Proprietorship firms registration means firms owned and run by a single member. The sole proprietor and the business property are the same in law. The sole member of the company is the single owner of the asset who shares in all of the company’s gains and losses. Because the liability of the solitary member is unlimited, the sole proprietor’s personal property is used to pay off the firm’s debts when business profits are insufficient to cover them. A minimal regulatory compliance standard exists to form and register a proprietorship firm online.
While a sole member may provide authority to its employees, they are not permitted to assign the right to sign the company’s legal documents to anyone else.
Tax audits are required if the proprietorship firm’s sales turnover exceeds Rs. 1 crore (in the case of a business) or if its gross receipts exceeds Rs. 50 lakh (in the case of a profession).
- With Lawgicalindia, India’s top service provider, you may get sole proprietorship registration online in five easy steps.
Features Of Proprietorship Firm
Single Ownership
A sole proprietorship is owned by a single person. The business is managed and funded by the sole proprietor. He runs it solely at his own financial risk.
Capital
In a sole proprietorship registration, the owner uses their own personal funds to fund the business. If he cannot rely solely on his resources, he may borrow money from friends and family.
Unlimited Liability
The owner is wholly responsible for the company’s debts. If the business assets are insufficient to meet the debts, the creditors have the right to recoup their debts, even from the owner’s personal property.
One-person control
The sole proprietor is responsible for managing the whole business. He makes all the choices, obtains all the material resources, hires all the staff, and oversees all business operations. When making a choice, he is not liable to consult anyone else. Even if the sole proprietor distributes authority to his employees, still he retains ultimate management and control.
Profits and Losses
The sole proprietor is solely responsible for any business losses and risks and any excess resulting from his operations.
Annual compliances under proprietorship firm registration
- TDS return filing
- GST returns
- File Income tax return
- Annual ROC filing
- Finalize financial statements
Benefits Of Proprietorship Firms Registration
Proprietorship firm Registration in India can provide several benefits to the owner. Following is a detailed discussion of some of these advantages:
Easy to Incorporate
There is a simple Proprietorship firm registration procedure to set up proprietorship firms. A sole proprietorship firm employs the owner's legal name. This clause prevents the firm from being registered separately unless required. This simple Proprietorship firm registration procedure benefits entrepreneurs by making it easy for them to register proprietorship firms online.
Flexible Operational Strategies
Being a sole proprietor firm, it is easy to comprehend and run the business. The sole decision-maker is the owner. As a result, the organization benefits from the quicker and better decision. Businesses with a single owner typically operate more simply because only one person is responsible for developing and carrying out the company’s plans.
No Division of profits
Since there is only one proprietorship owner, there are no guidelines for how much money the business can make. The proprietor is the only one who can amass profits and then invest them further in the business and other endeavours. The firm receives funding to support and sustain its processes. There’s a benefit of no conflict in the firm as there is secrecy and the sole proprietor is the only decision maker.
Taxation
The company’s decision to start small and economize on taxes has substantial advantages. If the annual profit of a sole proprietorship firm is less than Rs. 2.5 lakh, they will be excluded to pay income tax. It is important to remember that the company must pay income taxes once its annual profits exceed Rs. 2.5 lakh.
Sole Proprietorship Registration In India - Eligibility Criteria
You must be an Indian citizen who pays taxes
Only companies operating a local business are eligible for proprietorship registration online. After proprietorship firm Registration online, you can incorporate a proprietorship business. The Indian government considers this business entity to be too free. Hence only Indian citizens may establish it.
You must register your business name with the GST
If your company’s yearly revenue exceeds INR 40 lakh in case of goods and 20 lakhs in case of services (with certain exceptions), you must obtain a GST registration certificate in India. It will serve as evidence for your company.
You require a bank account in your sole proprietorship’s name
You must create a bank account in your business’s name as one needs certification as a sole proprietorship firm. You can correctly handle your business’s financial dealings with its assistance.
You must be an Indian citizen who pays taxes
Only companies operating a local business are eligible for proprietorship registration online. After proprietorship firm Registration online, you can incorporate a proprietorship business. The Indian government considers this business entity to be too free. Hence only Indian citizens may establish it.
You must register your business name with the GST
If your company’s yearly revenue exceeds INR 40 lakh in case of goods and 20 lakhs in case of services (with certain exceptions), you must obtain a GST registration certificate in India. It will serve as evidence for your company.
You require a bank account in your sole proprietorship’s name
You must create a bank account in your business’s name as one needs certification as a sole proprietorship firm. You can correctly handle your business’s financial dealings with its assistance.
Process Of Proprietorship Firm Registration Online
These are all the necessary steps for pvt ltd company registration in India
Documentation
The documentation of the owner and the primary location where the proprietorship will conduct its business activities is the first step in the proprietorship company registration process. Make sure the documents are authentic and current. The necessary documents are listed below.
Select a Unique Name
Choosing a unique name for the proprietorship is the next step in sole proprietorship registration online. The name should not be illegal and may not violate any registered trademark’s intellectual property rights. You can start the procedure by checking whether the proposed names are available in the trademark public database on the IP India portal. Additionally, remember to register the name you choose for your proprietorship firm as a trademark after you select it to guard against misuse or potential infringement.
MSME / Udyog Aadhar / Udhyam Registration
You require two mandatory documents in the name of your proprietorship firm to open a business bank account. Udyog Aadhar card is the first thing to obtain and the second one is MSME or Udhyam Registration Certificate. In addition to the benefits provided under the MSME Act, these documents allow an entrepreneur to access online MSME services and perks given by several Government Departments.
GST Registration
You will not be able to provide your goods and services across India, If your sole proprietorship business does not receive GST Registration. However, if your company’s operations are limited to a single state, GST registration is only necessary once the revenue reaches Rs. 40 lakh for commodities and Rs. 20 lakh for services, respectively.
Other Tax Registrations
Depending on the business activity, nature, and prime location, a proprietorship firm may be necessary to get TAN, IEC, and PT Registrations. TDS laws must be complied with by TAN, while firms engaged in the import and export of products or services must adhere to the IEC Code. In several states where professionals must pay professional tax, proprietorships are obliged to register for PT.
With our support, you can obtain Proprietorship firm Registration online and other required registrations.
Allotment of Licence
Suppose the business is operating as a store or outlet. In that case, you can apply for a license under the Shop and Establishment Act after completing the online proprietorship firm registration process. You can also establish a proprietorship firm under the Proprietorship Act of 1908. Although the registration of proprietorship firms under these acts is not required by Indian law, getting a legal license for efficient operation and long-term business growth is important to protect yourself from future legal conflicts.
Necessary Documents for Sole Proprietorship Firm Registration in India
- Passport-sized Photograph
- Voter’s ID/Passport/Driver’s License
The number from your Aadhar card is required for the Proprietorship firm Registration in India. Linking business information to the other information associated with Aadhar cards is crucial.
A PAN card is required to file income tax returns during proprietorship firm registration. Consequently, obtaining a GST registration number is also required (if applicable)
You must provide the bank account used for office transactions. If the applicant does not have a separate bank account for their business, this may also be their personal account.
Registered office proof is required for the Registration of a Proprietorship firm. The following documents are acceptable as proof of registered office:
- Notarized English Rent Agreement
- NOC from the landowner
FAQ's
Few doubts important to be resolved quickly
Since a proprietorship firm is essentially an unregistered legal entity, dealings with vendors, banks, and other entities only require legal entity verification from the government. Under the Firm Act, there is no Registration Certificate. It is beneficial to register a proprietorship firm to prove the legal status of the business.
Anyone may choose sole proprietorship registration online. Anyone who wishes to launch a firm with less capital can choose this type of business structure. Additionally, you are the only one who has power over the company. It takes a week to ten days for a proprietorship firm registration online.
Yes. You can transform your sole proprietorship business into a private limited company. For the same, there is a regular procedure.
You don’t need to visit our office for this purpose. Your work is completed after you deliver the necessary documents to us by email or Whatsapp.
