What Are the Pros and Cons of Udyam Registration for a Freelancer, Proprietor, Self Employed, or Small Entity?
Before describing the pros and cons of Udyam registration, many newbie entrepreneurs still have questions about what Udyam Registration is! So, if you have the same confusion, let’s make it clear before coming to the point.
Udyam Registration (also known as MSME Registration) is a government registration process for small/medium businesses and enterprises. With this registration, a recognition certificate and a unique number are provided by the government to identify and regard the entity’s business as per government guidelines.
This scheme is launched by the government of India with the aim of providing maximum benefits to medium or small-scale businesses or industries who are registered via MSME through their Aadhar Card Number. There are compulsory guidelines for enterprises or entities whether they are a sole proprietor, LLP, or Private limited companies.
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Who All Can Register for Udyam?
The organizations which are in manufacturing or producing or processing or preserving the goods or offering the services are eligible for Udyam Registration. The distinct size of businesses is classified as medium, small, or micro-enterprise with set criteria for obtaining the MSME certification. As per the current notification, the following entity (manufacturing and service sector) are eligible for Udyam registration.
- Micro Enterprises for the Investment up to Rs 1 Cr and turnover up to Rs 5 Cr
- Small Enterprises for the Investment up to Rs 10 Cr and turnover up to Rs 50 Cr
- Medium Enterprises for the Investment up to Rs 50 Cr and turnover up to Rs250 Cr
Udyam Registration (Sole Proprietor, an LLP, a Private Limited Company)
Pros: Sole proprietors, LLPs, or Private Ltd companies can avail of several benefits of Udyam registration.
- Avail of government tenders easily
- Get a loan on lower interest rates (Upto 1.5% lower than interest on regular loans)
- Get various kinds of tax rebates
- Obtain licenses, approvals, and registrations, regardless of the field of business.
- Take benefits of higher preference for license and certificates
- Avail business credit at lower interest rates
- Obtain tariff subsidies and tax and capital subsidies
- Get a patent done and set up an industry at a reduced cost
- Avail of many rebates and concessions.
Udyam registration (Small Entities, Business)
Pros: small entities and Business owners registered under MSME can avail of the following benefits under MSME law:
- Collateral Free Loans from Bank
- Easy Clearance of Pending Payments
- 50% discount on trademark and Patent Fees
- Some Concession on Electricity bill
- Get Tax exemptions under direct tax laws
- Avail of many rebates and concessions.
- Avail business credit at lower interest rates
- Reimbursement of ISO Certification charges
Udyam Registration (Freelancer)
Pros: Freelancers registered under MSME can avail of the following benefits:
- Get a loan at lower interest rates
- Get various kinds of tax rebates and exemptions
- Obtain licenses, approvals, and registrations easily
- Avail business credit at lower interest rates
- Avail of many rebates and concessions.
Cons: Freelancers who earn less than 5 lakhs may find their GST filing or taxes costly after registering under MSME law.
Udyam Registration (Self-Employed)
Pros: self-employed registered under MSME can avail of the following benefits:
- Get government tenders easily
- Avail of a loan on lower interest rates
- Get Tax exemptions under direct tax laws
- Obtain licenses, approvals, and registration
- Avail business credit at lower interest rates
- Avail of any rebates and concessions.
Cons: Self-employed registered under MSME may find their GST filing costly under the new MSME to be implemented from 1 April 2021.
How Can You Register for Udyam?
The process of Udyam Registration is quite easy and the process is also free of cost. So, you can go for Udyam registration without much consideration. Check out the simple guide for MSME registration.
Step 1: Visit the Official Udyam Website (https://udyamregistration.gov.in/) and click on the “For new Entrepreneurs who are not registered yet as MSME” option.
Step 2: Enter Your Personal Information – name and 12-digit unique Aadhar number. Click on “Validate & Generate OTP.” You will receive an OTP on your registered mobile number. Enter the OTP in the required field.
Step 3: Choose the type of organization, enter your PAN no and click on validate.
Step 4: Enter Correspondence Details like the postal address of the company/enterprise/entity, info about your company’s district, pin code, state, email address, and mobile number.
Step 5: Enter the bank account number along with the IFSC code of the concerned branch.
Step 6: Enter your business details such as the total number of employees and the National Industry Classification (NIC) Code for Activities.
Step 7: Choose the district industry center from the provided drop-down list, accept the declaration, and click on “Submit and Get final OTP”
Step 8: Enter the OTP received on mobile and click on the “Final Submit” button.
Soon you submit the application, and you will receive a registration number. And after verification of your information, you will receive an E-registration document in your e-mail.
Author Bio
What are regularity requirements (e.g. returns, tax filings, etc) after registering as Udyam under MSME scheme, for a proprietorship firm with annual turnover less than 20 lakhs. Will it be mandatory on proprietor to file GST return if annual income is less than 20 lakhs and source of income is consultancy/ITES services provided to overseas client to whom GST is not charged.
disadvanage of msme can they collect delayed payment intrest