Proprietorship Firm Registration

A sole proprietor is the single owner of the sole proprietorship, he is treated as an entity same as the business. As the sole proprietor is the owner of the business he is entitled to all the company's revenue and expenditures.

To run a business as a sole proprietor one need to obtain some licenses and permits. The needs of license will depend on the industry, state, and locality of the business.

One does not have to separately register for sole proprietorship business. The business can be carried out after getting the following documents:

• PAN card from the government on the name of Proprietorship business.

• GST registration certificate as per the provisions of Goods and service tax Act 2017.

• Shops and Establishment Registration applicable to the specific state in which the business needs to be carried out.

• Trade License on the basis of business which requires to run.

• Micro, Small & Medium Enterprises Registration Certificate.

• Professional Tax Registration Certificate.

• Identity Proof of the applicant - PAN Card and Aadhar Card.

• Address Proof of the applicant - Latest Bank Statement

• Passport size photo.

Starting a sole proprietorship business is easy if all the compliances are met properly.
One needs to choose a suitable business name which reflects the objective of the business.
A suitable business location designated as the principle place of business should be selected.
As there is no formal registration is required to run a sole proprietorship business there are some other taxation and business related formalities that need to be complied with.

• Bank Account

  One should open a bank account in the name of his proprietorship firm.

• Shops and Establishment Registration

  The Shop and establishment license covers the various business entities such as the shops, restaurants, commercial establishments, the retail trade/ business, profit-making organizations and so on. Disregarding of any business entity whether fully functional or not it is mandatory to get the business registered.

• GST Registration

  GST has alternate many indirect taxes such as the service tax, Value added tax, Central sales tax, excise duties, additional customs duties, and so on. Any individual making the interstate supply of goods and services and having an annual turnover of more than Rs.40 lakh is required to get GST Certificate.

  Obtaining a GST registration makes the business legally acknowledge as the supplier of services or goods. Small businesses can opt for the composition scheme to lower the tax rates, which in results reduced the taxation and the compliance burden of the business. For certain businesses getting GST registration is mandatory. According to the GST Act, penalties are imposed if a business is operating without GST registration.

• Udyog Aadhar Registration

  Udyog Aadhar Registration is issued to the Micro, small, and medium-sized businesses in India under the MSME development Act, 2006.

  Earlier known as MSME registration, the process of obtaining the Udyog Aadhar registration is online. The main objectives of the Udyog Aadhar registrations are as follows:

  To empower the micro, small and medium enterprises to compete with the international competition competently;

  To promote the growth of micro, small and medium enterprises on a large scale to handle the problems related to unemployment and poverty effectively.

  To prevent the small-scale industries from the financial injustice in the hands of the big industries.

• TAN Registration

  TAN or the Tax Deduction Collection Number is a mandatory ten-digit number required for all persons who are liable to pay the Tax deduction at source or TDS on behalf of the Government.

  The person deducting the tax at the source has to deposit the deducted tax to the central Government.
  A proprietorship business and other entities must deduct tax at the source, making certain payments like salary, payments to the contractor or the subcontractors, amount of rent exceeding Rs.1,80,000 per year, etc. On deducting the TDS, the entity has to issue a TDS certificate as proof of collection of tax.

• FSSAI Registration

  FSSAI registration can be obtained from the Food Safety and Standard Authority of India in the proprietor's name if he is engaged in the business of selling or handling of the food products. Following is the list of documents required for FSSAI registration:

  • Photo of the food business operator

  • Document for Identity proof- Pan Card, Driving License, Passport, Aadhar Card, Department Issued ID, Voter ID card.

  • Supporting Documents (if any):- NOC by the Municipality or the Panchayat, Health NOC.

• Trademark Registration

  It’s a good idea to come up with a trade name for your business and get it trademarked.

• Importer-Exporter Code

  If the proprietor wants to go in for international trade then he needs to obtain an Importer & Exporter Code from the Director General of Foreign Trade.

BENEFITS OF REGISTERING AS A PROPRIETORSHIP FIRM:

• Proprietorships firms are owned and run by just one single person. Therefore the owner has full authority to make all the decisions as no partners are involved to consult.

• As there are no registrations are required to start a proprietorship business, one can create and receive payments from clients very easily.

• The weightily advantage of the Proprietorship is that it doesn't require any additional compliance in maximum cases.
  The PAN of the Proprietor and Proprietorship are the same as they are treated as the same legal entity.
  Hence, in most cases, only form of ITR3 is filed for income tax returns every year.

• If a proprietor has to cease operation, he does not have to wind up the company significantly.

• Registering a proprietorship requires very little investment. Therefore, anyone who wants to start a business with low funds can go for proprietorships as there is no investments are involved.

The proprietorships business is required to file income tax returns. As the proprietors and the proprietorships entity are the same the income tax return filing for the proprietor and proprietorship is the same.

Under the Income-tax Act, all the proprietors below the age of 60 will have to file ITR only if the total income exceeds Rs. 2.5 lakhs. If the proprietor is over 60 years and below 80 years, he has to file ITR only if his income exceeds Rs. 3 lakh. Proprietors over the age of 80 years are required to file income tax if the income exceeds Rs. 5 lakh.

Audit for Proprietorship

An audit is required for the proprietorship firms if the total sale exceeds Rs. 1 crore during the financial year.

In some professional case, an audit is mandatory if the total gross receipts are over Rs.50 lakhs during the financial year assessment.

An audit is needed for any proprietorship firm under a presumptive taxation scheme regardless of turnover if the income claimed is lower than the deemed profits and gains under the scheme.

Audit for Proprietorship for income tax purposes must be done by a practicing Chartered Accountant.