The single window system is trying to help entrepreneurs/business owners get started as quickly as possible, without going through the hectic bureaucratic processes.
This sole prop Udyam registration will save time and cost zero rupees to register/maintain, and just one week to get the certificate. It will allow you to run a business with a distinct name instead of your name, although you and your business are treated as the same person hence, your PAN card is used for registration.
Only one business (Udyam) can be registered per person. The official website is Udyam Registration. This is where you’ll register to get your Udyam certificate which can be used at different places.
At the time of writing, all types of businesses can register for the Udyam certificate including Services, manufacturing, or trading.
What is a sole proprietorship?
A sole proprietorship is a business owned and operated by an individual. The sole proprietor is responsible for all aspects of the business, including profits and losses. When you get it registered, it is called a “firm” not a company. The firm is not a separate entity and you have unlimited liability. You and your business are treated as one entity.
It is one of the easiest ways to register a business if you’re starting out and is FREE.
Significant benefits it provides: –
- You get a certificate of registration, which can be used while registering for payment gateways, like Stripe, Razorpay, etc. They will offer you a business account rather than a personal one.
- In most places, Sole prop/Doing Business As (DBA) is treated as a business. So you can get a business account everywhere you go. This certificate will allow you to register as a business on Paypal.
- A distinct business name, you can name your business anything. However, the name will not have any legal protection as it is not a company.
- More benefits are outlined here – link.
Who is it for?
- People who are starting a new business for the first time. And don’t know about compliances.
- People who already provide services but want to expand further and establish it as a proper business.
- Freelancers who wish to sell products/services, inland or overseas.
- For software product owners, the certificate allows you to get a business account on Stripe which helps you to sell your software products worldwide.
Who is it NOT for?
- Entrepreneurs who are looking to raise funds, and or want a company rather than a firm. Go for LLP, OPC, or Private Limited registration instead.
- This is great for starting but if you’re already doing 40L revenue then other forms of entity will suit you. The good thing is this can be converted to an LLP (limited liability partnership) or Company.
- People who want to issue shares, or have partners in your business.
- As sole prop is on a self-declaration basis, a few types of business ventures may require you to have a company.
Requirements for registration: –
- Your Aadhaar card and PAN card, linked to your mobile number and email ID, are used for verification.
- Must be 18 years of age. If you’re not then use your parents’ details, but only one Udyam registration per person.
- A business address; home address will work fine, just get a written Non-objection certificate (NOC) from your landlord if on rent. You don’t need to submit it anywhere but get it if you’re registering. If you own the property or your parents then there’s no need. Make sure your parents allow it.
- GST number if you lie under the tax slab i.e. 20 Lakhs/year for service businesses and 40 Lakhs/year for manufacturing businesses. Otherwise no need. Do check on the government site as it varies for different states.
- Visit the official government site – https://udyamregistration.gov.in
- Make sure you read the details on the site, as it is updated with the latest details. All the important information is mentioned in PDFs on the site.
- Have the details ready to fill out the form. These details need to be mentioned:
- Here is a sample form – link
- Aadhaar number & your name (entrepreneur)
- PAN and type of organization, choose sole proprietorship.
- GST, if you don’t lie under the slab choose “exempt”.
- Mobile number and email.
- The name of the enterprise is what your firm will be called. This will be mentioned on the certificate.
- The unit and plant are where you put your address (business). The same for the official address.
- Bank details and National industrial classification code. (NIC). This tells us about the services/products your firm offers, make sure you choose all the closely related activities. You can choose as many as you want.
- If you’ve employed people in your business fill in their details as well.
- Make sure you re-check all the details before submitting.
Here’s a short video (in Hindi) demonstrating how to fill out the form. It may be a little outdated but it is still helpful.
After one week your certificate will be available to download and print. You can visit the site after one week enter your Udyam ID then download and print it. You can keep the digital copy as it can be used online.
Important: At the end of a financial year, you just need to update your yearly profits/income generated by the business and report it to the government on the same portal. You’ll receive an email for the same. If you don’t, the registration will become invalid.
This certificate will be valid as proof of your business. Follow me on Twitter if you need any help. Make sure you google the relevant information if you get stuck while registering.
Read more business articles here.