Sole Proprietorship Firm
Proprietorship Registration
One of the earliest and simplest business structures to establish in India is the sole proprietorship. One person owns, runs, and controls a proprietorship, which is a particular kind of business. Since proprietorship and proprietor are synonymous, starting one is fairly simple, and there aren’t many criteria for compliance.
A proprietorship cannot have additional partners or shareholders because the owner and the business are one and the same. Furthermore, the proprietor is not protected by restricted liability for commercial operations carried out in a sole proprietorship. Therefore, small enterprises with fewer than five employees are the ideal candidates for this sort of corporate structure.
A sole proprietorship is a straightforward and effective business structure that is perfect for one-person operations, and LegalMedia can help you register for one. You can begin registering your proprietorship firm online fast and easily with our professional advice and simplified procedure. Register for a sole proprietorship with us to begin realizing the possibilities of your business concepts.
Sole Proprietorship Registration in India
Since there isn’t a specific government-established registration procedure for sole proprietorships, the registration process for these company structures in India takes a different approach. Rather, an online proprietorship firm registration is recognized by the tax registrations required by applicable laws and regulations. The GST (Goods and Services Tax) Registration is a crucial tax registration that needs to be obtained in the owner’s name in order to formally establish the business’s proprietorship status. The owner is operating their firm under the structure of a proprietorship, as indicated by this sole proprietorship registration.
Essential Licenses and Registrations for Proprietorships
Important permits and registrations are required to operate a proprietorship in India, including:
1. Obtain an Aadhaar card and a Permanent Account Number (PAN) for your company’s identification.
2.Register with UDYAM to receive government benefits and to have your company recognized as a Micro, Small, or Medium Enterprise (MSME).
3. You must register for Goods and Services Tax (GST) in order to collect and pay GST if your company’s revenue reaches certain levels.
4.To ensure efficient financial management, open a separate bank account for your company.
5.Register under your state’s Shops and Establishment Act in accordance with local labor laws, depending on where your firm is located.
Advantages of Proprietorship
Easy registration: Sole proprietorship registration does not have any formal incorporation or dissolution process – as its the same as the Proprietor. However, to operate a business, the proprietor may have to obtain certain registrations and licenses to be compliant with the laws and regulations of India.
Lower compliance: As most proprietorship are only registered with government departments like Income Tax & GST, the compliance burden will be lower. On the other hand, entities like LLP or Company are registered with the Ministry of Corporate Affairs and have to file various statutory returns and be audited by a Chartered Accountant each year.
Simplicity: As there are no partners, shareholders, or directors, the proprietor can easily operate this business with minimal documents and consent requirements. Hence, this type of business structure is best suited for very small businesses.
Business decision: In a proprietorship, the business owner takes all business decisions. There is no consent or approval required from any other person. Hence, a proprietor can normally take quick decisions regarding his business affairs.
Complete control: As sole proprietorship is owned only by the proprietor. He/she has complete control over the assets, revenue, expenses and all business operations.
Disadvantages of Sole Proprietorship
Funding: This type of business structure relies solely on one persons savings, borrowings and credit history. As there are no other persons are involved in this type of business structure, raising funds from banks will be very hard. Raising equity funds will not be possible – as this type of business entity does not allow for profit sharing or shareholding.
Personal liability: If a proprietor is unable to pay business loans or taxes, in a proprietorship – the personal assets of the business owner can be attached or encumbered. Hence, in this type of business structure – the proprietor will be held personally liable until all the liabilities are extinguished.
Business continuity: In case of death or disability of the business owner, the sole proprietorship will be automatically dissolved. Hence, there is will be no business continuity.
Growth: A proprietorship has various restrictions in terms of fundraising, liability and business continuity. Hence, only very small businesses that are in the unorganized sector operate as proprietorship.
Unincorporated business: Sole proprietorship are unincorporated businesses. Hence, there is no centralized database available to see if a sole proprietorship registration is active or inactive. Thus, sole proprietorship entities are mostly classified as unorganized business.
Proprietorship Business Activities
Any business activity that an Indian individual can engage in across the majority of sectors and industries can be carried out via a proprietorship. Nonetheless, certain operations, such as banking, insurance, financial services, lending, defense, and telecommunication, call for specific authorization. In these situations, a business must formally secure a number of government approvals. Therefore, the proprietorship business structure is only effective for small-scale commercial operations. This could be one of the restrictions on registering a proprietorship firm.
Compliances for Proprietorship
Income Tax Filing: A proprietorship’s business owner must use form ITR-3 or ITR-4 to file a personal income tax return.
Business Income: Business income can only be reported on income tax forms ITR-3 and ITR-4. Therefore, in order to comply with the income tax requirements, all proprietorships will need to file form ITR-3 or ITR-4.
GST Return Filing: In accordance with the scheme under which the firm is established, a proprietorship that has GST registration is required to file a GST return each month and every three months.
TDS Returns: Tax must be withheld at the source and TDS returns must be submitted on a quarterly basis if the proprietorship employs people or makes purchases of goods or services that exceed a specific level.
Price
Standard
₹3999
- Proprietorship Firm Registration
- Trade License
- GST Registration
- Udyam registration
- Professional Tax
