Can A Sole Proprietorship Firm Apply For MSME Registration?

Looking into MSME registration as a sole proprietor? Here is a compilation of everything you need to know.

The full Form of MSME is Micro, Small and Medium Enterprises. These industries are the backbone of developing economies like India. 

1. MSMEs contribute to 45% of the Total Industrial Employment and take a 50% share of the total export from India and a 95% share of all the industrial units. When MSMEs grow, the economy of the country also grows.
2. When it comes to business registration in India, there are various ways to go about it based on various provisions. The sole proprietorship firm is a prevalent type of business entity in India. 

If you wish to register a sole proprietorship firm in India, you can do it in three ways.

Modes of Sole Proprietorship Firm Registration

1. The Shop and Establishments Act- This form of registration is needed when it exists in local law of the location of the sole proprietorship.
2. Udyog Aadhaar under MSME Act– This is for entities in micro and small industries
3. GST Registration– If your sole owner business has an ROI of more than a certain limit, you need to go for GST registration. The threshold is ₹ 40 lakhs for the ones who supply goods and ₹ 20 lakhs for those who provide services.

There are two categories of MSME:

1. Manufacturing enterprises
2. Service enterprise

 Here is a tabular representation of the investment that is required for each:

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

MSME Registration Process

If you are looking to go for MSME registration, read carefully as the following steps will take you through the process:

• A single form must be filled out. MSME registration can be done online or offline
• Individual registration is also available if a person wishes to register for more than one industry
• Along with the form, one must provide information such as an Aadhaar card, industry name, bank account details, address, and so on
• Self-certified certificates must be produced
• This process requires no MSME registration charge.
• You will receive the MSME registration number and certificate once you have filled in all the details and uploaded them to the portal. The Owners Can Simply sole proprietorship company registration.

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:

Business Address Proof

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

Sale Bill and Purchase Bill Copy

The business must submit a copy of the sale bill for each product it will supply and a purchase bill for each raw material it will purchase.

MoA and AoA or Partnership Deed

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

Copy of License 

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

Bills of Machinery and Raw Materials

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:

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

For MSME Registration, is a good credit score necessary?

No, there is no requirement for a credit score.

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

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

Is it the Right time for a startup to register as MSME?

Now is the perfect time for startups to register as MSMEs. Many incentives and relaxations are on offer for both new and existing businesses. We can even help you with your registration. Vakilsearch allows you to register your startup or sole proprietorship as an MSME in three simple steps. We thoroughly examine the files you submit to us. We will assign an affiliate to handle your application. The government department issues the certificate within 15 days.

Conclusion

In conclusion, the registration of MSMEs, including sole proprietorship firm, plays a crucial role in boosting the economy by creating employment, fostering exports, and supporting industrial growth. By understanding the various registration modes and the necessary documents, businesses can take advantage of the numerous benefits provided by the government, such as easier access to credit, tax benefits, and concessions. Proper registration ensures compliance and opens doors to government tenders and other opportunities, making it a valuable step for any proprietorship firm or other MSME entities in India.