A step by step guide on registering sole proprietorships in Pakistan
A sole proprietorship (also known as a sole trader) is a business run by an individual. There is no separate legal entity; the owner takes all of the profits and / or losses of the business. The owner also has all the control and all the liability and debts from the business. The owner is the final decision maker and has no interference. The business taxes are paid by the owner through his or her personal income tax return. Sole traders can benefit from lower tax rates. The obvious disadvantage of this business structure is that there is unlimited liability of the owner and in case of lawsuits and other debts, the owner is personally held liable. A sole proprietorship is different from partnerships and limited companies. A basic sole proprietorship is also different from a Single Member Company (SMC) which is a limited liability company with one owner. Not sure about which business structure to choose? Read our Guide.
In order to register a basic sole proprietorship all you need to do is:
- Think of an unique name for your business
- Make a letterhead, stamp, and business card with business name, logo, phone number and physical office address on it.
- You can then visit FBR website and create a free account on IRIS from where you will be issued a National Tax Number (NTN). Please note you will require a rent agreement of your office or house. You will additionally require an electricity bill.
- Take your cnic, letterhead, business card, NTN copy, and a stamp with your new business name to any bank of your choice.
- They will open a bank account for you in the name of your business and give you confirmation with account details (account maintenance / welcome letter).
- Congratulations! You are now a registered sole proprietor.
- Now you can apply for GST Number, Chamber of Commerce, PEC, PSEB or WEBOC if required.
- Note there is no official certificate issued by any authority in case of a sole proprietorship. You will only receive a NTN certificate with your name & details on it.
Documents required:
- Full name and color CNIC copy of sole proprietor.
- Nature and scope of business.
- Business letterhead and stamp.
- Electricity bill of business premises.
- Rent agreement of office or residence (we recommend commercial area).
- Residential address of sole proprietor.
- Mobile number of applicant that is not registered before with FBR.
- Email address of applicant that is not registered before with FBR.
Source: lawyersofpakistan.com