How-to-Establish-a-Bank-Account-for-a-Sole-Proprietorship

How to Open a Current bank account for a Sole Proprietorship firm in India?

Sole Proprietorship refers to doing business in one’s own name. Proprietorships are classified as unregistered businesses since they are not registered with the Central Government as an independent business organization. Proprietorships are appropriate for extremely small enterprises in the unorganized sector with yearly revenues of less than Rs.10 lakhs. In many situations, the sole proprietor would run a firm under a different name (for example, Chennai Metal Trading, Kumar Groceries, etc.,).

Sole Proprietorship firm names are not rigorously checked or monitored, and most entrepreneurs choose a common name that does not infringe on any prominent brand. Lastly, a bank account must be opened to offer legitimacy to the Sole Proprietorship and to accept payment in the name of the Sole Proprietorship firm. In this post, we will go through how to create a single proprietorship bank account.

Single Proprietorship Bank Account

The Central Bank of India has established Know Your Customer (KYC) requirements for creating a sole proprietorship current account, and all banks follow the process for opening a single proprietorship current account in the company name. The RBI has extensively suggested the following as KYC standards for the creation of sole proprietorship current accounts by banks:

  • Evidence of the company’s name, address, and activity: Proof of the name, address, and activity of the concern, such as registration certificate (in the case of a registered concern), certificate/license issued by Municipal authorities under Shop & Establishment Act, sales and income tax returns, GST certificate, certificate/registration document issued by Sales Tax / Professional Tax authorities, Licence issued by the Registering authority, such as Certificate of Practice issued by Institute of Chartered Accountants of India, ICRA, ICRA, ICRA, ICRA, ICRA, ICRA, ICRA
  • Secondary Proof: Any registration / license document issued by the Central Government or a State Government Authority / Department in the name of the proprietary firm. NBFCs/RNBCs may also accept an IEC (Importer Exporter Code) given to a private firm by the DGFT office as an identification document for account establishment.
  • The whole Income Tax return (not only the acceptance) in the name of the sole owner, reflecting the firm’s revenue, officially authenticated/ recognized by the Income Tax Authorities.
  • Utilities bills in the name of the proprietary firm, such as power, water, and landline telephone bills.

Any two of the papers listed above would suffice to start a sole proprietorship current account. The RBI KYC guidelines further state that these papers must be in the name of the proprietorship.

Establishing a Proprietorship Bank Account Requires Documentation

Several banks have adopted processes and a list of papers necessary for establishing a current account in the name of a sole proprietorship business based on the aforesaid RBI recommendations. The following is a list of papers needed by a bank to register a <a href="https://setupfilings.com/learn/advantages-and-disadvantages-of-sole-proprietorship/" title="What Are The Advantages And Disadvantages Of Sole Proprietorship?“>Proprietorship Bank Account.

Evidence of Sole Proprietorship (Any one of the following documents)

• Any certificate granted in the name of an entity/firm by a local/state/central government/government agency/SEBI/IRDA/ ICAI/ ICSI/ ICWAI/ Office of Registrar of Newspapers for India for registration/operations/trade license/business. For example, sales tax, TIN/TAN, and so on.

• APMC/ Mandi License/ Certificate

• Labour License/Certificate

Professional Tax Registration Certificate

Trade Mark Registration Certificate

• Liquor License/ Registration Certificate

• Drug License

• Registration Certificate is given by Excise & Customs Department.

• License/ Certificate to Sell/ Stock/ Exhibit for Sale or Distribute Insecticide/Pesticide

• Registration Certificate issued under the weight & Measurement Act

• Police Department Permission/License/Certificate

• Regional Transport Office Permit/Registration Certificate

• Consent to Operate document issued by State/Central Pollution Control Board

• Sales Tax Registration Certificate/ TIN Certificate/ GST Registration Certificate/ TAN certificate.

• A current Shops and Establishment Certificate/Trade License. The validity term may be extended up to the grace time for renewal specified in the certificate.

• Certificate issued in the name of the entity and indicating the location given by SEZ, STP, EHTP, DTA, and EPZ.

Importer-Exporter Code Certificate, as well as a PAN Card (if PAN is quoted on the IEC Certificate).

• Certificate from the Gram Panchayat (should be on letterhead and not more than 3 months old).

• A trade license in the entity’s name.

• District Industries Center (DIC)/ Small Scale Industries (SSI) Certificate – Acknowledgement Part -II issued by DIC/ SSI with Entrepreneur’s Memorandum Number. The issuing authority has duly stamped and signed the document.

• Factory Registration Certificate in the entity’s name.

• SEBI Registration Certificate in the entity’s name.

• Municipal Corporation certificate of enlistment/license/shop allocation letter (Kolkatta, Ludhiana and others).

• E-Seva Kendra’s Shops and Establishment Certificate (Andhra Pradesh). Only receipts provided by the Municipal Corporation of Hyderabad (MCH) will be accepted in conjunction with the Shops and Establishment Certificate.

• Municipal Corporations in West Bengal offer Shops and Establishment Certificates that are valid till March 31 of each year.

Evidence of a Second Sole Proprietorship (Any one of the following documents)

• Firm registration with Employee Provident Fund Organization.

• Firm registration with the Employee State Insurance Corporation.

• A letter or certificate (on letterhead and no older than three months) verifying the existence of the business issued by the Chairman/ President/ CEO/ Head of the Nagar Panchayat/ Parishad, rather than local councillors/ corporators.

• Prepare a sales tax return in the firm’s name, fully acknowledged. The receiving authority shall recognize the component of the sales tax return that shows the firm’s name.

• The firm’s last available Income/Wealth Tax Assessment order.

• The most recent copy of the Energy Bill, no older than three months.

• A copy of the most recent telephone bill from the telecom provider, no older than three months.

• A certificate issued by the Municipal Corporation/Local Self Government Authorities proving the firm’s address.

• A accurate copy of the entity’s gas connection book, as well as the most recent gas receipt, no more than three months old, or a gas bill in the event of a pipe connection.

• A water tax bill paid to a municipal body/corporation that is no more than 6 months old, coupled with a tax receipt, should be in the name of the enterprise.

• Property tax bills should be no more than one year old from the day they were issued, coupled with tax receipts for property tax paid to Municipal Bodies / Corporations. The tax receipt should be in the name of the company.

• Weight and Measurement Act Certificate of Verification-This document will not be regarded if a Registration Certificate issued under the same act is used as the first entity proof document.

Evidence of Sole Proprietorship (Any one of the following)

• Passport

• Voter Identity Card

• Driving License

• Aadhaar card provided by Unique Identification Authority of India (UIDAI)

• Senior Citizen Card issued by State/Central Government

• Fisherman Identity Card issued by State/Central Government

• Weapons License

Address Evidence for a Sole Proprietor (Any one of the following)

• Passport

• Voter Identity Card

• Driving License

• Aadhaar card issued by Unique Identification Authority of India (UIDAI)

• Senior Citizen Card issued by State/Central Government

• Fisherman Identity Card issued by State/Central Government

• Arms License

• Utility bills (Electricity bill, Telephone bill) not older than 3 months

• Water tax bill with receipt not older than 6 months

• Registered Lease & Licence Agreement with utility bill not older than 3 months in the landlord’s name • Consumer gas connection card/Passbook with receipt of gas supply not older than 3 months

HUF PAN Card

• Karta’s PAN Card

• Karta’s document

• HUF Declaration

• In savings accounts, Karta’s document is regarded as address evidence

• In current accounts, KYC in the name of the HUF is needed as address proof

Other Entity Documents

• <a href="https://setupfilings.com/learn/partners-responsibilities-and-rights-in-a-partnership-firm/" title="Partners’ Responsibilities and Rights in a Partnership Firm“>Partnership Deeds

Partnership Firm Declaration

• Entity PAN card copy

• Address Proof in the Entity’s Name

• Copies of the Partners / Authorised Signatories / Beneficial Owners (Including Latest Photograph and PAN card copy)

LLP agreements from commencement

Certificate of Incorporation

LLP Firm Declaration

• Latest list of designated partners

PAN card copy of the entity

• Address Proof in the name of the Entity

• Copy of the Partners / Designated Partners / Authorised Signatories / Beneficial Owners (Including Latest Photograph and Pan card copy)

• Memorandum of Association (MOA) & Articles of Association (AOA)

• Certificate of Incorporation

• Board Resolution

• Latest List of Directors

• PAN card copy

• Address Proof in the Entity’s Name

• Copy of the Directors / Authorized Signatories / Beneficial Owners (Including Latest Photograph and Pan card copy)

Visited 123 Times, 2 Visits today