Proprietorships are ideal for very small businesses in the unorganised sector. A sole proprietorship is a type of unregistered business entity that is owned, managed and controlled by one person. Sole proprietorships are one of the most common forms of business in India, used by most micro and small businesses operating in the unorganised sectors There is no mechanism provided by the Government of India for the registration of a Proprietorship. Therefore, the existence of a proprietorship must be established through tax registrations and other business registrations that a business is required to have as per the rules and regulations. For instance, GST Registration can be obtained in the name of the Proprietor to establish that the Proprietor is operating a business as a sole proprietorship. Thus, all the registrations for a proprietorship would be in the name of the Proprietor, making the Proprietor personally liable for all the liabilities of the Proprietorship.
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Ease of formation is its most important feature because it is not required to go through elaborate
legal formalities. No agreement is to be made and registration of the firm is also not essential, only related licenses are required according
to to the line of business. - The capital required in the operations is totally arranged by the owner himself or may be by profits of his business.
- Owner has a complete control over his business and its operations, he is the sole decision maker.
- Owner alone enjoys the benefits/profits of the business and the losses too.
- The firm has no legal existence separate from its owner.
- The liability of the proprietor is unlimited i.e. it extends beyond the capital invested in the firm.
- Lack of continuity i.e. the existence of a sole proprietorship business is dependent on the life of the proprietor and illness, death etc. of the owner brings an end to the business. The continuity of business operation is therefore uncertain.
- Ease to formation
- maximum profit
- secrecy of business
- quick decisions
- ease tax preparation
- Flexibility of operations
- Limited capital
- Limited managerial ability
- Lack of continuity
- MOA + AOA
- Unlimited liability
- Heavy burden
- Hard to raise money
For opening bank account a proprietor can take following REGISTRATIONS
Tax Deduction Account Number
I (TAN) is an alphanumeric number issued to individuals who are required to deduct tax on payments made by them to their employees under the Indian Income Tax Act, 1961.
Registration under Shops and Establishment Act :
This is state specific requirement, in some states it is mandatory and in some it is optional, for example in the Delhi NCT it is optional.
Trade Mark Registration :
Brand Name, Logo, Slogan, Label etc.; are intellectual properties which acquires value over a period of time and it is advisable to protect them under as trade mark.
Sales Tax (VAT) Registration:
This is a tax on sale of goods within the state which is governed by the respective vat act of the state.
Central Sales Tax Registration :
This is a tax on Sale of goods between the states, which is governed by the central sales tax act.
Service Tax Registration :
This is a tax on the services provided by the proprietor apart from the negative list of service.
Provident Fund Registration :
The moment number of employees exceeds 20 the proprietor is required to get itself registered with the regional office of the Provident Funds Organization. The contribution rate is 12% each from employee as well as employer.
Employee State Insurance Corporation (ESIC) Registration :
every organization including the proprietorship concerns employing more than 10 employees having salary more than 15000/- is required to get themselves registered with the concerned Regional office of the ESIC,.
- Easy to Start
- Single Promoter
- Lower Taxes
- Easy to Close
Identity Proof of proprietor
- Copy of PAN Card of proprietor of Indian nationals
- Notarised passport copy for Foreign Nationals
Address Proof of proprietor
- Bank Statement
- Driving License
- Pan card
- Aadhar card
- Passport
- Electricity bill not older than 2 months
Proof for Registerd Office in INDIA
- Copy of Property papers(If owned property)
- Copy of Rent agreement (If rented property)
- Electricity/ Water bill not older than 2 months
- Landlord NOC
Passport size photo of proprietor
- Applying for PAN. If you already have one this step is not required.
- Name of the business.
- There is no formal registration required, but the next step is to open a bank account in the name of the business.
- You can also register for GST if your turnover exceeds Rs 20 lakh.
- One can also get a Shop and Establishment registration done.
