Who is a sole proprietor? The image above defines in shortest possible words. How to opening Sole Proprietor account? Are there any restraints on opening of a bank account for a such customers? What would he need for opening of account? Let us try to answer it.
Opening Sole Proprietorship Account and Required Documents
Following documents are usually required for opening of such accounts:
- Copy of the applicable valid identity document;
- Any one of the following documents:
- Registration certificate for registered concerns
- Sales tax registration or NTN certificate, wherever applicable
- Certificate or proof of membership of trade bodies etc., wherever applicable
- Declaration of sole proprietorship on business letterhead
- Account opening requisition on business letterhead
What is the Difference Between Required Documents for Opening of Sole Proprietorship Account and Opening of Small businesses and professions including freelance professionals:
- Copy of the applicable valid identity document of the account holder(s)
- Any one of the following documents: a. Registration certificate for registered concerns. b) Sales tax registration or NTN certificate, wherever applicable. c. Certificate or proof of membership of trade bodies etc., wherever applicable. d. Proof of source of funds/ income.
If we notice the underlined words in above paragraph, source of income. There must be economic sense. Some documentary evidence to link your income to your source. This remains pivotal and most relevant for opening of any account in financial institution like banks. This would also have a universal stigma if it is. Bankers are obsessed with the source of income. And they have to. Banking industry won’t survive without being too careful and cautious in this regard.
Why do Banks Treat Sole Proprietorship as a Higher Risk Customers?
Banks usually consider Sole Proprietor customers as more prone to risk. This relates, primarily, to their mode of business. Either they make the best choices or the worst. No one is there to question. So, they may grow real big. They may lose it all. Documentary evidence of their business/ trade/ income is less.
References:
SBP Guidelines on Account Opening – Minimum set of Documents