Proprietorship is a business concern owned and operated by an individual. Proprietorship is nothing but the Individual carrying the business himself. Most of the micro and small businesses operating in the unorganized sectors prefer registering a Proprietorship.
Proprietorship is simple to start and has very few regulatory compliance requirements for conducting the operation. Proprietorship registration is ideal for entrepreneurs who are getting into the business for small businesses with few clients.
Registering a Proprietorship firm in India requires no formalities or registration. It is necessary to obtain a business license as required by the state/central government.
Key Registrations for Proprietorship:
MSME registration: If the registration of Proprietorship is with the Ministry of Micro, small and medium enterprises, MSME registration can be obtained.
TAN registration: A proprietor must obtain a TAN registration from the Income Tax Department if the proprietor is making salary payments wherein the TDS reduction is required.
GST registration: GST registration is to be obtained if the proprietor is involved in selling goods or services that cross the GST turnover threshold.
Import-export code: The IE Code can be obtained from the DGFT in the name of the business- if the proprietor is undertaking export or import of goods in India.
FSSAI registration: FSSAI registration must be obtained from the Food and Safety and Standard Authority of India in the operator’s name if the Proprietorship is involved in the selling or handling of food products.
Shop and Establishment Registration: Shop and Establishment Registration refers to the process of obtaining a Certificate or License which is issued to the business, professions, and trade registered under the provisions Shop and Establishment Act of the respective state.
Trademark registration: Further, if the business name is unique, then it is better to Register a Trademark.
Benefits of Proprietorship:
- Complete Control- Proprietorships firms are owned and operated by just one person. The owner has full authority and can make all the decisions as no partners are involved to consult.
- Easy Setup- As no registrations are required to start, a proprietorship can create and receive payments from clients very easily
- Easy Compliance- The significant advantage of the Proprietorship is that it doesn’t require any additional compliance in most cases. The PAN of the Proprietor and Proprietorship are the same. Hence, in most cases, only income tax returns in the form of ITR3 must be filed every year.
- Dissolution- If an individual has to cease operation, he does not have to wind up the company significantly. This undoubtedly saves time.
- Requires less investment- Registering a proprietorship in India requires very little investment. Hence, anyone who wants to start business with low funds can go for proprietorships as no investments are involved.
Information is not disclosed in public – The Proprietorship firm’s financial reports are public like that of the LLPs, where the financial statements are made public.