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Proprietorship Firm

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Proprietorship Firm

Sole Proprietorship is a business which is managed by a single person. Registration is not necessary. In present time, entrepreneurs are picking proprietorship as their business form. 

Those person who want to start less investment business can use this business form. It starts in 10-15 days which is a short span of time. In this form of business one person handles on his own. There are certain points why proprietorship is chosen:

  • Open bank account on the name of business

  • Not costly

  • Less compliance

 
 

Registration Process: 

The registration process of the Proprietor firm is simple and a short process.

Step 1 : Fill application form of Proprietorship firm.

Step 2 : Make payment accordingly, via online modes.

Step 3 : Submit the necessary documents needed for registration.

The registration can be done in four ways:

Registration under MSME : MSME Registration Certificate + CA Business Certification 

  • It is applicable within state only
  • Turnover must be less than Rs. 20 lakh

GST registration certificate as Proprietorship Entity

  • It is applicable on inter-state sales 
  • Business is based on E-commerce
  • Turnover is more than 20 lakh Rs.

Shop Act License

  • It is expensive
  • To start a new shop this may be used.

Income Tax Returns (Business ITR) 

  • It is only for old & traditional business

Advantages

  • Can be started by one person easily
  • Minimum compliance for running of business
  • Less expensive than other forms of business 
  • No corporate tax payments 
  • Only person handles the business

Disadvantages

  • Unlimited liability of proprietorship, he is personally liable for all the transactions of the firm.
  • Business depends on only one person i.e. on his demise business may shut down.
  • Only one person manages the business, so he may face difficulty in increasing capital.

Requirements

  • Always file Income Tax Return annually
  • File GST Return if you are registered under GST
  • File TDS return if proprietor is liable for Tax Audit

Documents Required

  • Utility bill 
  • KYC Bank documents
  • License under Shop & Establishment Act
  • Income Tax Return of latest financial year
  • Passport size photograph
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