
Medium Enterprises Up to Rs. 50 crores Up to Rs. 250 crores

MSME Registration Process

If you are planning to go for MSME registration, then the following steps will take you through the process:

  • One needs to fill a single form. You can do MSME registration online or offline.
  •  If an individual wants to do registration for more than one industry, then also they can do individual registration.
  • Along with the form, one needs to present information like Aadhaar card, industry name, bank account details, address, etc.
  • One needs to produce self-certified certificates.
  • There is no MSME registration fee for this process
  • Once you have filled all the details and upload it on the website, you will get the MSME registration number and MSME registration certificate.

With Vakilsearch, you can register your startup or sole proprietorship as MSME in 3 simple steps –

  1. We do a thorough check of the files you send into us
  2. We will appoint an affiliate to process your application
  3. With 15 days, the certificate is issued by the government department

register your business

What are the documents required for MSME registration?

Whether you are going forward with MSME registration online or offline, you need to produce the following documents:

1. Business Address Proof

If you have self-owned premises, then you need to produce an allotment letter, lease deed, property tax receipt, or possession letter. In case you are running your business on rented premises, then you need to provide a NOC certificate. You can also submit a utility bill as a business address proof.

2. Sale bill and purchase bill copy

business needs to submit a copy of the sale bill of each of the products that it will supply, and for every raw material that it purchases, the business needs to produce a purchase bill.

3. MoA and AoA or Partnership Deed

if your business is a partnership firm, then you need to produce a partnership deed, and in case of a company, one needs to furnish MoA and AoA and certificate of incorporation.

4. Copy of License 

In some cases, the applicant might be required to furnish an industrial license

5. Bill of machinery, purchased for the work 

The applicant must also have all the bills and receipts of the purchases done by them.

Benefits of MSME Registration

There are several advantages of going ahead with MSME registration:

  • You will get a loan at a cheaper rate; the interest rate can be as low as 1-1.5% per month
  • There are several tax benefits to the industries operating as MSME
  •  MSMEs are allowed for MAT or minimum alternate tax that can be carried for up to 15 years
  • Government has also given special benefits to MSMEs by opening certain tenders only for industries operating under MSME
  •  It is easier for MSME to get credit
  • After successful MSME registration, the cost of a patent or setting up industries gets reduced as there are many concessions for such industries.
  • There is a One Time Settlement Fee for non-paid amounts of MSME
  • Businesses registered under MSME have a higher preference for a government license.

FAQs

1. For MSME, is the credit score necessary?

No, there is no requirement for a credit score. 

2. After registration, do I get a hard copy of the MSME certificate?

Now the entire process has become paperless, and hence,  you will not get a physical copy of the MSME certificate. However, you will get an email of the same.

3. Is it the right time for a start-up to register as MSME?

It’s the perfect time for start-ups to register as MSMEs. A lot of incentives and relaxations are on offer for both new and existing businesses. We will help you with your registration.

Click here: private limited company registration