Proprietorship Firm

Ease of Formation

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Services

Our Package includes the followings:

  1. GST Registration
  2. MSME Registration (Complimentary)
  3. Any Government fee, if applicable shall be paid by you directly for which we will share the challan if required.
    Rs.1500/-
    Rs.1180/-

About Proprietorship Firm

A Proprietorship Firm is a type of unregistered business entity that is owned, managed and controlled by one person called Proprietor. Proprietorship Firm is the most common type of business in India with minimal regulatory compliance requirements and is used by most micro and small businesses operating in the unorganized sectors.

This entity is ideal for entrepreneurs who are getting into business for the first time and for small businesses with few clients.  

There is no mechanism provided by the Government to form the proprietorship firm. Proprietorship Firm may be started by just opening a bank account with the firm name and taking some Government Registration like Udyam Registration, GST Registration, Import Export Code etc. There is no requirement of a separate Income Tax PAN in the name of Proprietorship firm. The PAN of the proprietor will be the PAN of the firm and proprietor will have to file income tax return in his personal name.

Documents Required

  Self-attested scanned copy of PAN Card & Aadhaar Card.
  Latest Photographs
  For Bank account details- a Copy of Cancelled Cheque/Copy of Bank Statement/Copy of Passbook.
  Copy of electricity bill/landline bill/water bill.
  Copy of Rent agreement and No objection certificate (NOC) from the owner (if rented)
  Details of Business activity including name of top products/services.

Benefits of Proprietorship Firm

Ease of Formation:

Starting a sole proprietorship is much less complicated than starting a formal corporation, and also much cheaper. A sole proprietorship business does not have any specific registration requirements and the proprietors legal identity is used by the business. Hence, a proprietorship can be started without any registration

Tax Benefits:

Proprietorship business is not treated separately for income tax purposes. The tax slab as specified for an individuals income is only applicable to the income of the business. The rates of tax are lower compared to other business structures like company and partnership.

Employment:

Sole proprietorships can hire employees. This can lead to many of the benefits associated with job creation, such as tax breaks.

Decision making:

Control over all business decisions remains in the hands of the owner. The owner can also fully transfer the sole proprietorship at any time as they feel necessary.

Frequently Asked Questions (FAQs)

 

The proprietor must be an Indian citizen and resident.
Proprietorship firms do not have a certificate of incorporation or a certificate of registration. The identity of a proprietorship firm is established by getting some relevant Government registrations.
There is no for registering the name of a Proprietorship Firm. Therefore, proprietorship firms can adopt any name that does not breach on registered trademarks. The only way to ensure exclusive use of the business name is to obtain a trademark registration of the business name.
Yes, there are procedures for converting proprietorship business into a company or an LLP at a later date. However, the procedures for the same are expensive and time-consuming. Therefore, it is wise for entrepreneurs to start an LLP or a company in case they are expecting to operate at a bigger scale.
There is no limit on the minimum capital required to start a proprietorship.
Proprietorship Firms will have to file their annual tax return with the Income Tax department. However, annual reports or accounts need not be filed with the Ministry of Corporate Affairs which is required for an LLP or a company.
It is not necessary for proprietorship firms to prepare audited financial statements each year. However, a tax audit may be necessary based on turnover and other criteria.