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Proprietorship Firm


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Proprietorship Firm

Proprietorship firm

The definition of ‘Company’ signifies any enterprise which is formed under the Companies Act, 2013. The procedure of registration of a company in India relies upon the type of the company.

When a business or firm is held and governed by one individual it is referred to as a sole proprietorship firm or company. In this Proprietorship firm form of business a single individual takes care and controls the total operation and functioning of the business. The proprietor of the business is the only individual to enjoy the profit of business and he has to bear the losses.

There is no specific law that directs the sole proprietorship firm. Proprietors of such corporations have unlimited business liability. This comprises that proprietor personal assets shall be attached in order to fulfill business liability claims. It is not possible in order to transfer the ownership of a Proprietorship firm from one individual to another.

Proprietorship Firm Registration

For a proprietorship firm or business, Proprietorship Firm Registration is not essential as they are recognized by alternate registrations such as GST registrations. Though its liability is unlimited and it also does not have a continuous presence.

A proprietorship registration is needed for the individual owned business for doing business, hence it is recommended to get the given registrations in order to run the business function smoothly and legally. An individual could select any form of registration from the below:

•    Shop and Establishment Registration under the laws of the individual states

•    Registering as SME

•    GST Registration

The documents required for a Proprietorship Firm registration are;

•    Aadhar Card

•    Registered office proof (for Rented Property: Rent agreement and NOC from a landlord/ For a Self-owned Property: Electricity bill or any other address proof.)

•    PAN Card of the proprietor

•    Bank Account

Proprietorship Firm Registration in Delhi

The steps to be followed for Proprietorship Firm Registration in Delhi include;

1.    Applying for PAN. If an individual already has one this step is not needed.

2.    The next step is naming the business which is required before registration of the Proprietorship Firm in Delhi.

3.    There is no formal registration needed, but the next step is to open a bank account in the name of the commerce for Proprietorship Firm Registration in Delhi.

4.    An individual may also register as a Small and Medium Enterprise (SME) as per the MSME Act, but it is not compulsory, however, it is beneficial towards being registered under the same.

5.    An individual could also register for GST if the turnover goes beyond Rs 20 lakh. For registering under GST, an individual has required the following documents which include PAN card, Photo and Aadhar Card of the proprietor; Proof of business place (Electricity bill/ rent agreement) and Bank statement copy (first page for confirming bank account number, address and IFSC code).

6.    An individual could also get a Shop and Establishment registration done.

Step 1

Obtain PAN -- eStartIndia will apply for Permanent Account Number (PAN)

Step 2

Current Bank Account -- eStartIndia will open a Current Bank Account on the business name

Step 3

GST Registration -- eStartIndia will register for GST if your business required it.

Step 4

Shop & Establishment License – eStartIndia will register for lifelong Shop & Establishment license if needed

Step 5

Congratulations! Your work is done. You can download your GST certificate from your dashboard. We also send your certificate on your registered email.

Package

Standard

2999 /-

    Package Includes:

    • Basic Package
    • MSME Registration

(All Inclusive)

Premium

4499 /-

    Package Includes:

    • Basic Package
    • MSME Registration
    • Trademark Filing

(All Inclusive)

Basic

1999 /-

    Package Includes:

    • Proprietorship Registration with GST Registration
    • Free Expert Advice

(All Inclusive)

Comparison

Compare Your Business Requirements:

 

 Private Limited  Company

One Person

Company

Sole ProprietorshipLimited Liability  PartnershipPartnership Firm
Ideal ForStartup & Growing CompaniesSingle PromotersSmall Traders & ManufacturersProfessionalsSmall businesses & Home Businesses
Requirements2 Directors/Shareholders1 Director/Shareholder1 Proprietor2 Partners2 Partners
Initial InvestmentNot RequiredNot RequiredNot RequiredNot RequiredNot Required
Tax AdvantagesFew benefitsFew benefitsMinimalMost efficientMinimal
CompliancesHighHighMinimalLowMinimal
Limited Liability ProtectionYesYesNoYesNo
Time Taken5-10 days5-10 days2-5 days10-15 days5-10 days

 



FAQs

Who can form a sole proprietorship Firm?

An Indian National with a current bank account on a business name is eligible for forming a sole proprietorship Firm. Generally, banks ask a customer for a Shops and Establishments license prior to opening a current bank account.

What kind of liabilities does a sole proprietor have?

A sole proprietor has unlimited liability towards the business as a sole proprietorship is not a separate legal entity.

What type of business is sole proprietorship Firm most suited for?

A sole proprietorship Firm is most suited for unorganized sectors with preference given by small and micro businesses such as grocery vendors, fast food vendors, etc.

What are the key advantages of a sole proprietorship Firm?

The key advantages of a sole proprietorship firm are less compliance, Ease of start, Less Tax and less costing.

Does a sole proprietorship firm have any mandatory registration requirements?

No. A sole proprietorship firm does not have any government-mandated registration requirements. The registration of this type of business entity is usually obtained by the acquisition of registration related to tax under the business name.

Is it possible to convert a sole proprietorship firm to any other business form?

Yes. A sole proprietorship firm can be converted to a Partnership or Limited Liability Partnership as per due procedure at a later stage.

What is the treatment of a sole proprietorship firm under tax law?

As per tax laws, the income from a sole proprietorship firm is treated as the personal income of the sole proprietor as a sole proprietorship is not a separate legal entity.

How many are people are required to start a Proprietorship firm?

For starting a proprietorship firm, you need only one person is required and it has only one promoter.

Is Audit required for a Proprietorship Firm?

It is not necessary to prepare audited financial statements each year. However, a tax audit may be required based on turnover and other criteria.

Can I convert my Proprietorship firm into a Pvt Ltd Company or LLP?

Yes, you can convert your Proprietorship Firm into a Pvt. Ltd. Company or LLP. The Procedure is a little complex.



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