What is the Minimum Capital Required to Register a Proprietorship Firm

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What is the Minimum Capital Required to Register a Proprietorship Firm

A proprietorship firm is the most basic form of business entity. It doesn’t have any separate legal identity; it’s quite easy to setup and it doesn’t require any minimum capital. In simple terms, you can start a proprietorship firm with zero capital. In this post, we are going to tell you how to start your proprietorship firm with zero capital.

Procedure of zero capital sole proprietorship registration

One thing that you should be glad about is this: there is no official process to register a sole proprietorship firm. Therefore, you can already exclude a lot of the legal costs involved with the process. All you need to do to register your sole proprietorship firm is to open a bank account in its name. To do so, follow the general process of opening a bank account and attach any two of the following document:

1. Certificate under Shops and Establishments Act: The requirement varies depending upon the state you want your sole proprietorship in.
2. Sales and Income tax returns documents: Documents related to sales you’ve done (a bill) and the income tax returns you’ve filed in the last 5 years.
3. GST certificate: By registering for GST, you register your sole proprietorship. So go through the GST registration process on your leisure.
4. Utility Bills as address proof: Any bill is applicable. However, it should be no less than 3 months older than the date of opening your sole proprietorship account.
5. Documents depending upon the type of business you have or want to start:
   • If you are running a CA firm, a Certificate of practice issued by Institute of Chartered Accountants of India.
   • If you are running an import and export business, a copy of the IEC code will be issued to you.

The capital requirements for sole proprietorship registration are nil. And, the cost of starting a bank account under the name of your sole proprietorship is nominal. Just attach any of the two above with the application for opening the bank account and you are good to go.

Conclusion

The minimum capital requirements for sole proprietorships are none. However, you’ll have to pay a nominal fee to open a bank account in its name. That’s it. That’s all it takes to start your own business without much effort, and with zero money.

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