Proprietorship Registration
Sole proprietorship is one of the oldest and easiest Business Structure to start in India. A proprietorship is a type of business that is owned, managed, and controlled by one person – who is the proprietor. As the proprietorship and proprietor are one and the same, it is very easy to start and there are very minimal compliance requirements.
As the proprietor and the business are one and the same, a proprietorship cannot have other partners or shareholders. Further, there is no limited liability protection for the proprietor from the business activities conducted in the sole proprietorship. Hence, this type of business entity is best suited for every small businesses with no more than 5 employees.
Useful Links
Obtaining GST Registration for Proprietorship
GST registration for a proprietorship will be obtained by IndiaFilings as a part of the service. The following documents are required for GST registration:
Bank Account for Proprietorship
The bank current account for a proprietorship will be opened in the name of the business owner using his/her PAN. The business owner will have to submit proof for doing business. Any two of the following documents can be submitted to create a current account instead of savings account in the name of proprietorship:
- GST registration certificate
- Shop & Establishment Act license
- License issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities,
- Banks may also accept IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening a bank account etc.
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 can normally be registered in India through IndiaFilings in less than 15 days. However, the timelines for registration will vary from case to case depending on the government and bank processing timelines.
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Advantages of Proprietorship
Compliances for Proprietorship
The following are some of the compliances that are applicable for a sole proprietorship:
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.
Proprietorship FAQ's
A proprietorship firm is a type of business structure where a single individual owns and manages the entire business. The proprietor is personally liable for all the debts and obligations of the firm. Proprietorship firms are easy to set up and operate, making them a popular choice for small businesses and startups in India.
There are mainly four types of proprietorship in India:
Each type of proprietorship has its advantages and disadvantages, and the choice of business structure depends on the proprietor’s needs, goals, and resources
No, there is no certificate of Incorporation given.
No, there is no minimum requirement to start a sole proprietorship in India.
The sole proprietorships exist as long as the proprietor is alive and is desiring to run the business.
Yes, a sole proprietor is considered to be the same as the sole proprietor.