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Proprietorship Firm Registration
Proprietorship firm is one of the Simpe way to start a business because it is owned and managed by propretor self or authorized person. Proprietorship firm are very simple and easy to start and have very less regulatory compliance requirement for starting and operating. So, its ideal for small businesses and first-time Entrepreneurs who would like to know how to run a business. Current account of Proprietorship firm can be open by taking registration in shop and establishment Act, GST No.or Udhyam as per applicability according to bank rules.
ADVANTAGES AND DISADVANTAGE OF SOLE PROPRIETORSHIP
*Less Formalities during formation.
*Less Government Intervention
*Less wastage of time for taking various approvals.
*Limited Capital required according to business need.
*Current account can be opened easily.
*Have a registration name in proprietorship.
*No Sharing of profits.
*Personal Property Of Proprietor Is Also Affected In Case Of Any Loss Arise In Sole Proprietorship.
*Because Of Proprietor Pan Is Used In The Business For All The Compliance Or Registration It Is Not Easy To Transfer The Business To Some One Else If Required Or Needed In Future.
*There Is No Chance Of Perpetual Existence In Case Of Sole Proprietorship Because Proprietor And Proprietorship Both Are In Case Of Death Of Proprietor – Proprietorship Is Also Come To Its End.
*Not Easy to get funds from outside.
*Limited Scope of Recognition.
HOW TO REGISTER A SOLE PROPRIETORSHIP?
There is no Specific Registration Process Or Procedure Prescribed By The Government For The Registration Or Operation Of Sole Proprietorship.
One or more Business license or tax license are applicable:
1. Udhyam MSME Registration
2. GST Registration (Optional till limit of Tournover specified)
3. Trademark – In case you want no one can use your business name
4. Shops and Establishment License.
Documents Required
Pan Card Copy Self singed
Aadhar Card Copy Self signed
4 Passport Size Photo's
Rent Agreement Copy with Electricity Bill Not Older Than 3 Month's
Cancelled Cheque
Name Of Business and Items To Be Traded
FAQS
Who can start a sole proprietorship firm?
Any person being an individual can start a sole proprietorship firm.Basically current account shold be required to open a propritorship firm and to open a currnet account firm need a basic type of registration as per state law like Shop and establishment registration((LDMS) or MSME.
Is there need of any other registration apart form shop and establishment registration or MSME?
In case of business having tournover up to 20 lakhs in case of services and 40 lakhs in case of good (10 lakhs in case of North Eastern states) no need of any other registration but if tournover of the firm exceed from this we need to take GST registration apart from these.
Can i convert sole proprietorship firm in private limited or partnership?
yes it is possible but the conversion requires high cost.
what are Features of Sole Proprietorship?
Unlimited Liability: A sole proprietorship has no separate existence. Therefore, all debts can only be recovered from the sole proprietor.
Small Business: The owner has unlimited liability with regard to all the debts. This should heavily discourage any risk-taking, which means that it’s suited to only small businesses.
If you plan on running a business that requires a loan or may end up paying penalties, fines or compensation, it’s best you look into registering an OPC
Easy to Start: There is no separate registration procedure for proprietorships. All you need is a government registration relevant to your business.
If you’re selling goods online, a proprietor would only need a tax registration (GST). Therefore, starting up as a sole proprietor is relatively easy.
Sole proprietors will be taxed on their personal income tax rate.
what are Disadvantages of Sole Proprietorship?
1.Unlimited personal liability.
2.Difficulty in raising investment capital.
3.lack of financial control.
4.difficult to find outside investors to fund sole proprietorships.
what are List of documents/information required to register Sole Proprietorship?
1.Name of the Proprietor Firm
2.PAN Card
3.Aadhaar Card
4.Rental Agreement on Business name if available
5.Utility Bill – Electricity Bill copy of the address
6.Email id and phone number
what are Steps to register Sole Proprietorship?
Step 1. Open a Current Account in Bank with your Proprietorship Firm name. (For Bank KYC Two proofs required from step 2)
Step 2. Legal Certificate: get register under any 2 of the below:
a) GST Registration certificate
b) MSME Certificate
c) Shop and Establishment Act
d) IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of bank account. Etc.
what are Income Tax Applicability on Sole Proprietorship?
The income tax rate for sole proprietorship firm is the same as that of the income tax rate of individuals. In short, sole proprietor taxes are payable as of that of the individual.
what are Due date of filing of an income tax return for sole proprietorship firm?
Particulars Due date
Income tax return filing wherein the audit is not necssary 31st July
Income tax return filing wherein the audit is necessary 30th September
what are Proprietorship firms are not eligible for a start – up / DIPP Recognition?
Proprietorship firms are not eligible for a start – up / DIPP Recognition as Proprietorship firm are not covered under any Act or Law. A sole proprietorship has no separate existence. Therefore, all debts can only be recovered from the sole proprietor. Therefore, the owner has unlimited liability with regard to all the debts.
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