What is a Proprietorship Firm Registration?
You’ve jumped into the business world for yourself. You don’t have excess paperwork to start a sole proprietorship. But there are some important things you need to know before starting your journey in entrepreneur’s world.
A sole proprietorship is most preferred for of business entity as it is simplest and easiest form of business to register and to maintain. There is no formal set of rules and regulation for sole proprietorship registration. However, in order to run a business there are certain requirements that are needed to fulfill.
A sole proprietorship is kind of business entity which solely owned, controlled and managed by a single person. It is the easiest way of running business, with the ease of registration process and with lease compliances responsibilities.
Sole proprietorship is the most common form of business practiced in India and is not governed by any specific book of laws. Proprietor has the whole rights of the business to himself in terms of legal formalities, decision making, finance etc.
There is no limited liability in case of sole proprietorship. As the proprietor and the proprietorship firm is treated as the same entity, the person who manages the business is the sole director as well as the shareholder and the proprietor can also sign the agreements or contacts in his name even if the business is registered under any other name. Also, the proprietor can use their personal accounts requirements.
Any individual who is want to commence a business with low capital should choose this kind of business form. Sole Proprietorship business is mostly preferred by small businesses holders such as retail, wholesale, etc. Such businesses have the simple business plan, nominal or the least financial risk and have small product market. The business with a little or minimal capital requirements can also prefer to start their work as Sole Proprietorship.
Nowadays, Proprietorships are also required to register itself under Tax laws such as GST Registration, if it falls under a certain category. A sole proprietor registration can be done by registering their business in –
• GST registration
• MSME registration
• Shop and Establishment
There are different registrations, licenses and permits to start your business that will be required along with the above registrations. This requirement depends on the kind of business a individual wants to run. For example, to start your food business as a proprietorship, you might need to register with FSSAI or get FSSAI License.
Is a sole proprietorship right for you to start?
If you’re into business and haven’t created a formal business structure, then probably you’re already working as a sole proprietor– Next step is to understand various implications.
What are the Benefits under Proprietorship Registration:
• Low tax liabilities
• Easy to control as managed by single promoter
• Freedom to choose any business name but not registered by a company
• Easy to start with the minimal registration process
• Easy to shut down the company with very less compliances
• Taxes – All business profits are personal income for a proprietor and pay self-employment tax on those profits
Documents Required, Compliance & Taxes
Documents Required to Register Sole Proprietorship Firm
• Voter’s ID/Passport/Driver’s License
• Passport-sized photographs
• PAN Card
• Latest Bank Statement/Telephone or Mobile Bill
• Rental agreement or sale deed (in case of Shops & Establishment Act Registration).
Compliances Required by a Proprietorship Firm:
• TDS Return Filing
• Filing Income Tax Return
• GST Compliances
• Drafting of Financial Statements
• Tax Audit Compliance
• Documentation of invoices of sales and purchases
Taxes
• All business profits are personal income for a proprietor and pay self-employment tax on those profits.
Kaushikii Four Step Process For Proprietorship Firm Registration
If above conditions satisfy your requirement, then Sole proprietorship best suits your business needs. Now in order to run a proprietorship business, a little more preparation will definitely go a long way.
Business Licenses
There are different registrations, licenses and permits to start your business. For example, to start your food business as a proprietorship, you might need to register with FSSAI or get FSSAI License.
Tax Advice
To Prepare & file business taxes can be complicated. Our expert CA/CS will help you to prepare and file tax forms correctly with the minimal fee and on time.