With the ease to start most of the entrepreneurs are choosing Proprietorship as a business form if they don’t have any partners. There is no distinction between the business entity and the owner. There are several benefits of registering as a Proprietorship Firm and we have jotted them to make your decision easy. Know the Features, Documents Required, Time to Register for a Proprietorship Company, Process on How to Register a Proprietorship Company in India all in one place.
- How to Register a Proprietorship Company in India?
- Documents Required for Proprietorship Registration
- Time to Register Proprietorship Firm
- Features of Proprietorship Firm
- Advantages of Proprietorship Firm
- FAQs on Proprietorship Registration
Sole Proprietorship is one of the most common forms of business being done these days. Individual Owner owns and manages the business operations and does all business transactions. Sole Proprietorship Firm will not create a separate legal entity for its owner. The Firm might need 2 legal entity proofs in order to open a current bank account.
You can do the Sole Proprietorship Registration through 2 different forms one is through GST Registration and the other is through MSME License.
GST Registration: You can for GST Registration for your Firm Proprietorship in any of the following cases
- Dealing with Inter-State Business.
- Trader, Retailer, MFG or Aggregator.
- Ecommerce or Internet Based Business.
- Within State and with turnover more than 20 Lakhs.
MSME License: It is applicable in the below cases i.e.
- Deals within the State.
- Within the State and If the turnover is less than 20 Lakhs.
You might need the following documents as a part of your Proprietorship Firm Registration and they are as such
- PAN Card/Aadhar Card/ Voter Card/ Driving License
- Personal Bank Account
- Firm Address Proof such as Electricity Bill
- MSME Registration might take around 2-6 days on average from working on the assignment.
- GST Registration will take around 7 days from working on the assignment.
Following are some of the features that a Proprietorship holds.
- Single Owner of the Business
- Complete Control – As there are no partners the owner has the complete right to make decisions.
- Minimal Compliances and Lower Cost for Formation – Compliances are less and you need not get accounts audited or file annual returns.
- Easy to Start as well as Close – It is the easiest form of business to start and you can finish the entire process in a single day. Closing is also relatively easy you just need to surrender registration and licenses and close the business.
There are several benefits of registering for a Proprietorship Firm and we have outlined some of them below for your idea.
- Easy to Start – You need not do any registration for Proprietorship Firm and it is the easiest to start without any formalities. However, it is difficult to open a bank account in the name of the business and you might need more registrations.
- Business Name – As there is no registration required you can choose any name unless and until it violates any registered trademark.
- Taxation – A Proprietorship Firm with less than 2 Lakhs Income need not pay any Income Tax as they are treated as individuals owning the business. Once you exceed an Income o 10 Lakhs you can’t avail taxation exemptions.
- Suitable for Small and Medium Scale Businesses as they can start their business completely through online environments without any hassle.
- You will have Greater Flexibility and Ease of Operations.
1. Does Proprietorship Firm has a separate legal entity?
Since the Proprietorship Firm and the Proprietor are one and the same legally. Both the PAN of the Firm and the PAN of the Proprietor would be the same. Thus, Proprietorship Firm doesn’t have any separate legal entity.
2. Can Others Invest in Proprietorship?
No, Others can’t invest in Proprietorship as it is owned, managed, and controlled by a single person.
3. What is the minimum capital required to start a Proprietorship?
There is no limit on the capital to be invested in order to begin a Proprietorship.
4. How to register the name of a Proprietorship?
As there are no rules and regulations to register the name of a Proprietorship you can choose any of the names as per your choice as long it doesn’t infringe any registered trademarks.
5. Do you need an audit for a Proprietorship?
In general, it is not necessary to prepare an audited financial statement every year. However, you need to audit if at all the turnover exceeds the limit.
6. Do Proprietorship Firms have any registration certificates?
No, Proprietorship Firms will not have any registration certificate or certificate of incorporation. However, legitimacy is established by registering with respective government authorities.