Proprietorship

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Proprietorship

A Sole proprietorship is an entity, which is owned, managed and controlled by a single owner. It is one of the most common form of business in India, used by small entrepreneurs operating in the unorganized sectors. In proprietorship, the owner is the sole decision-maker, responsible for all aspects of the business, including its debts and liabilities.

Proprietorships are usually small businesses that are easy and inexpensive to set up, as they do not require formal registration with the government or the creation of any legal documents. The owner can operate under their own name or choose a trade name for the business.

Advantages of Proprietorship

Minimum Statutory Compliances

No Audit Requirement

No sharing of profits with any other person

Minimum Initial setup Cost & Ease of Dissolution of business

Get Income Tax Slab & Information is not made public

Disadvantages of Proprietorship

Unlimited Liability

Difficulty in obtaining funds

No trasferability & Less Reliable

No separate identity

Limited Lifespan till proprietor existence

Documents Required

PAN and Adhaar of the Applicant

Address proof of the place of business

Bank Account Statement / Cancelled Cheque

Digital Signature

Mobile No and Email id

Passport size Photograph

What You Will Get

PAN Card

GST Certificate

UDYAM Registration

Compliance Support

If you are looking to register your proprietorship in India, you can do so by following these steps:

Choose a name for your business: Select a unique name for your proprietorship that is not already in use.

Obtain a PAN card: Apply for a PAN (Permanent Account Number) card from the Income Tax Department.

Open a bank account: Open a bank account in the name of your proprietorship with any bank of your choice.

Obtain licenses and permits: Depending on the type of business you are starting, you may need to obtain certain licenses and permits from the relevant authorities.

Register for GST: If your business turnover exceeds a certain threshold, you will need to register for GST or you can voluntarily take GST Registration to start the business.

Register for MSME: To register the proprietorship, business owner can register in MSME (UDYAM Registration) which provides benefit like government schemes, collateral free loans, credit facilities, lower interest rates etc.

Register for Shop & Establishment Act: A proprietor can register his/her business under Shop & Establishment Act that is governed by State Law. It typically applies to Shops, Hotels, Restaurants, Cinemas and other similar businesses.

Frequently Asked Question

Can I transfer my proprietorship to other person?

No, Unlike Partnership, LLP and Pvt Ltd Company you can not transfer your proprietorship to someone. Only assets and liabilities can be sold to other business but proprietorship can not be transferred as a whole.

Can other people invest in proprietorship?

No, A proprietor can not issue share or certificate to someone who invest in their proprietorship. You will have to consider as a Loan and not investment. Proprietorship is run by a single person so there is no law which prescribes to issue shares or something to investor. Click Here

Can I convert my proprietorship to LLP or Pvt Ltd Company?

Yes, You can transfer your proprietorship in to LLP or Company as prescribed by Companies Act or LLP Act. You will have to follow the process for converting your business in to a LLP or Company through Registrar of Companies.

Is audit required for proprietorship?

No, There is no law which precribes the compulsory Audit for proprietorship.

Will I get Proprietorship Registration Certificate?

No, There is no department which issue Proprietorship Certificate. Proprietorship is not a separate entity which is registered instead it is a extension of it's proprietor. Proprietorship is registerd in some other laws like GST, MSME, IEC and they issue the certificate of their own