Proprietorship Firm Registration

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Proprietorship Registration

One of the earliest and simplest business structures to establish in India is the sole proprietorship. A proprietorship is a business in which the proprietor is solely responsible for ownership, management, and control. With minimal compliance requirements, it is easy to set up because the proprietorship and the proprietor are considered the same legal entity.

A proprietorship cannot have partners or shareholders, as the owner and the business are indistinguishable. Additionally, the owner bears full liability for business operations. This makes sole proprietorships best suited for small businesses with fewer than five employees.

A sole proprietorship is a simple and efficient business structure, perfect for independent owners. TaxHint can assist you with the registration process. Start your proprietorship registration online quickly and easily with our expert support and streamlined procedure. Take the first step to unlock the full potential of your business ideas by registering as a Sole Proprietor with us.

About Proprietorship Registration

Proprietorship Registration in India

In India, registering a proprietorship requires a different procedure because this type of business structure does not have a specific government-mandated registration method. Rather, tax registrations required by applicable rules and regulations give recognition to a proprietorship firm registration. To formally establish the proprietorship status of the company, one essential tax registration that needs to be obtained under the proprietor's name is the GST (Goods and Services Tax) Registration. This registration is proof that the owner is operating under the legal structure of a proprietorship.

Essential Licenses and Registrations for Proprietorships

To run a proprietorship in India, you need important licenses and registrations, including:

  • Obtain an Aadhaar card and a Permanent Account Number (PAN) to identify your business.
  • Enroll in UDYAM to receive government advantages and have your company recognised as a Micro, Small, or Medium Enterprise (MSME).
  • Register your business for Goods and Services Tax (GST) if it exceeds certain turnover levels.
  • Open a separate bank account for your company to ensure easy financial management.
  • Register under the Shops and Establishment Act of your state, depending on your business location, to comply with local labor laws.

Advantages of Proprietorship

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Simple Registration

Since a sole proprietorship is the same as a proprietorship, there is no formal incorporation or dissolution procedure. To comply with Indian rules and regulations, the owner of a business may need to secure specific licenses and registrations in order to operate.

Reduced compliance

Since most proprietorships merely register with government agencies such as GST and Income Tax, there would be less work to be done in terms of compliance. However, organisations such as LLPs and companies must register with the Ministry of Corporate Affairs, file a number of statutory returns, and undergo an annual audit by a chartered accountant.

Simplicity

The owner can run this company with less paperwork and permission because there are no shareholders, directors, or partners. Therefore, extremely tiny enterprises are the ideal candidates for this kind of business structure.

Business decision

The owner of a proprietorship makes all business choices. No other person's permission or consent is necessary. As a result, an owner is typically able to make judgements about his business matters quickly.

Total control

The lone proprietor is the only owner of a sole proprietorship. He or she is in total charge of the company's resources, earnings, outlays, and daily activities.

Disadvantages of Proprietorship

Funding

All of a person's assets, debts, and credit history are used to support this kind of corporate organisation. Since this kind of business structure involves no other parties, getting bank financing will be extremely difficult. Because of the prohibitions against profit sharing and shareholding, equity funding cannot be raised.

Personal liability

In a proprietorship, the owner's personal assets may be attached or encumbered if they fail to make business loan or tax payments. Because of this, the owner of this kind of business structure will be held personally liable until all liabilities are satisfied.

Business continuity

The sole proprietorship will immediately dissolve in the event that the business owner passes away or becomes disabled. Thus, business continuity won't occur.

Growth

A proprietorship is subject to a number of limitations including business continuity, liability, and financing. Therefore, proprietorship is only used by very tiny, unorganised firms.

Unincorporated business

Businesses run by sole proprietors are not incorporated. As a result, there is no centralised database that can be used to determine the status of a sole proprietorship. Sole proprietorships are typically categorised as unorganised commercial entities.

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Online Proprietorship Registration with TaxHint

Ownership firm registration is a simple process that you may finish online with TaxHint. The business owner's PAN and Aadhaar card are the only documents needed for a lone proprietor registration. Within 15 days or fewer, we can assist you in obtaining the following registrations:

  • GST Registration.
  • UDYAM Registration.
  • Zero-Balance Business Current Account with LEDGERS Accounting Software

After registering online with TaxHint for the proprietorship firm registration, please proceed as instructed below and log into LEDGERS to upload the necessary papers.

Step 1: Login to LEDGERS using the email address for payment.
Step 2: Go to Services Tab & Select Proprietorship Engagement
Step 3: Upload your PAN & Aadhar Card Copy
Step 4: An taxhint advisor's Registration Expert will file the registration application with GST Department, MSME Department and Bank for Current Account.
Step 5: Access to LEDGERS Accounting Software is provided for GST invoicing, GST filing and other services.

PAN Card for Proprietorship Firm Registration

A proprietorship is not an independent company. Therefore, there is no process for obtaining a PAN card for a proprietorship. For a proprietorship, the firm owner's PAN card is utilised.

Obtaining GST Registration for Proprietorship

TaxHint will arrange GST registration for a proprietorship as part of the service. The aforementioned paperwork is needed in order to register for GST:

  • Permanent Account Number (PAN) of Proprietor
  • Digital Signature Certificate of the Authorized Signatory.
  • Consent by Proprietor for obtaining GST Registration.
  • Photograph of Proprietor and Authorized Signatory
  • Details of the bank account: A scanned copy of a cancelled cheque that includes the name, MICR, IFSC, and branch details of the corporate entity.
  • Declaration / Authorization to Authorized Signatory
  • The rent or lease agreement should be under the owner's name for business purposes.
  • If the complete address on the ownership document (a copy of the electricity bill, a copy of the property tax receipt, or a copy of the municipal Khata) is not provided, then additional documents in the name of the owner, such as an Aadhaar card, driver's license, passport, or voter ID, should also be submitted.

Obtaining UDYAM Registration for Proprietorship

You can register for Udyam online and take advantage of the many incentives offered to small and medium-sized businesses. After obtaining the GST registration, the taxhint Advisors team will assist in obtaining the UDYAM registration by submitting the GST certificate, Aadhaar card, and PAN card to the government.

Bank Account for Proprietorship

A proprietorship's bank current account will be opened in the owner's name using his or her PAN. Proof of conducting business will need to be submitted by the business owner. To open a current account in the proprietorship's name rather than a savings account, any two of the following paperwork may be sent:

  • GST registration certificate
  • Shop & Establishment Act license
  • Licenses from the Registering Authority, such as the Certificate of Practice from the Indian Medical Council, Food and Drug Control Authorities, Institute of Company Secretaries of India, Institute of Cost Accountants of India, and Institute of Chartered Accountants of India,
  • The Importer Exporter Code (IEC) that the DGFT office issues to the proprietary firm may also be accepted by banks as identification when opening a bank account or other transaction............................................................................................................................................................................................................................................................................................

Obtaining Shops & Establishment Act License for Proprietorship

From state to state, the process for acquiring a Shop and Establishment registration certificate changes. It is available both online and offline. In most states, Shop and Establishment Act registration can be obtained within 2-3 weeks.

Timelines for Sole Proprietorship Registration

A sole proprietorship registration can normally be done in India through Taxhint Advisor's in less than 15 days. However, the timelines for registration will vary from case to case depending on the government and bank processing timelines.

Proprietorship Business Activities

A proprietorship can undertake any type of business activity that an Indian person can undertake across most sectors and industries. However, there are some activities like banking, insurance, financial services, lending, defence, telecommunication that require specialized approval. In such cases, a company is mandatorily required to obtain various approvals from the Government. Hence, proprietorship business structure only works for business activities that are small scale in nature.

Compliances for Proprietorship

The following are some of the compliances that are applicable for a sole proprietorship registration:

Income Tax Filing: The business owner of a proprietorship will have to file personal income tax return using form ITR-3 or ITR-4.

Business Income: Only income tax forms ITR-3 and ITR-4 allow for declaring business income. Hence, all proprietorships will have to file form ITR-3 or ITR-4 to be compliant with the income tax regulations.

GST Return Filing: If a proprietorship has GST registration, GST return must be filed every month and quarter as per the scheme under which the business is registered.

TDS Returns: In case the proprietorship is having employees or purchasing goods/services beyond a certain threshold - tax must be deducted at source and TDS returns must be filed every quarter.

In addition to the above, various other compliance requirements maybe applicable to the proprietorship based on industry and location.