How can a Sole Proprietorship firm apply for MSME Registration?

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Sole proprietorship is the most widespread form of business structure in the world and is often regarded as the oldest legal way of doing business in India. Proprietors act as single owner of their businesses and have absolute control over their profits and business operations. The registration process is the most simple one with minimal formalities and compliance procedures when compared to LLPs and Companies.

A sole proprietor can register itself to MSME to establish its legality and to avail the benefits of the various schemes introduced by the Ministry. Udyam Registration is a re-classified version of the Udyog Aadhaar Memorandum which earlier was known as Udyog Aadhaar registration. Registering to MSME will provide proprietors several benefits, such as being able to receive loans at low rates of interest, receiving funding from the government, and many other benefits that help companies in various ways. In this article we’ll discuss the various procedures concerned with registration, documents and eligibility.

What is MSME?

MSME (Micro, Small, and Medium Enterprise) term was introduced by the Government of India in agreement with the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006. The Indian government offers a myriad of benefits to MSMEs, so they can function seamlessly in the Indian as well as global market. It was initiated and is managed under the Ministry of MSME (MoMSME). MSME are entities engaged in the production, manufacturing, processing, or preservation of goods and commodities. They are further classified on the basis of investment and annual turnover as follows.

These enterprises are considered the backbone of our Indian economy and contribute nearly 27% of the country’s GDP. In this article, we’ll discuss the best MSME business ideas which can be sustainable in this new era.

Note:

With effect from 1st July 2020, MSME Registration / Udyog Aadhar has been replaced by a new system known as Udyam Registration. Even if you have already obtained MSME Registration / Udyog Aadhar before 1st July 2020, they are no longer valid. Companies that are already registered for a Udyog Aadhar can no longer avail of the benefits without migration/registering to Udyam Registration.

Documents Required for MSME Registration

- PAN Card, Aadhar Card

- Business Address Proof

- Copies of the Sale Bill and Purchase Bill

- Partnership Deed / MoA and AoA

- Copy of Licenses and Bills of Machinery Purchased

Registration Procedure

Any enterprise that qualifies under the definition of MSME can obtain Udaym Registration under the MSME Act on the Udyam Registration portal, based on self-declaration with no requirement to upload documents, papers, certificates or proof.

 Upon registration, an enterprise will be assigned a permanent identity number to be known as “‘Udyam Registration Number”. An e-certificate, namely, “Udyam Registration Certificate” shall be issued on completion of the registration process. It has lifetime validity unless canceled.

Follow the below steps for registration:-

Step 1: Visit the Government MSME portal - udyamregistration.gov.in

Step2: Fill out the MSME registration form online with all required details by visiting udyamregistration.gov.in

Step 3: Submit the application form along with documents, you shall receive a registration number

Step 4: After successful submission of the application, the authority will register the applicant’s business as MSME within a few working days

Step 5: MSME registration certificate shall be delivered by email or to the applicant's registered address.

Benefits of getting Udyam Registration  

However, registration for MSME is not mandatory, but if you choose to register, then there are many benefits that can be enjoyed by MSME firms after obtaining registration. Some of the benefits are listed below:

➤ A lot of government schemes can be availed by MSMEs such as unsecured MSME loans, easy loans, micro business loans, subsidized rates, etc.

➤ Registered businesses with an MSME certificate will benefit and can avail of concessions as well from various government departments, including electricity.

➤ Exemption on excise and indirect taxes is provided.

➤ Avail tax rebates customized for MSMEs credit for Minimum Alternate Tax (MAT) and other special schemes from banks custom-made for MSMEs.

➤ ISO Certification Reimbursement

➤ Avail special rebates and concessions on patents and industry set-ups

➤ Get credit guarantee schemes and financial support from the government

➤ Special consideration on International Trade fairs

Suggested Read: Top 10 Profitable MSME Business Ideas With Low Investment In 2022

Conclusion

MSMEs are widely regarded as a source of economic growth and a way of achieving more equitable development. They are recognized for having the highest rate of economic growth. MSMEs have propelled India to new heights due to their low investment requirements, flexibility in operations, and ability to develop suitable native technology.

Applying for Udyam Registration is a simple and easy process for sole proprietors. However, it is not compulsory to get an MSME registration, but it enhances the chances of the business to get future loans and an upper hand in various other legal matters. Several schemes are also being run by the government to benefit SMEs where loans are granted to them at low-interest rates.