If you are starting a new business then it is essential for you to know the importance of a business registration proof. A business registration proof not only depicts that your business is legally registered but also helps you to establish authenticity in the eyes of the clients, suppliers, and stakeholders.
However, there are various types of business registration proof that the company or an entity can obtain depending upon the nature of its business and commercial operations.
What is a Business Registration Proof?
A business registration proof is a certificate that serves as evidence of a company’s formal registration. It often includes details such as company name, registration number, date of registration, and other relevant information. Having a business registration proof is essential for various purposes, such as entering into legal contracts, and obtaining business loans and other credit facilities.
Why is Business Registration Proof Important while applying for a Business Loan?
While applying for a business loan through a formal lender, be it a traditional bank or an NBFC, a thorough evaluation of both the business owner and the business is conducted. This assessment serves the purpose of gauging the potential risk associated with lending to the business owner and knowing the capability to manage day-to-day monthly business expenses while meeting the monthly EMI obligations.
Having a proof of business registration certificate serves the following purposes-
- Presenting the business registration proof signifies to the lender that you are a responsible entrepreneur who conducts business operations in compliance with the law.
- The lender utilises these documents to verify your financial and tax history. This verification ensures that you adhere to timely tax payments and follow appropriate tax guidelines concerning your employees and customers.
- By reviewing these documents, the lender can establish your business vintage, indicating how long your business has been registered and operational. Generally, a longer registration period enhances the creditworthiness of your business in the eyes of the lender.
- The lender relies on these documents to cross-verify essential information about your business. This includes details such as your company’s name, business constitution, address, and other pertinent information important for an informed decision.
Different Types of Business Registration Proof
The different types of Business Registration Proof based on the nature of the company and operation are:
1. GST Registration/Provisional Certificate
Businesses with an annual turnover exceeding INR 40 Lakhs (for Goods) are mandated to obtain a GST (Goods and Services Tax) registration. In the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, and Uttarakhand, the threshold limit for exemption from GST registration is an annual aggregate turnover of INR 20 lakhs.
Similarly, businesses engaged in the services sector must obtain a GST registration if their annual turnover is over INR 20 lakhs. In the northeastern states of Manipur, Mizoram, Nagaland and Tripura, the threshold limit for registration is INR 10 lakhs for services.
The GST registration certificate acts as evidence that the business is officially registered with GST authorities. The registered business owner is obliged to file monthly/quarterly GST returns and pay tax at the required rates.
2. IEC (Import Export Certificate)
The 10-digit IEC code is essential for businesses engaged in import or export. The IEC certificate functions as proof of registration with the DGFT (Director-General of Foreign Trade).
3. Sales Tax/Service Tax/Professional Tax Authorities Certificate/Registration Document
State government authorities issue these certificates to businesses liable for sales tax, service tax, or professional tax. They validate the business’s registration with the respective tax authorities.
4. Certificate/License issued under the Shop and Establishment Act by Municipal Authorities
A registration certificate or license issued by Municipal Authorities under the Shop and Establishment Act confirms the business’s registration, and regulated working conditions in shops, commercial establishments, and similar businesses.
5. Sales and Income Tax Returns
Serving as proof of filed returns with the relevant authorities, these documents validate the business’s compliance with sales and income tax regulations and act as proof of business registration.
6. Labour Department Registration Certificate
Businesses registered with the state’s labour department receive this certificate, demonstrating compliance with labour laws.
7. Agricultural Board Trade License
Mandatory for businesses dealing with agricultural products, this license serves as proof of registration with the Agricultural Board.
8. Food and Drugs Control Certificate/Drugs License/Registration Certificate (Medical Council of India):
These certificates serve as proof of compliance with laws and regulations regarding food and drugs.
9. Factory License
Compulsory for businesses involved in manufacturing, the factory license provides evidence of registration with the Factory Inspectorate.
10. Central/State Govt. Contractor License
Necessary for businesses bidding for government contracts, these licenses verify registration with relevant authorities.
11. SEBI Registration Certificate
Essential for businesses operating as stockbrokers or investment advisors, this certificate acts as proof of registration with SEBI (Securities and Exchange Board of India).
12. Municipal Corporation/Mahanagar Palika/Nagar Panchayat/Gram Panchayat Registration Certificate:
These certificates validate registration with local municipal authorities.
13. Utility Bills (electricity/water/telephone/internet/piped gas) in the Name of the Proprietorship Firm:
These bills act as an address proof and provide evidence that the business operates at a specific address.
14. Udyam Certificate or MSME registration certificate
Udyam registration certificate or MSME registration certificate is an identification of an entity as a Micro, Small, and Medium Enterprise (MSME). There are no documents required to be uploaded to register as an MSME through the UDYAM portal.
15. FSSAI License
Every food establishment is required to adhere to FSSAI standards and obtain an FSSAI License certificate. This certificate serves as both evidence and authorisation for any establishment involved in food-related activities to function as a legal manufacturer and distributor of cooked and processed foods intended for commercial sale to the public. The license functions as a clear validation that a startup or sole proprietorship is a legitimate business engaged in the sale of food and culinary items.
Documents required to establish proof of business
To establish proof of business, various commonly used and accepted legal documents can be provided to the lender. Depending on the GST registration status, the following documents can be provided:
For businesses with GST registration
For businesses with a GST registration certificate, a copy of the GST certificate is required.
For businesses without GST registration
The following documents may be sought by the lender from a business depending upon the nature of the business and the sector they function in (please note the list is not exhaustive):
1. Shop and Establishment Certificate
2. Renewed Industry Trade Licenses, including but not limited to FSSAI license, factory license, drug license, etc., issued by municipal, state, or central authorities.
3. Importer – Exporter Code (IEC)
4. Udhyam (MSME) Certificate, which is also accepted if you possess a Current Account. If opting for this document, proof of the opening date of your Current Account must also be submitted.
Conclusion
In summary, business registration proof is an important document providing substantial evidence of a business’s legal standings and qualifications for government initiatives and services. It is therefore important for businesses to have these documents and keep them updated to ensure uninterrupted flow of operations.
Frequently Asked Questions
Q1: What are the documents required for sole proprietorship registration in India
The essential documents required for registration of a sole proprietorship firm are-
- Aadhar Card
- PAN Card
- Registered office address proof
- Bank account statement
Q2: What are the required documents for company registration in India
The following documents are required during the registration process:
- Address Proof ( Driving License / Passport / Voter ID / Aadhaar Card/ utility bills)
- Registered office proof (electricity bill or any other utility bill)
- Company’s bank statement
Q3: Is the company PAN Card necessary for doing business in India?
Yes, the company’s Permanent Account Number or PAN Card is necessary for any Indian or Foreign company to do business in India.
Q4: What are the different types of companies in India?
According to the Companies Act, 2013 there are 7 companies with separate legal existence recognised under the Indian Law. These are different types of companies are:
Private limited company, Public Limited Company, Sole Proprietorship Firm, One Person Company, Partnership, Limited Liability Partnership, Section 8 Company (NGO).
Q5: How to check if a company is registered with the Ministry of Corporate Affairs?
You can check if a company is registered with the Ministry of Corporate Affairs (MCA) by following 3 easy steps:
- Visit the MCA website
- Click on the “MCA Services” tab and select “View Company/Directors under prosecution” under the Master Data dropdown menu
- Enter the CIN of the company.
- Enter the captcha code and select “submit”.
