5 Basic KYC documents your business needs

(Last Updated On: May 12, 2022)

Looking to understand what basic KYC documents your business needs to produce when approaching a bank? Let’s find out.

Every business entity needs to comply with certain laws and regulations. KYC or ’Know Your Customer’ guidelines set by the Reserve Bank of India (RBI) make it compulsory for potential customers to submit a list of documents before they can start using a financial product – like a bank or payment gateway.

What is KYC document?

Know Your Customer (KYC) is a mandatory RBI process that was incorporated by the banks to prevent any kind of financial fraud.

This helps banks get to know their customers better and help manage risks and protect them from financial crimes like money laundering, identity theft, and terrorist financing.

Related read: 5 ways to identify fraud loan apps and avoid losses for small businesses

Why do businesses need KYC documents? 

  • Identify, locate, and authorise the customer
  • Comply with RBI’s Prevention of Money Laundering Act
  • Fulfil the bank’s internal risk management
  • Monitor transactions for regulatory and tax purposes

List of specific KYC documents may vary from bank to bank depending on the constitution of your business entity, which could be – 

  • Sole proprietorship
  • Partnership firm
  • Limited Liability Partnership
  • Private or Public Limited Company

Let’s take a look at a list of common requirements for individuals connected to the business:

5 KYC documents you need for your business

1. Proof of Identity

  • Valid passport
  • Election/Voter’s ID card
  • Permanent driving license
  • Photo ration card
  • Government employee ID card
  • Defence ID card
  • Photo PAN card

2. Proof of Address

  • Valid passport
  • Election/Voter’s ID card
  • Permanent driving license
  • Gas bill (pipeline connection only)
  • Latest electricity/water/phone bill (maximum 3 months old)
  • Property tax bill (maximum 3 months old)
  • Domicile certificate with address issued by a municipal corporation

In addition to one of these above documents, you will have to furnish your latest passport size photos. The number of copies will be specified by the bank you are looking to transact with.

Related read:  5 Important Tips for KYC Documents You Still Do Not Know

Some specific documents required based on business composition

Sole proprietorship

When an individual owns, manages, and controls the business, it is known as a sole proprietorship entity.

The individual and the business are considered a single entity. Therefore, there are very few regulatory requirements for an individual setup. Any one of the following documents for KYC will do for a business account.

  • GST registration certificate
  • Excise registration certificate
  • Value Added Tax (VAT) registration certificate
  • Turnover tax registration certificate
  • Professional tax registration certificate
  • Commercial tax registration certificate
  • Certificate/licence issued by the municipal authority under the Shops and Establishments Act (Gumastha License) or Municipal Trade/Tax bill
  • Small Scale Industries registration certificate / Entrepreneurs Memorandum (Part II)
  • Importer Exporter Code Number certificate.

Partnership Firm

When two or more people (up to a maximum of 20) agree to collectively run a business under a firm name, it is known as a partnership firm.

Although it is not very different from a sole proprietorship, the responsibilities, profits, or losses are shared on a pre-decided basis and also, explicitly stated in a partnership deed.

Individual documents remain the same as required for a sole proprietorship. The only additional document is a copy of the partnership deed, along with the registration certificate.

Limited Liability Partnership (LLP)

An LLP is a hybrid entity, with elements of a partnership firm and a corporation. Some or all partners may have limited liability towards the business or other partners. This requires:

  • An LLP agreement
  • A Certificate of Incorporation

Private or Public Limited Company

Two or more people can start a Private Limited Company, wherein the ownership is closely held amongst the directors.

However, a Public Limited Company requires a minimum of seven members to set up. The ownership of the business is open to the general public with the sale of stock options, which are traded via the stock exchange.

There are other differences with respect to regulations and operations.

However, for the purpose of a bank account, the list of documents is quite similar.

  • Certificate of Incorporation
  • Memorandum and Articles of Association
  • Board resolution to open and operate the bank account, and for activities as specified in the application form of the bank
  • The latest list of directors
  • A company search of the file at Company Registry
  • Certificate of Commencement of Business (for public limited companies).

The exact list of documents can vary from bank to bank, but it is best to go prepared with all the basics in place. You can then, get the exact requirements from the bank in question before initiating the banking process. 

How to resubmit KYC with Instamojo

At Instamojo, we like to keep the paperwork to a bare minimum. You don’t need to submit any papers if you want to collect payments under Rs.10,000 a month. If you wish to remove limits on your online store, all you have to do is submit your pan card, bank statement and a business certificate, and you’re done.

Related read: How to update KYC on Instamojo in 2021

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  1. Are banks in Africa like GTB, Eco Bank offer KYC certificate or it only India are authorised to do that ?

  2. Thankyou so much sharing such useful information. this article has helped me a lot in resolving my confusion on partnership. keep writing and sharing such articles.

  3. For partnership firm both partnership deed and registration certificate is required or just partnership deed will do?
    As its not necessary to register a partnership firm.

    1. Depends on who (bank/payment gateway) is requesting the KYC documents and what they need according to their compliance regulations. We request you to consult a legal advisor for this.

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