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Proprietorship

2,950.00 2,358.82

Description

What is a Proprietorship Firm Registration?

You’ve jumped into the business world for yourself. You don’t have excess paperwork to start a sole proprietorship. But there are some important things you need to know before starting your journey in entrepreneur’s world.

A sole proprietorship is most preferred for of business entity as it is simplest and easiest form of business to register and to maintain. There is no formal set of rules and regulation for sole proprietorship registration. However, in order to run a business there are certain requirements that are needed to fulfill.

A sole proprietorship is kind of business entity which solely owned, controlled and managed by a single person.  It is the easiest way of running business, with the ease of registration process and with lease compliances responsibilities.

Sole proprietorship is the most common form of business practiced in India and is not governed by any specific book of laws. Proprietor has the whole rights of the business to himself in terms of legal formalities, decision making, finance etc.

There is no limited liability in case of sole proprietorship. As the proprietor and the proprietorship firm is treated as the same entity, the person who manages the business is the sole director as well as the shareholder and the proprietor can also sign the agreements or contacts in his name even if the business is registered under any other name. Also, the proprietor can use their personal accounts requirements.

Any individual who is want to commence a business with low capital should choose this kind of business form. Sole Proprietorship business is mostly preferred by small businesses holders such as retail, wholesale, etc. Such businesses have the simple business plan, nominal or the least financial risk and have small product market. The business with a little or minimal capital requirements can also prefer to start their work as Sole Proprietorship.

Nowadays, Proprietorships are also required to register itself under Tax laws such as GST Registration, if it falls under a certain category. A sole proprietor registration can be done by registering their business in –

  • GST registration
  • MSME registration
  • Shop and Establishment

There are different registrations, licenses and permits to start your business that will be required along with the above registrations. This requirement depends on the kind of business a individual wants to run. For example, to start your food business as a proprietorship, you might need to register with FSSAI or get FSSAI License.

What are the Benefits under Proprietorship Registration –

  • Low tax liabilities
  • Easy to control as managed by single promoter
  • Freedom to choose any business name but not registered by a company
  • Easy to start with the minimal registration process
  • Easy to shut down the company with very less compliances
  • Taxes – All business profits are personal income for a proprietor and pay self-employment tax on those profits

Disadvantages of proprietorship
• 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 unorganised sector with a limited period of existence.

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.

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.

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.