How to open proprietary firm

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Raja (Querist)
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25 July 2015 I AM RUNNUNG A WEB PORTAL AND GIVING SERVICE TO BUSINESSES. I AM ALSO ACTING AS BROKER FOR BUYER AND SELLER FIRM.

NOW HOW TO OPEN PROPRIETARY FIRM ?

I.E. TO OPEN BANK CURRENT ACCOUNT IN MY DESIRED COMPANY NAME. I BELEIVE I HAVE TO APPLY FOR SERVICE TAX NUMBER.

WHAT IS PROCEDURE FOR APPLYING SERVICE TAX NUMBER IN MUMBAI AND HOW LONG IT TAKES TO GET NUMBER ? IS IT ONLINE FACILITY OR OFFLINE

WHAT IS MIN. BRACKET FOR CHARGING ST TO CLIENTS AS CURRENTLY I HAVE NIL INCOME. SO AFTER WHAT INCOME I SHOULD CHARGE ST.

CAN I TAKE BROKERAGE AMT IN MY PERSONAL CURRENT A/C AS WELL IF IT IS FROM FOREIGN CO. IN $ . WHAT IS RIGHT WAY TO RECEIVE SUCH PAYMENT

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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25 July 2015 u take registration once u reach 9 lakh as fees from ur service and once it crosses 10 lakhs then u need to pay service tax

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Raja

Raja (Querist)
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28 July 2015 But for opening business current A/C bank is asking for any kind of registration from govt. body ?? So they are not opening current a/c if i say I have nil income from business ?? So what to do ??

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Asha Kanta Sharma

Asha Kanta Sharma

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28 July 2024 ### How to Open a Proprietary Firm

**1. ** Establish Your Proprietary Firm

1. **Choose a Name:** Decide on a suitable name for your proprietary firm. This will be used for all business correspondence and legal documents.

2. **Obtain a PAN:** Apply for a Permanent Account Number (PAN) from the Income Tax Department. This is mandatory for all financial transactions.

3. **Register Your Business:** While there is no formal registration required for a proprietary firm, you may want to obtain a registration under the Shops and Establishment Act of your state for legal and administrative purposes.

4. **Obtain GST Registration:** If your annual turnover exceeds the threshold limit (currently ₹20 lakhs for most states), you need to obtain GST registration. For service providers, the threshold is ₹10 lakhs.

5. **Open a Business Bank Account:** You will need a PAN and proof of address for opening a current account in your firm’s name. The bank may also require a certificate from the Shops and Establishment Department or similar documents to verify your business.

**2. ** Apply for Service Tax Number

As of July 1, 2017, Service Tax has been replaced by GST. Therefore, you should apply for GST registration instead of Service Tax.

1. **Online Application:**
- **Visit the GST Portal:** Go to the [GST Portal](https://www.gst.gov.in/).
- **Register:** Click on the “Services” tab and select “Registration” and then “New Registration.”
- **Fill the Form:** Enter the required details about your business.
- **Submit Documents:** Upload documents such as PAN, proof of business address, identity proof, and bank details.
- **Verification:** After submission, you will receive an ARN (Application Reference Number) and an email/SMS notification. The GSTIN will be issued after verification.

2. **Timeline:** GST registration is usually processed within 3-7 working days, depending on the completeness and accuracy of your application.

**3. ** Service Tax (Under GST)

Since Service Tax is now replaced by GST, you need to follow GST guidelines:

1. **Threshold Limit for GST Registration:**
- For most service providers, the threshold limit is ₹20 lakhs (₹10 lakhs for special category states). Below this, registration is optional but recommended.

2. **Charging GST:**
- For services, the GST rate is generally 18%. You must charge this on your invoice once you are registered under GST.

**4. ** Receiving Brokerage Payments

1. **Bank Account:**
- It is advisable to receive all business-related payments, including brokerage, into a business account rather than a personal account. This ensures clarity in financial transactions and helps maintain proper accounting records.

2. **Foreign Payments:**
- If you receive payments in foreign currency, it should be deposited into your business account. You might need to handle these transactions according to the regulations under FEMA (Foreign Exchange Management Act).

**5. ** Opening a Business Current Account

1. **Requirements:**
- **PAN Card:** For both the individual and the firm.
- **Proof of Business:** Registration documents or a certificate from the Shops and Establishment Act.
- **Address Proof:** For the firm’s office address.
- **KYC Documents:** For the proprietor.

2. **Bank Requirements:**
- Banks typically require a minimum level of documentation to open a business account. Even if you have no income, you should still be able to open a current account by providing the necessary documentation. If the bank is unwilling, consider approaching another bank or a financial institution.

### Summary:

1. **For opening a proprietary firm:** Obtain PAN, register under GST (if applicable), and open a business current account.
2. **Service Tax is now replaced by GST:** Follow GST registration and charging guidelines.
3. **Receive payments:** Preferably through a business account, especially for foreign transactions.
4. **Bank requirements:** Provide PAN, proof of business, and address proof. If issues arise with banks, try different banks or consult a financial advisor.

If you have specific issues with banks or registration processes, consulting a local CA or financial advisor might be beneficial.