Proprietorship

Proprietorship Registration can easily be obtained under the provisions of Companies Act, 2013. Proprietorship business license can be acquired by opening a current Bank Account.

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What is a proprietorship?

A sole proprietorship is a type of unregistered business entity that is owned, managed and controlled by one person. Sole proprietorship is the most common type of business in India and it is used by most micro and small businesses operating in the unorganised sectors.

Proprietorships are simple to start and have minimal regulatory compliance requirements for operating. This entity is ideal for entrepreneurs who are getting into business for the first time and for small businesses with few clients.

Who is a proprietor?

The owner of a sole proprietorship business in India is called a proprietor. It cannot be a corporate or legal entity. The proprietor and the proprietorship are considered to be the same entity legally.

The PAN and other documents of the proprietor are the basis for obtaining all other business registrations and licenses. In case of any issues of liability in the business, the proprietor is held personally liable for it.

Proprietorship Firm Registration Process

There are simply 3 steps to register your Firm with Vyapar Formations

Step1

Fill-Up your Proprietorship Firm Application Simplified form.

Step2

Make payment of package online via cards/netbanking/upi/wallets etc in a secure way

Step3

Assign a dedicated CA/Legal experts & submit the docs online via emails or WhatSapp. Be Relax! Your work is done.

Documentation

Documents Required for Sole Proprietorship Registration

KYC of Applicant

i.e Pan Card + Aadhar Card or Voter or Driving or Passport etc.

Firm Address Proof

Electricity Bills copy or gas bill or phone bill etc. (No issues if it’s on other names)

For the GST Additional

Passport Size Photograph of the applicant
Personal Bank Account Cancel Cheque or Bank Statement or Passbook Front Page anyone.

Time to Register Proprietorship Firm ?

MSME Registration + CA Certification | 2-6 days avg from working on the assignment.

GST Registration | avg 7 days from working on the assignment. How to Search a Company Name.

Benefits

Benefits of Proprietorship Firm Registration?

1 Person Required as Single Entrepreneur

Single Owner of the Business

Easy to Start and Easy to Close

Complete Control

Lower Cost of Formation and Compliance

Advantages

Ease of setup

The entrepreneur can start operations and receive payments from clients as no registrations are required to start a proprietorship.

Ease of compliance

The other advantage of a Proprietorship is that it requires no additional compliance in most cases. The PAN of the proprietor and proprietorship are one and the same. Hence in most cases, only income tax return in Form ITR-3 must be filed every year.

Ease of dissolution

The proprietor does not have to particularly wind up the company in case he wants to cease operations. This saves a lot of time and effort.

Disadvantages

Liability protection

A sole proprietorship does not provide the proprietor with limited liability protection. So the proprietor would be held personally liable in case of any loss or liability.

Transferability

Any license or registration obtained in the name of the proprietorship cannot be transferred to any other person or entity.

Lifespan

The existence of the sole proprietorship is tied to the proprietor hence it would cease to exist with the proprietor.

Fundraising

A proprietorship cannot raise equity funds from angel investors, venture capital firms or PE funds. Banks also tend to restrictions on the amount of credit they can lend.

Due to the disadvantages mentioned above, this registration will be suitable only for small businesses and the unorganized sector with a limited period of existence.

For more information on Proprietorship Registration, consult Vyapar formations.

Our team will guide you through the complete process of Proprietorship required for your company.

FAQ

1Is minor are allowed to start a sole proprietorship?

No, a minor cannot allow starting a sole proprietorship. Only a major whose age is above 18 can start a sole proprietorship firm.

2Is a sole proprietorship allowed to have employees?

Yes, a sole proprietor is allowed to hire and have employees.

3What is the tax to be paid by the sole proprietors?

The business does not come under tax purview as such separately however, you must report all business income or losses on your personal income tax return.

4I want to use my name as my sole proprietorship, can I do so?

Yes, you can do so as no legal restrictions as such are there for name usage and also for the fact that it is not a legal entity. It is a simple set up wherein a person starts his business and is accountable for his own acts.

5What happens to the property when a sole proprietor dies?

As a sole proprietor, your business ceases to exist when you die. Your business's assets and liabilities become part of your estate.

6How to verify sole proprietorship in India?

The registration for the sole proprietorship is not necessary in India. But to maintain and verify the business of sole proprietorship, one needs to open a current bank account which will prove the existence of the firm.

7How to change the name of sole proprietorship in India?

The amendment or change in the name of the sole proprietorship is made by structuring sale agreement, cancelling or changing DBA, notifying interested parties, by giving the public and government notice.

8How to close the sole proprietorship business in India?

There is no proper procedure for the winding up or closing of the sole proprietorship business in India. Only once the closing is done by the proprietor he has to inform the employees working in the sole proprietorship firm.