Sole Proprietorship Registration
Sole Proprietorship Company - An Overview
Registering a proprietorship in India involves a unique process, as there isn’t a specific government registration for this type of business structure. Instead, a proprietorship firm gains recognition through various tax registrations required by laws and regulations. One crucial tax registration is the GST (Goods and Services Tax) Registration, which must be secured under the proprietor’s name to formalize the business. This registration signifies that the proprietor is conducting business as a proprietorship.
Essential Documents Required for Proprietorship Registration
To run a proprietorship in India, you need several important licenses and registrations, including:
- Permanent Account Number (PAN) and Aadhaar Card:
These are required for business identification. - UDYAM Registration:
This recognizes your business as a Micro, Small, or Medium Enterprise (MSME) and offers government benefits. - GST Registration:
If your business exceeds specific thresholds, you must register for Goods and Services Tax (GST) to collect and pay GST. - Bank Account:
Open a separate bank account for your business to manage finances smoothly. - Shops and Establishment Act Registration:
Depending on your business location, register under your state’s Shops and Establishment Act to comply with local labor regulations.
Advantages of Proprietorship
- Easy Registration:
There is no formal incorporation or dissolution process, but the proprietor may need to obtain certain registrations and licenses to comply with Indian laws. - Lower Compliance:
Proprietorships have lower compliance requirements, as they are typically only registered with government departments like Income Tax and GST. In contrast, entities like LLPs or companies must file various statutory returns and undergo annual audits. - Simplicity:
With no partners, shareholders, or directors, the proprietor can easily operate the business with minimal documentation and consent requirements, making this structure ideal for very small businesses. - Business Decision Making:
The business owner makes all decisions without needing consent or approval from others, allowing for quick decision-making. - Complete Control:
The proprietor has full control over assets, revenue, expenses, and all business operations.
Disadvantages of Proprietorship
- Funding:
Proprietorships rely solely on the owner’s savings, borrowings, and credit history. Raising funds from banks is challenging, and raising equity funds is impossible as this structure does not allow for profit sharing or shareholding. - Personal Liability:
The proprietor is personally liable for business loans or taxes, meaning personal assets can be at risk if the business cannot meet its obligations. - Business Continuity:
The business dissolves automatically upon the owner’s death or incapacity, leading to a lack of continuity. - Growth Limitations:
Proprietorships face restrictions in terms of fundraising, liability, and business continuity, making them suitable only for very small businesses. - Unincorporated Business:
There is no centralized database to verify if a sole proprietorship is active or inactive, often classifying them as unorganized businesses.
Procedure for Registration of Proprietorship in India
You can easily complete proprietorship firm registration online through CRSB. For sole proprietorship registration, only the PAN and Aadhaar card of the business owner are required. CRSB can help you obtain the following registrations in less than 15 days:
- GST Registration
- UDYAM Registration
- Zero-Balance Business Current Account with LEDGERS Accounting Software
Follow these steps to register your proprietorship online with CRSB:
Step 1: Log in to LEDGERS using the email address used for payment.
Step 2: Go to the Services Tab and select Proprietorship Engagement.
Step 3: Upload your PAN and Aadhaar Card copies.
Step 4: A CRSB Registration Expert will file the registration application with the GST Department, MSME Department, and bank for a current account.
Step 5: Access to LEDGERS Accounting Software is provided for GST invoicing, GST filing, and other services.
PAN Card for Proprietorship Firm Registration
A proprietorship is not a separate legal entity, so there is no procedure to obtain a separate PAN card for the proprietorship. The business owner’s PAN card is used for the proprietorship.
Obtaining GST Registration for Proprietorship
CRSB will obtain GST registration for your proprietorship as part of their service. The following documents are required:
- Permanent Account Number (PAN) of Proprietor
- Digital Signature Certificate of the Authorized Signatory
- Consent by Proprietor for obtaining GST Registration
- Photograph of Proprietor and Authorized Signatory
- Bank Account Details: A scanned copy of a canceled cheque with the business entity’s name, bank account number, MICR, IFSC, and branch information
- Declaration/Authorization to Authorized Signatory
- Rent/lease agreement in the name of the proprietor for commercial purposes
- Additional documents such as Aadhaar Card, Driving License, Passport, or Voter ID in the owner’s name with the complete address of the premises if the address on the ownership document (Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill) is incomplete
Obtaining UDYAM Registration for Proprietorship
UDYAM Registration can be obtained online to avail various benefits for small and medium-sized businesses. Once the GST registration is obtained, CRSB will assist in obtaining UDYAM registration by submitting the Aadhaar card, PAN card, and GST certificate to the government.
Bank Account for Proprietorship
The business current account for a proprietorship will be opened in the business owner’s name using their PAN. The owner must provide proof of conducting business. Any two of the following documents can be submitted to create a current account:
- GST registration certificate
- Shop & Establishment Act license
- License issued by the registering authority, such as a Certificate of Practice issued by the Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, or Food and Drug Control Authorities
- Importer Exporter Code (IEC) issued to the proprietary concern by the office of DGFT as an identity document for opening a bank account
Obtaining Shops & Establishment Act License for Proprietorship
The process for acquiring a Shop and Establishment registration certificate varies by state. It is available both online and offline. In most states, registration can be obtained within 2-3 weeks.
Timelines for Sole Proprietorship Registration
A sole proprietorship registration can typically be completed in India through CRSB in less than 15 days. However, timelines may vary depending on government and bank processing times.
Proprietorship Business Activities
A proprietorship can undertake any business activity that an Indian citizen can engage in across most sectors and industries. However, some activities, like banking, insurance, financial services, lending, defense, and telecommunications, require specialized approval. In such cases, a company is required to obtain various approvals from the government. Thus, the proprietorship business structure is only suitable for small-scale activities.
Compliances for Proprietorship
The following are some compliance requirements for a sole proprietorship:
- Income Tax Filing: The business owner must file a personal income tax return using form ITR-3 or ITR-4.
- Business Income: Proprietorships must file form ITR-3 or ITR-4 to comply with income tax regulations.
- GST Return Filing: If the proprietorship is registered for GST, returns must be filed monthly and quarterly as per the applicable scheme.
- TDS Returns: If the proprietorship has employees or purchases goods/services beyond a certain threshold, tax must be deducted at source and TDS returns must be filed quarterly.
Additional compliance requirements may apply based on the industry and location.
How CRSB can help you in Registration of a Proprietorship Company?
CRSB is the ideal partner for Sole Proprietorship registration online for several compelling reasons. With years of expertise in company registration and a deep understanding of the regulatory landscape, CRSB simplifies the often complex Sole Proprietorship registration process. Our Sole Proprietorship registration fees are designed to be affordable while providing exceptional value, ensuring a seamless experience from start to finish.
We offer expert guidance, from name reservation to document preparation and submission, for an effortless Sole Proprietorship registration process. Our commitment to accuracy and compliance guarantees that your Sole Proprietorship registration adheres to all legal requirements, while our dedicated support team is readily available to address any questions or concerns. With our transparent registration fees, you can trust CRSB to deliver reliable and professional service tailored to your needs.
Get started now and begin your entrepreneurial journey with confidence!