Proprietorships can be started in India by an Indian Citizen. Since, there is no legal entity, the Proprietors PAN is used as the basis of all registrations and compliance
A sole proprietorship is a type of unregistered business entity that is owned, managed and controlled by one person. Sole proprietorship's are one of the most common forms of business in India, used by most micro and small businesses operating in the unorganised sectors. Proprietorships are very easy to start and have very minimal regulatory compliance requirement for started and operating. However, after the startup phase, proprietorship's do not offer the promoter a host of benefits such as limited liability proprietorship, corporate status, separate legal entity, independent existence, transferability, perpetual existence - which are desirable features for any business. Therefore, proprietorship registration is suited only for unorganised, small businesses that will remain small and/or have a limited period of existence.
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, VAT or Service Tax or 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.
IndiaFilings is the market leader in company registration services in India, offering a variety of company registration like private limited company registration, one person company registration, Nidhi Company Registration, Section 8 Company Registration , Producer Company Registration and Indian Subsidiary registration. The average time taken to complete a proprietorship registration is 3 - 5 working days, subject to government processing time and client document submission. Get a free consultation for proprietorship registration and business setup in India by scheduling an appointment with an IndiaFilings Advisor.
Procedure and documents requried for starting a proprietorship in India. A sole proprietorship is one of the most common form of business in India. Any Indian citizen can easily start a proprietorship.
Sole proprietorship is the most widespread form of business ownership in the world. As the name suggests, it is a kind of business in which a single person is vested with the ownership of the assets and affairs of the business. In this article, we look at the advantages and disadvantages of a proprietorship firm.
Procedure for opening sole proprietorship bank account. The Reserve Bank of India has laid out Know Your Customer (KYC) norms for opening of current account in the name of a sole proprietorship along with the list of documents required.
Under Income Tax Act, all proprietors below the age of 60 years are required to file income tax return if total income exceeds Rs. 2.5 lakhs. The income tax rate for proprietorship is slab based starting from 10% for income between Rs.2.5 lakhs to Rs.5 lakhs.
File income tax return of proprietorship firm online with Expert help. Proprietorship firms are required to file tax return each financial year if taxable income exceed Rs.2.5 lakhs. IndiaFilings provides accounting and tax return filing services to help proprietorships file tax returns.
GST registration procedure, eligibility and documents required. Entities with an annual revenue of more than Rs.20 lakhs must obtain GST registration. Complete your GST registration online with expert help from IndiaFilings and obtain your GSTIN in less than a week from the comfort of your home.
File GST return online through IndiaFilings with GST Expert Support. You can prepare and file GSTR-1, GSTR-2, GSTR-3 and GSTR-4 return online through IndiaFilings. In addition to filing GST returns, you can also issue GST invoices and record purchases on LEDGERS to automatically file GST returns.
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The Reserve Bank of India has laid out Know Your Customer (KYC) norms for opening of current account in the name of a sole proprietorship and all Banks have procedure to open sole proprietorship current account in business name. GST registration is required in most banks to open a current account or business account for a proprietorship.
The Proprietor must be an Indian citizen and a Resident of India. Non-Resident Indians and Persons of Indian Origin can only invest in a Proprietorship with prior approval of the Government of India.
PAN Card for the Proprietor along with identity and address proof is sufficient to start a Proprietorship and obtain other registration, as applicable or required.
There is no limit on the minimum capital for starting a Proprietorship. Therefore, a Proprietorship can be started with any amount of minimum capital.
An IndiaFilings Associate will understand your business requirements and help you start a Proprietorship by obtaining the relevant registrations. IndiaFilings will help obtain the necessary registrations to help the Proprietor open a bank account in the name of the business, thereby proving an identity for the business.
To open a bank account for a Proprietorship, Reserve Bank of India mandates that the proprietor provide two forms of registration for the Proprietorship along with the PAN Card, identity proof and address proof of the Proprietor. The two forms of registration can be any two of the following: service tax registration, MSME registration, VAT/TIN/CST registration, shop & establishment Act registration, Professional license, Chartered Accountant certificate or others as provided in the RBI Know Your Customer norms.
No, the Proprietorship firm and the Proprietor are one and the same. The PAN Card of the Proprietor will be the PAN Card of the Proprietorship business.Therefore, there will be no separate legal identity for the business. The assets and liabilities of the Proprietorship business and the Proprietor will also be one and the same.
Proprietorship firms do not have a Certificate of Incorporation or Certificate of Registration. The identity and legitimacy of a Proprietorship firm is established by registering with the relevant or applicable Government authorities.
There is no registry or regulation for the registering the name of a Proprietorship. Therefore, proprietorship firms can adopt any name that do not infringe on registered trademarks. Since there are no registry or regulation for registering the name of a Proprietorship, the only way to ensure exclusive use of the business name is to obtain a trademark registration of the business name.
A business operated by proprietorship firm cannot be transferred to another person, unlike a Limited Liability Partnership or a Private Limited Company. Only the assets in the Proprietorship can be transferred to another person through sale. Intangible assets like Government approvals, registrations, etc., cannot be transferred to another person.
Proprietorship firms are business entity that are owned, managed and controlled by one person. So Proprietorship firms cannot issue shares or have investors.
Proprietorship will have to file their annual tax return with the Income Tax Department. Other tax filings like service tax filing or VAT/CST filign may be necessary from time to time, based on the business activity performed. However, annual report or accounts need not be filed with the Ministry or Corporate Affairs, which is required for Limited Liability Partnerships and Companies.
It is not necessary for Proprietorships to prepare audited financial statements each year. However, a tax audit may be necessary based on turnover and other criterion.
Yes, there are procedures for converting your Proprietorship business into a Company or a LLP at a later date. However, the procedures to convert a proprietorship business into a Company or LLP are cumbersome, expensive and time-consuming. Therefore, it is wise for many entrepreneurs to consider and start a LLP or Company instead of a Proprietorship.
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