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PROPRIETORSHIP

This kind of firm is something in which the individuals can set up their individual comPANies without being separate from its owner. In layman's language, this entity isn’t a legal entity and is owned by an individual who later on, can change the firm’s designation if required. A person who has a proprietorship is responsible himself for all the transactions for his Company. Be it a profit or a debt, the individual is self-responsible for the same and moreover the tax which is levied on the Company is paid by the individual as a part of an individual tax.

 

PROCess of proprietorship registration in India

 

This kind of firm can be established by anyone without any much complexities and is not governed by any of the specific laws by the government. As of sole proprietorship, these are the documents which are required for proprietorship registration:

 

  1. AADHAR card
  2. PAN card
  3. Bank Account
  4. Registered office proof

 

Also, it is advised for a Company registered as proprietorship to have these following registrations done:

 

  1. Registration as SME, which means that you can get yourself registered as Small Medium enterprise under the MSME Act
  2. Shop and Establishment Act License (mandatory in some states). This, in general, is in accordance with the local laws.
  3. GST Registration if your annual turnover is more than 20 lakhs.

 

Benefits of proprietorship Company registration in India

 

There are a number of benefits which one can avail if registered as a proprietorship firm. These are mentioned as follows: 

 

  1. You have the control for your organization in your hands.
  2. There is no need for a huge amount of investment required.
  3. Privacy is easy to maintain for you are the only person who is in charge of the business.
  4. Simplified and easy to manage
  5. There aren’t much of reporting requirements
  6. Tax filing is simplified and easy in this firm
  7. The Company which has proprietorship registration can be changed of the legal structure if needed in future.

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FAQ - Frequently asked questions

What is a Proprietorship?

A proprietorship/sole trading firm is a business that is owned and run by an individual person. The owner and the business are treated one and same. Proprietor is personally liable for all business debts i.e his personal property may also be used to repay business debts. Proprietorships are not regulated by any particular Act, hence there is no registration. Every buiness needs registration under Shop & Establishment Act whether it is providing a service or dealing in goods. Other registrations such as GST etc depend upon nature of product/service.


Who can start a Sole Proprietorship?

Any Indian citizen with a current account in the name of his/her business can start a sole proprietorship. Registration may or may not be required, depending on the type of business that is planned to be established. However, to open a current account, banks typically require a Shops & Establishments Registration.


How long does it take to establish a business with Sole Proprietorship?

A Sole Proprietorship business does not take more than 15 days to set-up and start functioning. This simplicity makes it popular among small traders and merchants. It's also much cheaper, of course. This is the other reason why it's the most widely used business structure.


What businesses are commonly run as Sole Proprietorships?

Most local businesses are run as sole proprietorships, from grocery stores to fast-food vendors, and even small traders and manufacturers. That is not to say that larger businesses cannot operate as sole proprietorships, they can! Jewellery shops are sole proprietors, but it is not recommended


Aside from a current account, is there no need for any other registration?

This depends on the business you're in. It is compulsory for any business whose turnover in a financial year exceeds Rs 20 lakhs (Rs 10 lakhs in the case of North Eastern states) to get a GST registration. For businesses that are involved in selling goods or services to customers out of a commercial establishment, it is mandatory to register under Shops and Establishments Act


Is it cheaper to run an LLP than a private limited company?

Yes, it is much cheaper to run an LLP than a private limited company. Mostly because compliances, such as an audit, apply to LLPs only after their turnover is sizeable. Most LLPs spend about half as much as a private limited companies, in their first year on registrations and compliance work.


What if I wish to convert from Sole Proprietorship to Private Limited Company or Partnership?

The procedure involved is a little tedious, but it is possible. It is very common for sole proprietors to convert into partnerships or private limited companies at a later stage of their businesses.


What if I wish to convert from Sole Proprietorship to Private Limited Company or Partnership?

What is the objective of the Shops & Establishments Act?


What is the objective of the Shops & Establishments Act?

Every Indian state has enacted certain rules and regulations with regard to conditions of work. The objective is to secure uniform benefits for employees working in different establishments, from shops, commercial establishments and residential hotels to restaurants, theatres and other places of public amusement or entertainment.


What is the objective of the Shops & Establishments Act?

Every Indian state has enacted certain rules and regulations with regard to conditions of work. The objective is to secure uniform benefits for employees working in different establishments, from shops, commercial establishments and residential hotels to restaurants, theatres and other places of public amusement or entertainment.


When is a Shops and Establishments Act license required?

Every shop and establishment needs to register itself compulsorily under this Act within 30 days of commencement of work. As this is such a basic license, many other licenses require this as proof of a commercial business. For example, most banks will require you to furnish it if you want to open a current account.


What are the records to be maintained under the Shops and Establishment Act?

Under the Shop and Establishment Act, every business has to seek approval from Department of Labour and keep up-to-date registers regarding details of employment, fines, deductions and advances, salary and holidays. The requirements may vary from state to state. Files related to annual holidays and number of employees need to be submitted to the office of the Municipal Corporation annually