Ask 4 Compliance | Proprietorship
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PROPRIETORSHIP

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PROPRIETORY FIRM

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, 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.

Our team of highly qualified professionals at Ask4compliance.com can help you to establish a Proprietary Firm to start your business as an individual.

Process & Timeline

5-7 days

Professional Fees

Rs. 3500

(GST, Government Fees and other Out of Pocket Expenses Extra)

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ADVANTAGES OF A PROPRIETORY FIRM

  • Business Name: Since the name of a proprietorship is not registered, a proprietorship can choose to have any name – as long as it does not infringe on a registered trademark. However, since the name is not registered, any other person can also use the same business name unless trademark registration is obtained.
  • Single Promoter: Proprietorship is the only type of business entity that can be registered and operated by one person. However, to register a one person company, a Director is required and for all other types of entities like company or LLP or partnership firm, two or more promoters are required.
  • Lower Taxes: Proprietorship with less than Rs. 3 lakhs of income is not required to pay any income tax, as proprietorship’s are taxed as the individual owing the business. However, unlike a company or LLP, a proprietorship cannot enjoy some of the tax deductions, which could potentially increase the tax liability.
  • Easy to Close: The Proprietor and the proprietorship are one and the same for all legal purposes. Hence, there is no formality for winding up or closing a proprietorship. In most cases, to close a proprietorship, only the tax registrations obtained in the name of the proprietor must be cancelled.

DOCUMENTS REQUIRED FOR REGISTRATION OF PROPRIETORSHIP

  • Passport size photograph of the Sole Proprietor: Two passport size photographs of the sole proprietor (JPEG format)
  • Proof of identity for Individual: Self attested copy of Pan Card/Voters Identity Card/Aadhaar Card/Passport/Driving license.
  • E-Mail id and Mobile number: Of the sole proprietor and the firm (if any)
  • Registered Office Address Proof
    • If Rented: Rent Agreement and utility bill likely electricity bill, telephone bill, etc. and No Objection Certificate from owner.
    • If Owned: Ownership proof, Receipt of Municipality tax paid etc. and No Objection Certificate from owner.

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