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Proprietorship Registration
Oldest and Easiest Business Structure :
- Sole proprietorship is recognized as one of the oldest and easiest business structures to establish in India.
- Owned, managed, and controlled by a single person—the proprietor.
Simplified Startup Process :
- Starting a proprietorship is remarkably straightforward due to the unified nature of the proprietor and the business.
- Minimal compliance requirements make the initiation process hassle-free.
Limitations and Suitability :
- A proprietorship cannot have additional partners or shareholders since the proprietor and the business are one entity.
- Lacks limited liability protection for the proprietor from business activities.
Filing Champs Support :
- Filing Champs offers assistance in registering a Sole Proprietorship.
- Expert guidance and a streamlined process ensure a quick and efficient start to your proprietorship.
Ideal for Solo Entrepreneurs :
- Suited for solo entrepreneurs looking for a simple and efficient business structure.
- Unlock the potential of your business ideas by starting your Sole Proprietorship with Filing Champs.
Essential Registrations for Proprietorship Business in India :
Business Identification : Obtain a Permanent Account Number (PAN) and Aadhaar card for clear business identification.
MSME Recognition : Register under UDYAM to secure Micro, Small, or Medium Enterprise (MSME) status and avail government benefits.
GST Registration : If your business exceeds set thresholds, register for Goods and Services Tax (GST) to manage GST transactions effectively.
Financial Clarity : Smoothly manage finances by opening a separate bank account dedicated to your business.
Local Compliance : Depending on your business location, ensure compliance with local labor regulations by registering under your state’s Shops and Establishment Act.
Advantages of Proprietorship :
Easy Registration : No formal incorporation or dissolution process; registration aligns with the proprietor.
Lower Compliance: Minimal compliance burden compared to entities like LLP or Company, making it simpler for businesses registered with Income Tax & GST.
Simplicity : Ideal for very small businesses due to the absence of partners, shareholders, or directors, resulting in minimal documentation.
Business Decision : Proprietor makes swift business decisions without requiring consent or approval from others.
Complete Control : Sole ownership grants full control over assets, revenue, expenses, and all business operations.
Disadvantages of Sole Proprietorship :
Funding Challenges : Relies on personal savings, borrowings, and credit history, making it challenging to raise funds from banks or equity.
Personal Liability : Proprietor’s personal assets can be at risk if unable to pay business loans or taxes, leading to personal liability.
Business Continuity : Automatic dissolution in case of the proprietor’s death or disability, resulting in no business continuity.
Growth Restrictions : Limited fundraising, liability, and business continuity options, suitable mainly for very small businesses.
Unincorporated Business : Sole proprietorships lack a centralized database, often categorized as unorganized businesses.
Compliances for Proprietorship :
Income Tax Filing : File personal income tax return using form ITR-3 or ITR-4 as a proprietorship business owner.
Business Income Declaration : Declare business income through income tax forms ITR-3 or ITR-4, ensuring compliance with income tax regulations.
GST Return Filing : If registered under GST, file GST returns monthly or quarterly, following the applicable scheme.
TDS Returns : For proprietorships with employees or exceeding certain purchase thresholds, deduct taxes at source and file TDS returns quarterly.
Additional Compliance Requirements : Depending on industry and location, various other compliance requirements may apply to the proprietorship. Stay informed to meet specific industry and location-based obligations.
Documents Required for Proprietorship :
PAN Card : PAN card of the Proprietor.
Aadhaar Card : Aadhaar card of the Proprietor.
Simplify Compliance with Filing Champs :
Trust Filing Champs to handle all your compliance needs seamlessly. From income tax filing to GST returns and beyond, we’ve got your back, ensuring a hassle-free journey for your proprietorship business.
Proprietorship vs Partnership vs Limited Liability Partnership (LLP) vs Company
| Features | Proprietorship | Partnership | LLP | Company |
|---|---|---|---|---|
| Definition | Business managed by one person | Agreement between multiple parties | Combination of partnership and company | Registered entity with limited liability |
| Ownership | Sole Ownership | Min 2 Partners, Max 50 Partners | Designated Partners | Min 2 Directors, Min 2 Shareholders, Max 15 Directors, Max 200 Shareholders. For One Person Company: 1 Director, 1 Nominee Director |
| Registration Time | 7-9 working days | – | – | – |
| Promoter Liability | Unlimited Liability | Limited Liability | Limited Liability | Limited Liability |
| Documentation | MSME, GST Registration | Partnership Deed | LLP Deed, Incorporation Certificate | MOA, AOA, Incorporation Certificate |
| Governance | – | Under Partnership Act | Under LLP Act, 2008 | Under Companies Act, 2013 |
| Transferability | Non Transferable | Transferable if registered under ROF | Transferable | Transferable |
| Compliance Requirements | Income tax filing if turnover is more than Rs.2.5 lakhs, ITR 5, Form 11, Form 8 | ITR 5 | ITR 5, ITR 6, MCA filing, Auditor’s appointment | ITR 6, MCA filing, Auditor’s appointment |
Documents Required For Proprietorship
-
PAN Card
PAN card of the Proprietor. -
Aadhaar Card
Aadhaar card of the Proprietor.
Simple Proprietorship Business FAQs
It's a business structure where one person owns and runs things – straightforward and common for small businesses in India.
Four types to consider: Sole Proprietorship, One Person Company (OPC), Registered Proprietorship, Unregistered Proprietorship. Pick what suits your needs.
In a proprietorship, one person handles everything. In a firm, it's a group effort – sharing ownership and profits.
No special certificate required for a proprietorship. Keep it simple.
Just file Income-tax and GST returns. That's all you need to do to keep it running smoothly.
No minimum requirement. Simple and easy to kickstart your business in India.
As long as you want to run it. Simple and straightforward.
You – the owner. You own, control, and manage your business.
Depends on your state. For instance, in Maharashtra, you might need a Shop and Act license. Keep it legal and straightforward.
No special PAN for the business. Your PAN is the key. Simple, right?
Absolutely. But remember, it's linked to your PAN. You're in control.
Absolutely. No fancy rules. Keep it simple.
Anything official with your name, photo, and address works. Keep it simple.
Not a must, but recommended. Makes your business dealings smoother.
A simple, unregistered business owned and run by one person.
Any Indian citizen with a current account in their business name.
Around 8 to 10 days. Government stuff takes a bit of time, but it's simple.
Keep it easy, straightforward, and make your business journey hassle-free!
