Proprietorship Registration

Proprietorship Registration

Proprietorship Registration: Sole proprietorship stands as one of the oldest and simplest business structures to establish in India. In this setup, a single individual, known as the proprietor, owns, manages, and controls the business entirely. Due to the seamless integration of the proprietor and the business, starting a sole proprietorship involves minimal compliance requirements, making it an attractive option for budding entrepreneurs.

Since the proprietorship and the proprietor are synonymous, there’s no provision for additional partners or shareholders within this structure. Moreover, the proprietor doesn’t benefit from limited liability protection, exposing them to personal liability for the business’s activities. Consequently, sole proprietorships are most suitable for small-scale ventures with fewer than five employees.

Accounts Profession offers comprehensive support for registering a Sole Proprietorship, providing a straightforward and efficient process tailored for solo entrepreneurs. With our expertise and streamlined procedures, initiating your proprietorship becomes quick and hassle-free. Embark on your entrepreneurial journey with Accounts Profession and unleash the full potential of your business ideas.

Proprietorship Registration in India

Registering a proprietorship in India is different from other business structures because there’s no specific government process just for it. Instead, a proprietorship gets recognized through tax registrations required by the law. One important registration is the GST (Goods and Services Tax) Registration, which must be obtained under the proprietor’s name to officially establish the business as a proprietorship. This registration shows that the proprietor is running the business as a sole owner.

Required Licenses and Registrations for Sole Proprietorships

To operate a sole proprietorship in India, you must obtain essential licenses and registrations, which include:

1. Obtain a Permanent Account Number (PAN) and an Aadhaar card for your business identification.
2. Register with UDYAM to classify your business as a Micro, Small, or Medium Enterprise (MSME) and access government benefits.
3. If your business revenue surpasses certain thresholds, you’re required to register for the Goods and Services Tax (GST) to collect and pay GST.
4. Open a dedicated bank account for your business to manage finances efficiently.
5. Depending on where your business is located, register under your state’s Shops and Establishment Act to comply with local labor regulations.

Benefits of Proprietorship

1. Easy Start-Up: Starting a sole proprietorship is simple because there’s no need for formal incorporation or dissolution processes. The owner and the business are essentially the same entity.
2. Less Hassle: Sole proprietorships usually have fewer compliance requirements compared to other business structures like partnerships or corporations. This means less paperwork and administrative burden.
3. Straightforward Operations: With no partners or shareholders, running a sole proprietorship is straightforward. There’s minimal bureaucracy and fewer decision-makers, making it suitable for small businesses.
4. Quick Decision-Making: In a sole proprietorship, the owner makes all business decisions independently. This allows for faster decision-making without the need for consensus from others.
5. Full Control: Since the sole proprietor owns the business outright, they have complete control over all aspects of the business, including finances, operations, and strategy.

Drawbacks of Sole Proprietorship:

Personal Liability: The sole proprietor is personally responsible for all business debts and obligations. This means that if the business can’t pay its debts, creditors can go after the proprietor’s personal assets.

Limited Resources: Sole proprietorships may face difficulty accessing large amounts of capital or resources compared to larger business entities. This limitation can constrain business growth and expansion.

Lack of Continuity: Since the business is tied to the proprietor, it may cease to exist if the owner retires, becomes incapacitated, or passes away. Without a succession plan in place, continuity can be disrupted.

Limited Expertise: Sole proprietors must handle all aspects of the business themselves, which can be challenging if they lack expertise in certain areas such as finance, marketing, or operations.

Difficulty in Raising Funds: Sole proprietorships may find it challenging to attract external funding from investors or lenders due to their smaller scale and perceived higher risk. This can restrict opportunities for business development and expansion.

Online Registration of a Proprietorship via Accounts Profession

Want to start your own business as a proprietorship? It’s easy with Accounts Profession! All you need are your PAN and Aadhaar card. We can help you get everything sorted in just 15 days.

1. Register Online: Visit Accountsprofession.in and register your proprietorship.
2. Upload Documents: After registering, log in to LEDGERS, our accounting software.
3. Submit PAN and Aadhaar: Upload copies of your PAN and Aadhaar cards.
4. We’ll Handle the Rest: Our experts will process your registration with the GST Department and MSME Department and help you open a zero-balance business account.
5. Access LEDGERS: You’ll get access to LEDGERS for invoicing, GST filing, and more.

Remember, for a proprietorship, your personal PAN card is used, as there’s no separate PAN for the business.

Getting GST Registration for Your Proprietorship

To get GST registration for your proprietorship through Accounts Profession, you’ll need the following documents handy:

1. The proprietor’s PAN: Your PAN card is a must.
2. Digital Signature Certificate: Required for the authorized signatory.
3. Consent Letter: You need to give consent for the GST registration.
4. Photographs: Yours and the authorized signatory’s.
5. Bank Details: Provide a scanned copy of a cancelled check with all the bank account details.
6. Declaration/Authorization: Giving authority to the authorized signatory.
7. Commercial Address Proof: If you’re using a commercial space, ensure the rent-lease agreement is in your name.
8. Additional ID Proofs: Aadhaar Card, Driving Licence, Passport, or Voter ID, along with address proofs if needed.

Getting UDYAM Registration for Your Proprietorship

You can easily get UDYAM Registration online to enjoy benefits for small and medium-sized businesses. Once you have your GST registration sorted, the Accounts Profession team will assist you in getting UDYAM registration. They’ll submit your Aadhaar card, PAN card, and GST certificate to the government for you.

Opening a Bank Current Account for Your Proprietorship

When you open a bank current account for your proprietorship, it’s in your name using your PAN card. To prove your business is real, you need to show two documents from these options:

1. GST registration certificate
2. Shop & Establishment Act license
3. License from a registering authority (like a Certificate of Practice from professional bodies)
4. Importer Exporter Code (IEC) from DGFT

These papers show your business is legit, allowing you to open a current account instead of a savings one.

Obtain a Shops & Establishment Act License for a Proprietorship

The process of getting a Shop and Establishment registration certificate varies from state to state. You can apply for it either online or offline. In many states, you can get the registration within 2 to 3 weeks.

Registration Timelines for Sole Proprietorships

Usually, you can register a sole proprietorship in India using Accounts Profession in under 15 days. However, the actual time might vary depending on how long the government and banks take to process your application.

Activities of Proprietorship Businesses

A proprietorship can engage in most business activities that an Indian individual can, covering various sectors and industries. However, certain activities like banking, insurance, financial services, lending, defense, and telecommunications need specific approval. For these, a company must obtain various approvals from the Government. Thus, proprietorship is suitable mainly for small-scale business activities.

Requirements for Proprietorship Compliance

Here are some of the things a sole proprietorship needs to do to stay compliant:

1. Income Tax Filing: The owner must file their personal income tax return using either form ITR-3 or ITR-4.
2. Business Income Declaration: Business income can only be declared using forms ITR-3 or ITR-4. So, proprietors need to file one of these forms to comply with income tax rules.
3. GST Return Filing: If the proprietorship is registered for GST, it must file GST returns every month or quarter, depending on the registration scheme.
4. TDS Returns: If the proprietorship has employees or makes purchases above a certain limit, it must deduct tax at source and file TDS returns every quarter.

Additionally, there might be other compliance requirements depending on the industry and location of the proprietorship.

Proprietorship vs Limited Liability Partnership (LLP) vs Company

Documents Required For Proprietorship