A sole proprietorship is the simplest business structure, owned and operated by one person, which can be set up simply by obtaining a trade license in Bangladesh from the local government authorities, including City Corporations, Municipalities, or Union Parishads 

Whether you are a sole proprietor, a partnership firm, a limited company, or other business structures obtaining a trade license is a mandatory legal requirement for any business operating in Bangladesh and serves as official authorization to conduct business activities within a designated area.

In terms of formalities and compliance requirements, it imposes the minimum obligations. 

If you are considering setting up other business structures, explore these guides below for more details:

• partnership firm
• one person company
• joint venture
• All Foreign business options.
• Non profit company 

Key Features of Sole Proprietorship

• Personal Control: The owner maintains complete control over business operations and decision-making. 
• Simple Registration Process: Registration can be done through Trade License from City Corporation/Municipality/Union Parishad. 
• Low Capital Requirement: No minimum capital requirement is made mandatory under law, which turns out to be advantageous for small entrepreneurs and startups in Bangladesh. 
• Unlimited liability: The owner is personally responsible for the business’s debts and liabilities.  
• Name Registration: Business name must be registered with the local authority.
• No separate legal entity: A sole proprietorship business has no separate legal entity from that of its owners. In the eyes of law, there is no distinction between the owner and his business. 
• Tax Obligations: Business income is deemed as personal income under Bangladesh’s tax laws, where the owner must pay taxes as personal tax. 
• No profit or loss sharing: There is no sharing of profit or loss because the business is solely run by a single individual. 

Where to Apply?

Trade license in Bangladesh are issued based on the business location by the following authorities:

• City Corporation – For businesses located in metropolitan areas.
• Municipality – For businesses operating in smaller towns.
• Union Parishad – For businesses situated in rural areas.
  

Each authority has its own application process and fee structure, which may vary slightly based on location and business type. For example, if you reside in Dhaka you need to go to DCC [Dhaka City Corporation – South and North] in order for you to obtain a Trade License. You should have the following documents with the application:

How to Get Your Trade License :

To obtain a trade license for your business, you’ll need the following:

• Application Form: Assuming you’re residing under Dhaka City Corporation North, the trade license form can be downloaded here. Nonetheless, the standard form is provided by the local government. 
• National ID: A photocopy of your national ID, certified by a First Class gazetted officer.
• Property Documents: Either a proof of property ownership or rental agreement.
• Holding Tax Receipt: Proof that your holding tax (property taxes) are paid.
• Passport Photos: Three recent passport-sized photos, certified by a First Class gazetted officer.
• Legal Declaration: A statement on a non-judicial stamp, agreeing to follow local regulations. (Required for all, and also for press/newspaper businesses).
• Company Documents (if applicable):
  • Certified copy of the Certificate of Incorporation along with the Memorandum and Articles of Association (for Limited Companies)
  • Partnership Agreement (for Partnerships): A certified copy.
  • A certified copy of the Work permit from the Board of Investment (for foreign investors/employees).
• Bank Solvency Statement: A document from your bank confirming your financial standing may also be required.
• TIN Certificate (if applicable): A certified copy of your Tax Identification Number certificate.

Additional documents may be required:

1. For Industries/Factory: Everything mentioned above along with: 

• No objection declaration on the surrounding [from minimum of two of your neighbours stating that they have no objection if you set-up your office or business in such area;
• Location Map;
• Copy of Fire Certificate;
• Declaration on non-judicial stamp to abide by the rules & regulation of DCC,

2. In addition, if you set-up a factory/CNG station/a business related explosive chemical you must obtain a no encumbrance certificate from the fire service and the Environmental bureau;

3. Clinic/Private Hospital : permission from the Director General of Health;

4. Printing Press & Residential Hotel: Permission from Deputy Commissioner (DC);

5. Recruiting Agency : License from Manpower Man-power export Bureau;

6. Arms and Ammunition : Copy of Arms License;

7. Drug and Narcotics : Copy of Drug/Narcotics License;

8. Travailing Agency : Approval from civil aviation authority.

How to Get Your License:

1. Get the Form: First get the application form from your local City Corporation, Municipality, or Union Parishad office.
2. Submit Your Application: Fill in the Form and submit all the required documents.
3. Inspection: Once all the documents are submitted, the authority, if necessary, conducts an inspection of your business location.
4. Pay the Fees and Collect Your License: upon receiving necessary FEES [Check the fee schedule from the respective authority], the office will issue a new Trade License.

License Fees:

• The license fee ranges from BDT 100 to BDT 40,000, depending on your business type.
• For Limited Companies, the fee is based on your paid-up capital.
• An additional 30% of the License fee will be added as Signboard Tax for only the introductory signboard of any business, trade or calling.
• You can get the exact fee information from your local City Corporation, Municipality, or Union Parishad office.

Processing Time:

• The license should be issued within 3-4 working days.

How to Renew a Trade License in Banglaesh:

Each and every License has to be renewed every year. Obviously, the procedure for renewal is less formal i.e. you may not need to submit all the documents again. 

Contact concerned office along-with the previous Trade License;

• Concerned staff of the zonal taxation office will provide a new Trade License;
• Fees for Trade Licence renewal are the same as applicable for a new Trade Licence, which has to be deposited at any Bank indicated on the Trade License.
• An additional 30% of the License fee will be added as Signboard Tax for only the introductory signboard of any business, trade or calling.
• In any event if any license holder fails to renew the license within 30^th September of every financial year, such license holder will be bound to pay per month at 50 Taka per license or 5% of the Trade License fee (whichever is greater).

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