Common mistakes to avoid during Udyam registration

Introduction

The Udyam Registration launched by the Government of India is very important for MSMEs regarding recognition and benefits. However, the process and requirements entail so much formality that it creates a common mistake among entrepreneurs and business owners who will be affected by delays or non-compliance in registering their business. This article is on the most basic tips for streamlining Udyam Registration, averting pitfalls, and maintaining compliance.

1. Not Knowing the Eligibility Criteria for Udyam Registration

The only thing that business people have to do is ensure whether the business entity that has been incorporated is an MSME or not. The registration process of Udyam registration is usually done with an unawareness that the Udyam Registration would only provide services to a business when it complies with the investment of plant and machinery and its turnover in terms of a few parameters.

• Micro enterprises: Investment ≤ ₹1 crore and turnover ≤ ₹5 crore

• Small enterprises: Investment ≤ ₹10 crore and turnover ≤ ₹50 crore

• Medium enterprises: Investment ≤ ₹50 crore and turnover ≤ ₹250 crore

Compliance Tip: Check your business data against these conditions to steer clear of any problems at the time of getting yourself registered under Udyam Registration.

2. Deficient or Incomplete Filing

The most common error is the submission of incomplete or incorrect information, documents and other details related to the business. An error in detail on the documents results in delay or even rejection.

• Aadhaar Number: Proprietor, Managing Partner, and Director.

• PAN and GSTIN: Business and LLP. Individuals don't necessarily need to procure one at this moment but are suggested in the future to adhere strictly to the compliance

• Bank Account: The bank account, that is, is critical in case of the business

Compliance Tip: Read each document word by word, and there shouldn't be any spelling of a name, address, or DLT/IDT Nos

3. Failing to Use the Correct Name and Address

The business name and address should match the one given on the PAN card of the business and other business registration documents. A spelling mistake, abbreviation, or any other type of variation can result in a non-matching and a delay in the process

Compliance Tip: Use the same spelling and format for names and addresses as provided in official documents issued by government departments. This is the most apparent step to avoid an administrative issue at verification

4. Not registering every separate branch or different business unit

For MSME units having more branches or diversified entities, it is very important to get registration of each one separately under Udyam. Every branch should get Udyam Registration if they are working independently and satisfying the criteria of MSME.

Compliance Tip: Maintain records of all business entities separately. Decide whether each of them has the potential to be separately registered under Udyam. If not registered individually, the benefits of not being registered will be lost.

5. Wrong Category of Business

Selecting the right category-Manufacturing or Services- is one of the major determinants in Udyam Registration. It determines your eligibility and benefits, schemes that can be availed of, and the wrong classification can deny you the appropriate support.

Compliance Tip: You can check your category with the guidelines of Udyam Registration based on the principal business activity. A fair understanding of the difference might save you from potential compliance pitfalls.

6. Miscalculating Investment and Turnover Figures

Udyam Registration requires an MSME to provide their investment and turnover details without any error. Misreporting the same, even if it is a clerical mistake or willful can result in penalty and cancellation.

Compliance Tip: Calculate investment and turnover through official accounting data. Overreporting or underreporting figures may raise compliance problems in the future, and hence accuracy is very crucial.

7. Failure in Periodic Updations and Compliance Check-Ups

Most businesses forget to update from time to time if their investment, turnover, or other qualifying numbers change after Udyam Registration. In case these are not updated, then the Udyam Registration gets canceled, or MSME benefits will be denied.

Compliance Tip: Review the registration status of your business at least once a year and update the changes in your investment or turnover figures right away to maintain compliance.

8. Multiple Applications or Duplicate Registrations

Some entrepreneurs end up registering more than once, especially after changing the nature of their business or simply making some mistakes during the process of registration. Duplicate registration complicates your records, besides causing unnecessary costs.

Compliance Tip: If you wish to file a new application, ensure that there was some other application made before. Aside from that, keep an extra copy of your details of registration. That way you don't risk repeating by accident.

9. Not taking the benefits of Udyam Registration after making the registration.

After registration, most entrepreneurs are not aware of the facilities Udyam Registration offers for the business owner, such as subsidies, loans at reduced interest rates, and protection against delayed payments. Not using any of these facilities is just not making the best out of being an MSME.

Compliance Tip: Learn about the MSME schemes and incentives after you have registered. Look regularly on government portals and the MSME website about new benefits and schemes offered.

10. Not Seeking Professional Help When Needed

Most small business owners and entrepreneurs face major challenges when filling out the Udyam Registration. Many have misinterpreted the requirements, or missed out on very important steps in the registration process, resulting in incorrect registration and potential non-compliance.

Compliance Tip: If you are still unsure about the registration process or compliance requirements, then seek professional help. The Udyam registration service providers can give you professional guidance to ensure that the registration is completed correctly and on time.