Proprietorship in India is a type of unregistered business entity that is owned, managed, and controlled by one person. The micro and small businesses that are operating in the unorganized sector prefer registering as a proprietorship in India. 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.
A sole proprietor is the owner of the sole proprietorship, he is recognized as an entity same as the business. As the sole proprietor is the owner of the business he is entitled to all the company's revenue. The sole proprietorship is completely under the control of the proprietor. Hence, he makes the decisions for the company.
To run a business as a sole proprietor some licenses and permits are required. The license will depend on the industry, state, and locality.
The process of proprietorship registration in India can be done online. All you need to do is submit the following documents:
IndiaFilings can help you in obtaining a sole proprietorship in India in just 5-7 working days.
The process of registering for a Proprietorship in India is completely online. There is no need to submit the documents manually. IndiaFilings has helped thousands of entrepreneurs to obtain proprietorship registrations in India.
Starting a sole proprietorship in India is easy if all the compliances are properly met.
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 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.
Udyog Aadhar 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 Udyog Aadhar registration is completely online. The major objectives of the Udyog Aadhar registrations are as follows:
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 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:
Supporting Documents (if any):- NOC by the Municipality or the Panchayat, Health NOC.
There are various reasons why one should register as a proprietorship firm. Here are some of them:
The proprietorships registered in India are required to file income tax returns. As the proprietors and the proprietorships are the same the income tax return filing for the proprietor and proprietorship is the same.
Under the Income-tax Act, all the proprietors below the age of 60 will file ITR only if the total income exceeds Rs. 2.5 lakhs. If the proprietor is over 60 years and below 80 years, he should file ITR only if his income exceeds Rs. 3 lakh. Proprietors over the age of 80 years are required to file income tax if the income exceeds Rs. 5 lakh.
At IndiaFilings we offer expertise in Income tax return filings for several small and medium-sized proprietorship firms across the country. Get in touch with an IndiaFilings Tax Expert to file the Income-tax return for your Proprietorship today.
An audit is required for the proprietorship firms if the total sales are over Rs. 1 crore during the financial year.
In a professional case, an audit is necessary if the total gross receipts are more than Rs.50 lakhs during the financial year assessment.
Also, an audit is required for any proprietorship firm under a presumptive taxation scheme irrespective of turnover if the income claimed is lower than the deemed profits and gains under the scheme.
Audit for Proprietorship for income tax purposes must be conducted by a practicing Chartered Accountant.
Proprietorship firms are required to file Form ITR-3 or Form ITR-4-Sugam.
Form ITR-3 can be filed by a proprietor or a Hindu Undivided Family carrying out a proprietary business or profession.
Form ITR-4-Sugam can be filed by a proprietor who would like to pay income tax under the presumptive taxation scheme. A presumptive taxation scheme is designed to help ease the compliance burden of small businesses by assuming a set profit margin on the business or profession's total income.
The income tax return of a proprietorship firm in ITR 3 or ITR V Sugam can be filed online using the proprietor's digital signature or manually.
Proprietorships in India are a type of unregistered business entity that is owned, managed, and controlled by one person. The micro and the small businesses that are operating in the unorganized sector prefer getting registered as Sole proprietorships.
An Indian Citizen with a current account in the name of his/her business can get a sole proprietorship registration.
It takes around 8 to 10 days but is subject to government processing and document submission.
No, there is no certificate of Incorporation given.
As the sole proprietorship and the proprietor are the same the individual has to just file the Income-tax returns and GST returns filing for the proprietorship firm.
No there is no minimum requirement to start a sole proprietorship in India.
The sole proprietorships exist as long as the proprietor is alive and is desiring to run the business.
Yes, a sole proprietor is considered to be the same as the sole proprietor.
It generally differs from state to state as in Maharashtra a Shop and Act license is required and for West Bengal, the trade license is required.
The proprietor owns, controls, and manages the sole proprietorships. He has a complete hold over the proprietorship.
Last updated: Nov 16, 2021