A proprietorship firm is wholly owned, managed and controlled by an individual called proprietor. Proprietorship is the easiest way of doing a bsuiness and have minimal regulatory compliance. Proprietorship Firm needs not be registered with any authority. However, Proprietorship firm may obtain the MSME Registration/ Udyog Aadhaar to avial various benifits available to Micro Small and Medium Enterprises.
For a Proprietorship Firm Registration, there is no need to take separate registration. Moreover, there is no procedure for obtaining name approval as in case of Companies. Also Government has not provided any mechanism to form the proprietorship firm.
Proprietorship firm may be start by just obtaining the Trade Licence, MSME Registration or opening a bank account with the firm name. Separate Income Tax PAN is not required in the name of Proprietorship firm. The proprietorship files the Income Tax return with the PAN of the Proprietor. Further, all other registration like Goods and Service Tax (GST) Registration will be in the name of the Proprietor. Hence, in Proprietorship, the Proprietor is personally liable for all acts done by the Proprietor.
Advantages of Proprietorship Firm:-
1. Ease of Formation 2. Ease to Operate 3. Minimal Compliance 4. Easy to Close
Any Indian citizen with a current account in the name of their business can start a sole proprietorship. Registration may or may not be required, depending on what business you are planning to establish. However, to open a current account, banks typically require a Shops & Establishments Registration.
A business can be started within 2 days from sole proprietorship.
Electricity / Water / Telephone Bill / Bank Account Statement of the proposed nominee
PAN Card of Proprietor
Voter Card / Passport / Aadhaar Card / Electricity Bill of Proprietor
Ease of Formation
Starting a sole proprietorship is much less complicated than starting a formal corporation, and also much cheaper.
The owner of a sole proprietorship is not required to file a separate business tax report. Instead, they will list business information and figures within their individual tax return. This can save additional costs on accounting and tax filing. The business will be taxed at the rates applied to personal income, not corporate tax rates.
Sole proprietorships can hire employees. This can lead to many of the benefits associated with job creation, such as tax breaks.
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 deem necessary.