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Proprietorship Firm Registration @ Rs 999/-

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Proprietorship Firm

We help in setting up your business/startup and guide you choose the appropriate business structure.

Information

  1. A sole proprietorship is a type of unregistered business entity that is owned, operated & controlled by a single person.
  2. Sole proprietorship's are one of the most common forms of business in India, used mostly by small businesses.
  3. However, after the startup phase, proprietorship's does not have benefits such as limited liability, corporate status, independent & perpetual existence, transferability - which are preferable features for any business.
  4. Therefore, proprietorship is suitable only for unorganised & small businesses
  5. Therefore, the existence of a proprietorship must be established through tax registrations and other business registrations that a business is
  6. All the registrations for a proprietorship would be in the name of the Proprietor, making the owner personally liable for all the liabilities of the business operations.

Select a Package Amount
Registration
Add-on Package

  • Bank Account opening assistance
  • Logo Design
  • 100 Letter Heads
  • 100 Visiting cards for 2 Directors
  • Physical Incorporation Certificate
  • Physical Share Certificate
  • 21 Agreement Formats
Total Amount
Rs
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Registrations

  1. Starting a sole proprietorship requires no legal formalities or registration.
  2. However, business licenses as required by State / Central Government and tax registrations must be obtained. Eg. Person operating in Food industry must obtain the Food Licence.
  3. Further, in case the name of the business is unique or brandable, a trademark registration is recommended.

Tax Registrations

  1. Based on the business activity of the Proprietorship, tax registrations must be obtained from the relevant tax authorities.
  2. Some of the tax registrations that would be required for a proprietorship are:GST Registration – Required as per GST turnover limit based on type of business Professional Tax Registration – Required for businesses employing Professionals ESI/PF Registration – Required for most businesses having employees

Trademark Registration

There is no Registrar or Registry for Proprietorships in India. Therefore, a proprietorship can be operated under any name, as long as it doesn’t conflict with any trademark registrations and is not in conflict with any other rules and regulations. Therefore, if you want to use exclusively to represent goods and services offered by your business; then it is recommended that you should obtain trademark registration.

Opening a Bank Account

Opening a bank account in the name of the proprietorship firm is one of the first steps after starting a proprietorship, to open a bank account in the name of the proprietorship, two of the following documents are required as per RBI’s Know Your Customer (KYC) norms: Certificate / license issued by the Municipal authorities under Shop & Establishment Act, Registration / licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority / Department. IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of bank account. GST Registration Certificate 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, etc.

Advantages of Proprietorship firm

Easy Incorporation

A sole proprietorship business does not have any specific registration requirements and the proprietor’s legal identity is used by the business. Hence, a proprietorship can be started without any registration. Using the PAN and Aadhaar of the promoter,  Udyog Aadhaar registration and Trademark Registration can be obtained optionally to create and protect the identity of the business.

Ease in making decisions

It is easier to operate the business as the owner is the sole decision maker.

Taxation & Compliance

Since a proprietorship firm is not registered with any Government authority like the MCA, the compliance requirements are least. Further, the proprietor needs to file income tax returns if the firm has taxable income of more than Rs.2.5 lakhs per annum. In case of proprietors who are senior citizen (the age of 60 years or more) during the previous year, income tax filing would be required only if the taxable income is more than Rs 3,00,000. In case of proprietors Super Senior citizen(the age of 80 years or more) the threshold amount is Rs. 500000.

Disadvantages of Proprietorship firm

Unlimited Liability

This is the worst drawback of a sole proprietorship firm. On the occurrence of a business loss or initiation of procecution by tax authorities, the owner is solely responsible to meet the liabilities, which implies that if the need occurs, his/her personal assets may have to be used for discharging the liabilities.

Difficult to raise funds

A sole proprietor cannot raise funds through any type of equity funding. Further, banks are also reluctant of lending large sums of money to a proprietorship firm as the existence of the proprietorship firm is tied to the owner. On the other hand, in a company or LLP, more than one person would be responsible for the liability and business continuity would be assured in the event of death or insolvency of one of the promoters. Hence, it would be easier for a company or LLP to get a bank loan when compared to a proprietorship firm.

Higher Tax Incidence

Proprietorship firms are taxed similarly to an individual. Hence, income tax rate for a proprietorship firm is based on slabs. Though the income tax rate for income of upto Rs.10 lakhs is lower as compared to a company, proprietorship firms cannot enjoy various benefits enjoyed by an LLP or Company. Further, for taxable income of more than Rs.10 lakhs, the income tax rate for a proprietorship firm is higher than the income tax rate of a company. Hence, in the long-run, it is highly recommended to register a company to reduce income tax liability.

Process

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Data & Document Collection

Fill up basic details in form & share required documents.

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Sit Back & Relax

Do nothing & Cooperate with us.

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Registration Done

You will get the registration certificate

Entity Type Private Limited Company One Person Company LLP Partnership Firm Sole Proprietorship
Act Companies Act, 2013 Companies Act, 2013 Limited Liability Partnership Act, 2008 Indian Partnership Act, 1932 No Specified Act
Minimum Shareholders 2 Directors and Shareholders 1 Person 2 Partners 2 Partners 1 Person
Maximum Shareholders 200 Shareholders 1 Person No Limit 100 Partners 1 Person
Duration for Registration 7 - 10 working days 7 - 10 working days 7 - 10 working days 7 - 10 working days 2-3 working days
Mandatory Compliances
  • Secretarial Compliances
  • Statutory Audit
  • Income Tax Return
  • Secretarial Compliances
  • Statutory Audit
  • Income Tax Return
    		•
  • Secretarial Compliances
  • Statutory Audit if sales exceeds Rs 40 Lakhs.
  • Income Tax Return
    		•  Income Tax Return Income Tax Return
    Advantages
  • Limited Liability.
  • Corporate Identity.
  • Perpetual Succession.
  • Easy to raise funds.
    		•
  • Limited Liability.
  • Corporate Identity.
  • Perpetual Succession.
  • Easy to raise funds.
    		•
  • Limited Liability.
  • Corporate Identity.
  • Perpetual Succession.
  • Lesser Compliance than Pvt Ltd Co.
  • Easy to Start.
  • Easy Decision Making.
  • Less Compliance.
  • Easy to establish and operate.
  • Sole beneficiay of Pofits.
  • Simple Compliance and Taxation
    • Disadvantages
  • Cost of compliance is higher than LLP.
  • Closure compliance is more than LLP.
  • Compulsory Statutory Audit
    		•
  • Cost of compliance is higher than Proprietorship.
  • Closure compliance is more.
  • Compulsory Statutory Audit
    		•
  • Raising funds from Investors is difficult than Private Limited Co.
  • Cannot be converted into Private Limited Company
    		•
  • Unlimited Liability.
  • Difficulty in raising funds from Investors.
  • No Perpetual succession.
  • Unlimited Liability.
  • Difficulty in raising funds.
  • Higher tax if Income exceeds specified Limit.
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    Frequently Asked Questions

    Does the proprietor have to be an Indian to start a Proprietorship firm?

    For Private Company registration in India, following things are mandatory: The Proprietor must be an Indian citizen and a Resident of India. There is no approval required prior to the commencement of business. But, Non-Resident Indians (NRI) and Persons of Indian Origin can invest or start sole their proprietorship business only with prior approval of the Government of India.

    Under which Government Authority is the application of Sole Proprietorship Firm Registration is submitted?

    Sole Proprietorship is an unorganized business structure and there is no specific law enforced for the said registration. SetupStartup.in provides services for Sole Proprietorship registration under MSME (Micro, Small and Medium Establishments) Development Act, 2006 of Central Government. The business entity must fulfill the registration requirement.

    What is the minimum amount of capital required to register sole proprietorship online?

    One can start a Sole Proprietorship Firm with any amount of Capital. An amount sufficient to commence the business should be introduced. As there is no restriction on infusion or withdrawal of amount, the proprietor can change capital anytime. Introducing the capital in Business is the sole decision of an owner of the firm i.e. the Proprietor.

    How to register the name of a sole Proprietorship business?

    There is no registry or regulation for registering the name of a Sole Proprietorship Firm. Therefore, the name of a sole proprietorship company can adopt any name based on its availability such that it does not infringe on registered trademarks. Since there is no registry or regulation for registering the name of a Proprietorship, the only way to ensure the exclusive use of the business name is to obtain a Trademark Registration of a business name.

    Will my Proprietorship firm have a separate legal identity or new PAN card after registration?

    There is no separate identity of a proprietor or its business even after the sole proprietorship firm is registered. Hence, the PAN card of the firm and the Proprietor is the same. The assets and liabilities for the proprietor and the proprietorship also remain the same.

    What are the benefits of Proprietorship Firm Registration under MSMED Act?

    The registered entity under MSMED Act can avail subsidies, incentives, and schemes launched by the Central Government with respect to the specific Business on the basis of a registration certificate.

    Who can apply for registration under MSMED Act?

    Any business entity can apply for this registration. However, recently, the Central Government has excluded the activities of Trading to be registered under this Act. The business with Trading Activities can apply for registration under Shop & Establishments Act.

    Can I have partners in a Sole Proprietorship Business?

    Characteristics of a Sole Proprietorship Firms is such that it cannot have any other Business Partner as it is owned and controlled by one person itself. If your Business requires the involvement of Partners, you may opt for a Partnership Firm, Private Limited Company, or Limited Liability Partnership, as the case may be.

    Can other people invest in a Proprietorship?

    Sole Proprietorship Business entity is owned, managed and controlled by one person. So, Proprietorship firms cannot issue shares nor have investors.

    What are the compliance requirements for starting a Sole Proprietorship Firm in India?

    Proprietorship will have to file their annual tax return with the Income Tax Department. Other tax filings such as GST returns filing may also be necessary from time to time, based on the business activities performed and registrations opted. However, one needs to file the annual report or accounts with the Ministry of Corporate Affairs, which is required for Limited Liability Proprietorships and Companies.

    What comes as a part of the Legal Documents Library?

    Legal documents Library involves documents like Employment Letter, Legal Notice, Non-Disclosure Agreement, Terms of Service and Privacy Policy and many more are a part of the Legal Documents Library.