SOLE PROPRIETORSHIP

OVERVIEW

A Sole Proprietorship form of business organisation is where a business is managed by a single person. Generally, it does not require any registration as such. Any individual who wants to start a business with less investment can choose this type of business form.It is very easy to start a sole proprietorship in India as it has very few regulatory compliances for conducting businesses. Proprietorship registration is ideal for the entrepreneurs who are getting into the business for small businesses with very few clients. The liability of the sole proprietorships is limited and they also do not have perpetual existence.

How to register a sole proprietorship in India?

Starting a sole proprietorship in India is easy if all the compliances are properly met.
  • Decide on the suitable business name.
  • A suitable business location designated as the place of doing business should be selected.

Shops and establishment registration

The Shop and establishment license covers all the business entities such as the shops, restaurants, commercial establishments, the retail trade/ business, profit-making organizations, public amusements, and so on. Irrespective of any business establishment whether fully functional or not it is necessary to get the business registered. The local municipal corporation issues this license and it depends on the number of employees in an establishment.

GST registration

GST has replaced many indirect taxes such as the service tax, Value added tax, Central sales tax, excise duties, additional customs duties, and so on. An individual making the interstate supply of goods and services and having an annual turnover of over Rs.40 lakh is required to get GST registration.

Getting a GST registration makes the business legally recognized as the supplier of services or goods. Small businesses can also opt for the composition scheme to lower the tax rates. Which has reduced the taxation and the compliance burden significantly. For certain businesses getting s GST registration is mandatory. According to the GST Act, penalties are applicable if a business is operating without ba GST registration.

UdyogAadhar Registration

UdyogAadhar Registration is provided to the Micro, small, and medium-sized businesses in India under the Micro, small, and medium enterprise development Act,2006.

Earlier recognized as MSME registration, the process of obtaining the UdyogAadhar registration is completely online. The major objectives of the UdyogAadhar registrations are as follows:

  • To enable the micro, small and medium enterprises to compete with the international competition efficiently;
  • To promote the growth of micro, small and medium enterprises on a large scale to tackle the problems related to unemployment and poverty effectively.
  • To extend the benefits of various government schemes at one stop to the SSI units.
  • To safeguard the small-scale industries from financial harassment in the hands of the big industries.

TAN Registration

TAN or the Tax Deduction Collection Number is a mandatory ten-digit number required for all persons who are supposed to pay the Tax deduction at source or TDS on behalf of the Government.

The person deducting the tax at the source must deposit the deducted tax to the central Government to quote the TAN number.

Salaried individuals are not required to obtain TAN or deduct tax at the source. A proprietorship business and other entities must deduct tax at the source, making certain payments like salary, payments to the contractor or the subcontractors, amount of rent exceeding 1,80,000 per year, etc. On deducting the TDS, the entity with TAN registration will issue a TDS certificate as proof of collection of tax.

FSSAI Registration

FSSAI registration should be obtained from the Food Safety and Standard Authority of India in the proprietor’s name if he is involved in the selling of food products or handling of the food products. Click Here know more about the people who need FSSAI registration.

Here is a list of documents required for FSSAI registration:

  • Photo of the food business operator
  • Document for Identity proof like Ration card, the Voter ID card, Pan Card, Driving License, Passport, Aadhar Card, Senior Citizen Card, Department Issued ID.
Supporting Documents (if any):- NOC by the Municipality or the Panchayat, Health NOC.

Advantages

There are various reasons why one should register as a proprietorship firm. Here are some of them:
  • Complete Control: Proprietorships firms are owned and operated by just one person. The owner has full authority and can make all the decisions as no partners are involved to consult.
  • Easy Setup: no registrations are required to start, a proprietorship can create and receive payments from clients very easily
  • Easy Compliance: The significant advantage of the Proprietorship is that it doesn't require any additional compliance in most cases.
    The PAN of the Proprietor and Proprietorship are the same.
    Hence, in most cases, only income tax returns in the form of ITR3 must be filed every year.
  • Dissolution: If an individual has to cease operation, he does not have to wind up the company significantly. This undoubtedly saves time.
  • Requires less investment: Registering a proprietorship in India requires very little investment. Hence, anyone who wants to start a business with low funds can go for proprietorships as no investments are involved.
  • Requires less investment: The Proprietorship firms' financial reports are public like that of the LLPs, where the financial statements are made public.

Documents required for Sole Proprietorship​ Registration

  • Aadhaar Card
  • PAN Card
  • Registered Office proof
  • Bank Account